Vodafone Sales Rise After Germans Spend More on Broadband

(Bloomberg) -- Vodafone Group Plc’s sales rose unexpectedly for the first time since March after German consumers stuck at home during the pandemic spent more on mobile and broadband services. Its shares rose 3.2%.

• The Newbury, England-based mobile carrier said third-quarter organic service revenue rose 0.4%, compared to the 0.2% decline expected by analysts.
• The company stuck to its guidance for full-year adjusted earnings before interest, taxes, depreciation and amortization of between 14.4 billion euros and 14.6 billion euros ($17.3 billion-$17.6 billion).

Key Insights

• Cable customers in Germany upgraded to costlier plans during the quarter, helping to vindicate Chief Executive Officer Nick Read’s purchase of Liberty Global’s German fixed business Unitymedia.
• The sales gain follows two quarters of declines, which Vodafone blamed mainly on the pandemic. Revenue had grown in the last full year thanks partly to cost savings and efforts to keep customers loyal.
• The centerpiece of Read’s strategy to streamline Vodafone, cut costs and pay down debt is the initial public offering of its mast business, Vantage Towers. It’s expected in the coming months and could be one of the biggest European IPOs of 2021.
• “We have made further progress on our strategic priorities, including the IPO of Vantage Towers in early 2021, which remains firmly on track and will now include our 50% shareholding in the U.K. towers joint venture with Telefonica,” said Read in a statement Wednesday.

Market Reaction

• Vodafone’s shares rose as much as 3.2% in early trading in London. The stock had fallen 16% in the past 12 months to Wednesday, versus a 13% fall in the Stoxx Europe 600 Telecommunications Index.
• Of the 26 analysts surveyed by Bloomberg, 23 rate Vodafone stock a Buy, 1 Hold and 2 Sell.

Get More

• Statement
• Feb. 2: Vodacom 3Q Revenue Gains 6.4%, Increases Network Investment

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