Vodafone said underlying service revenue declines slowed on a sequential basis in its fiscal second quarter to end September, to 0.4 percent year-on-year from a decline of 1.3 percent in the first quarter. Underlying momentum was offset by lower revenue from roaming and visitors amid the continuing covid-19 pandemic. Excluding roaming, service revenue grew 1.5 percent in Q2. The general figure was still off from the year before, when underlying service revenues lifted 0.7 percent.
For Europe alone, organic service revenues fell 1.8 percent year-on-year, worse than the decline of 1.4 percent last year but better than the drop of 2.6 percent recorded in Q1.
For the first half, group revenue dropped to EUR 21.4 billion from 21.9 billion a year ago, while the operating profit increased to EUR 3.5 billion from EUR 577 million. The net result improved to a profit of EUR 1.b billion from a loss of 1.9 billion. Underlying service revenue dipped 0.8 percent from the year earlier to EUR 18.4 billion, and adjusted EBITDA was virtually unchanged at EUR 7.0 billion from 7.1 billion. Adjusted earnings per share improved to 4.11 cents from 0.85 cents.
Net debt at the end of September amounted to EUR 43.9 billion from 42.2 billion at end March.
CEO Nick Read talked about a resilient first half, with increased customer loyalty, a wider fixed broadband base, significant cost savings and further coverage of 5G. Vodafone’s 5G services are now present in 127 cities across nine of its European markets, and gigabit broadband speeds pass 52 million marketable homes. Read noted the company was two years into its longer-term strategy to transform into a business “that enables a digital society, generating both sustainable growth and attractive returns.” The CEO said the company is executing at pace but that more remains to be done to achieve its goals, specifically to deepen customer engagement, accelerate digital transformation, improve asset utilization and to drive shareholder returns. Meanwhile, the IPO of Vantage Towers is on track to take place in early 2021.
Looking at customer figures, the number of European mobile contract customers reached 65 million at the end of the quarter, from 63.8 million the year before, with broadband customers increasing to 25.4 million from 24.5 million and Europe on-net Gigabit converged customers rising to 38.9 million from 23.5 million. The number of Europe consumer converged customers lifted to 7.5 million from 6.8 million, with mobile contract customer churn going lower to 12.9 percent from 14.6 percent. The number of data users in Africa advanced meanwhile to 84.5 million from 81.2 million, with M-Pesa transaction volumes going higher to 6.8 billion from 6.0 billion. Finally, IoT Sim connections went up to 112 million from 94 million.
The group reiterated its 2021 free cash flow guidance of at least EUR 5 billion (pre-spectrum and restructuring), with an adjusted EBITDA expected at EUR 14.4-14.6 billion. The new forecast means the company may grow adjusted EBITDA this year from last year's EUR 14.5 billion, after previously forecasting a flat to lower annual result.
The operator will distribute an interim dividend of EUR 0.045 per share, in mid-December.
