Vodafone slows decline in Europe as new CFO inherits all-too-red balance sheet
Vodafone has managed to slow revenue declines in vital European markets as CEO Margherita Della Valle looks to turn around the ailing telecoms giant.
In what it described as a “better” first quarterly earnings report than what was forecast, Vodafone told markets it had seen a near-6 per cent year on year revenue uplift in the UK and a 9 per cent increase by the same metric in its African business.
However revenues in Italy, Spain and the vital German market continued to slip.
Vodafone also announced the appointment of Luka Mucic as its new chief financial officer.
Mucic, who served as chief financial officer at software company SAP since 2014, will assume his new role on 1st September.
Vodafone boss Margherita Della Valle said she is “thrilled” at the appointment of Mucic. “He has a strong track record of international leadership, corporate repositioning and value-creation. Luka is joining us at a critical time as we undertake the transformation of Vodafone,” she added.
Commenting on his appointment, Mucic said: “I am very excited to be joining Vodafone at this important stage of the Group’s development. I look forward to working with Margherita and the team in delivering Vodafone’s strategic priorities of Customers, Simplicity and Growth.”
Despite Vodafone’s shares experiencing a 14 per cent decline year to date, the company has been exploring potential merger possibilities with Three, aiming to “create a sustainable and competitive third scaled network operator in the UK.”
If approved by the UK’s competition watchdog, the telecoms firms plan to invest £11bn to strengthen the nation’s standalone 5G network.
Digital services helped push Vodafone’s Business service revenue growth to 4.5 per cent, up from 2.9 per cent in the previous quarter. In the UK this figure was slightly higher at 5.7 per cent, having increased from 3.8 per cent in the previous quarter,
Della Valle said:”As we progress our plans to transform Vodafone, we have achieved a better service revenue performance across almost all of our markets. We have delivered particularly strong trading in our Business segment and returned to service revenue growth in Europe.
“Looking ahead, we have taken the first steps of our action plan focused on customers, simplicity and growth, but we have much more still to do.”
Vodafone shares climbed up over four per cent on Monday morning following the update.
Matt Britzman, equity analyst at Hargreaves Lansdown, was encouraged by the results. He said: “The transformation at Vodafone is in its infancy, and there’s a long way to go – but tentative signs of green shoots are emerging.”
Britzman added the UK and operations in Africa “continue to be beacons of light,” with increased prices and customer base spurring growth.
However, Matthew Dorset, equity research analyst at Quilter Cheviot, said the appointment of Mucic is “questionable”.
“While it makes sense having a German national on the board when that region is Vodafone’s most significant one, it isn’t an appointment that excites,” Dorset explained.
“He might be fine as a telecommunications CFO, but for a company that wants to be seen as a tech powerhouse, it is all a bit too safe and too corporate.”