Vodafone’s ‘resilient’ results and efficiency targets fail to impress markets

Vodafone Group revenue grew by 2% to €22.9 billion for the first half of financial year 2023, driven by service revenue growth and higher equipment sales. Operating profit also increased by 12% to €2.9 billion, but guidance for the full year is at the lower end of expectations. With key Vodafone market Germany delivering a weak performance, markets reacted by sending the company’s share price down by around 6%.

Nick Read, group chief executive, commented: “In the context of a challenging macroeconomic environment, we are delivering a resilient performance this year, alongside making good progress with our operational and portfolio priorities. We are pleased the Vantage Towers transaction accomplished our three key objectives – monetisation, deconsolidation and retaining co-control of these strategically important assets. In addition, our recently announced fibre-to-the-home JV in Germany will enhance our leading gigabit fixed network position in Europe’s largest market.”

Read added: “We are taking a number of steps to mitigate the economic backdrop of high energy costs and rising inflation. These include taking pricing action across Europe. We are also announcing today a new cost savings target of €1+ billion focused on streamlining and further simplifying the Group.”

The Vodafone chief has been under pressure for some time, because of the company’s tepid performance in the stock market. Investors believe he is not doing enough to unlock value in the business. In response, Read has been looking at merger opportunities across European markets. The most advanced example at present is a proposed merger in the UK with CK Hutchison’s Three. In his H1 2023 results statement, he said: “We are confident that the ongoing delivery of our strategy and portfolio actions will underpin long-term growth and create value for shareholders.”