Vodafone chief says ‘transformation progressing’ as cost cutting pays off
The chief executive of Vodafone has said the telecoms company’s transformation is “progressing” as her cost-cutting measures begin to pay off.
Margherita Della Valle hailed a strong performance for Vodafone in the first half of the year as service revenue grew 4.2pc to €19.2bn (£16.7bn).
The figures were driven by a turnaround in Germany, which returned to revenue growth in the second quarter after the company increased prices. The market makes up almost a third of Vodafone’s total revenue.
UK service revenue grew 4.1pc, driven by customer growth, inflation-busting price rises and higher revenues from roaming.
The upbeat results suggest turnaround measures implemented by Ms Della Valle are beginning to bear fruit. Ms Della Valle acknowledged the company “must change” when she took over as chief executive at the beginning of the year.
The Vodafone boss has unveiled plans to cut 11,000 jobs and announced a £15bn mega-merger with Three in the UK.
The company has also inked a deal to sell its Spanish operations for €5bn and is considering options in other markets such as Italy. Earlier this week it announced plans to spin-out its internal procurement and services division into a joint venture with Accenture.
Overall, group revenue fell 4.3pc to €21.9bn across the first six months of Vodafone’s financial year, reflecting the fact that businesses have been sold and no longer show up in the results. Revenue from Vodafone’s mast joint venture, as well as its operations in Hungary and Ghana, was missing when compared to last year after the company exited those businesses.
Operating profit also dropped by more than 44pc to €1.7bn as a result of the disposals and foreign exchange movements.
However, the sell-offs have helped Vodafone cut its net debt by 20pc from last year to €36.2bn and the company announced an interim dividend of 4.5 cents per share.
Vodafone reiterated its full-year guidance for adjusting earnings to remain flat at around €13.3bn and free cash flow of roughly €3.3bn.
Ms Della Valle said: “During the first half of the year, we have delivered improved revenue growth in nearly all of our markets and have returned to growth in Germany in the second quarter.
“Vodafone’s transformation is progressing. Our focus on customers and simplifying our business is beginning to bear fruit, although much more needs to be done.
“We have also announced transactions to strengthen our position in the UK and exit the challenging Spanish market in order to right-size our portfolio for growth.”