Vodafone shakes off merger talks and pushes forward with German growth
Telecom giant Vodafone revealed this morning that will be putting enhanced focus on Germany and shareholder returns, but remained coy about its exact ambitions for consolidation.
In its full year results, the firm posted a total revenue increase of four per cent to €45.6bn, driven by service revenue growth in Europe and Africa, and higher equipment revenue.
However, for Germany, which makes up 30 per cent of the group, total revenue increased by a humble 1.1 per cent to €13.1bn.
Vodafone chief Nick Read said he was “not satisfied” with this performance, and said it was largely driven by operational and IT factors that could be rectified by the company.
Read also added that the company was actively pursuing opportunities with Vantage Towers and strengthening market positions in Europe.
The chief batted away talk of specific mergers, but did agree that UK regulator Ofcom have shifted its position to be “more supportive towards consolidation”.
He pointed to the consolidation success in the US, where there are now three major players.
“I think three is the right formula for the UK and will lead to an acceleration of investment”, Read said.
Looking forward, UK’s third largest telecoms firm said that the current macroeconomic climate present specific challenges for the firm, particularly inflation. He suggested that this was likely to impact the financial performance in the year ahead.
As Neil Shah, Director of Research at Edison Group said: “In the UK in particular, with a growing cost-of-living crisis, there is the risk customers may cut back on amount they spend on mobile phone contracts and other services”,
He said guidance falls below market expectations, already signalling a difficult start to the next year for the group.
“Vodafone’s new investors will be sure to keep a close eye on how the group navigates these difficult market conditions in order to determine whether their vote of confidence has been misplaced”, Shah added.
While it said adjusted EBITDAaL was expected to be between €15.0 – €15.5 billion in the coming year, Vodafone said: “Guidance and our medium-term financial ambition assume no material change to the structure of the Group.”
Not only does this shake off any immediate Three merger talks, as reported by Morning Wire, but it shows how the main focus for Vodafone remains on its own ambitions.
Read also took the opportunity to assert that UAE telecom giant Emirates Telecommunications Group (&e), which snapped up a 9.8 per cent stake in Vodafone, was “supportive of plans” moving forward.