Vodafone Group revealed a complex fiscal landscape for the first half of the fiscal year, grappling with a 4.3 percent revenue decline to €21.9 billion.
Vodafone has generated sales of €6,405 million from Germany, €2,320 million from Italy, €3,377 million from UK, €1,929 million from Spain, €2,679 million from Europe, €3,590 million from Vodacom €1,128 million from Other markets and €721 million from Shared Functions.
The setback, attributed to adverse foreign exchange rates and the divestiture of Vantage Towers, Vodafone Hungary, and Vodafone Ghana in the preceding financial year, delineated a challenging period for the telecom giant.
Margherita Della Valle, Group Chief Executive of Vodafone, acknowledged the ongoing transformation within Vodafone, noting a progression in their customer-centric approach and streamlining operations. However, she emphasized the necessity for further efforts, signaling strategic transactions to fortify their UK presence while strategically exiting the demanding Spanish market to optimize portfolio growth.
The company’s operating profit mirrored the challenging landscape, plummeting by 44.2 percent to €1.7 billion due to prior-year business disposals, adverse currency movements, and a reduced share of results from associates and joint ventures.
Despite these hurdles, Vodafone reiterated its FY24 guidance, anticipating ‘broadly flat’ Adjusted EBITDAaL around €13.3 billion and an Adjusted free cash flow of approximately €3.3 billion. In line with their transformational agenda, the company has already executed about 2,700 role reductions out of the planned 11,000 over a three-year period.
The financial report reflected a nuanced picture of revenue dynamics. Total revenue decreased by 2.8 percent to €6.4 billion, propelled by diminished equipment revenue. However, on an organic basis, service revenue remained relatively stable, showcasing a marginal decline of -0.1 percent, buoyed by increased broadband and mobile ARPU, counterbalanced by customer losses and reduced mobile termination rates.
In a bid to navigate the evolving telecommunications landscape, Vodafone witnessed growth in fixed service revenue, recording a 0.3 percent organic increase. The company highlighted broadband ARPU growth offsetting a decline in the broadband and TV customer base, signaling a strategic shift that impacted commercial performance.
Mobile service revenue, on the other hand, experienced a 0.6 percent organic decline, primarily attributed to a reduced customer base and lower mobile termination rates. However, a resurgence in Q2 service revenue was propelled by non-recurring payments and increased roaming and visitor revenue.
Amidst these challenges, Vodafone Business service revenue saw a 0.5 percent organic increase, buoyed by the ‘SoHo’ customer segment and robust demand for Cloud and Security services. The company made substantial strides in the IoT sector, adding 4.3 million connections, predominantly driven by automotive sector demand.
Additionally, Vodafone unveiled strategic partnerships and initiatives, including the launch of the ‘Vodafone Zscaler Security Service’ and an agreement with BASF for industrial private 5G networks, positioning itself as a key player in the evolving technological landscape.
Despite fiscal setbacks, Vodafone remains committed to its FTTH joint venture, targeting up to seven million homes over six years, complementing its existing hybrid fibre cable network upgrade plans.
The company’s fiscal challenges mirror the volatile landscape of the telecommunications sector but underscore a resilient strategy focusing on innovation, strategic partnerships, and adapting to evolving customer demands.
