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Thursday, March 23, 2023

Vodafone generates more sales thanks to roaming revenues – Vodafone shares in demand

The British telecommunications group Vodafone has significantly increased its revenue in the first quarter of the new financial year thanks to rich roaming income.

Across the group, sales from April to June increased by 5.7 percent to 11.1 billion euros compared to the same period last year, as the company announced on Friday in London. The company did better than expected.

The numbers gave Vodafone shares a boost. Most recently, the Vodafone shares were quoted 2.75 percent firmer at 1.19 pounds. This enabled them to recover from the most recent downward trend. At a good 120 British pence, the Vodafone share is currently trading at roughly the same level as at the end of 2020.

The business environment in Europe is not yet back on a normal level, said CEO Nick Read. Nevertheless, Vodafone had a good service turnover, i.e. without the sale of end devices such as cell phones and tablets. This key figure, which is important for the industry, rose across the group by a good three percent to 9.4 billion euros. All markets grew, with the exception of Italy.
Compared to the previous year, when the corona crisis had left its mark, roaming revenues increased by 56 percent. However, this is still less than in the pre-Corona period at the beginning of 2020. In the pandemic, this income was almost completely lost across the industry. This was due to the lockdowns and travel restrictions, through which the companies lacked lucrative mobile communications and data traffic abroad.

Goldman Sachs analyst Andrew Lee praised the figures presented: The telecommunications group is returning to growth, and the growth in service revenues from its own resources, especially in Europe, has exceeded market expectations. The share is trading at a significant discount to the sector and therefore has plenty of room for improvement. JPMorgan analyst Akhil Dattani was a little more cautious : In view of the weak performance indicators and the revenues that were only expected in Europe, there is little to be expected on the balance sheet.
As the most important Vodafone market, Germany developed only slightly better. Service sales there rose by 1.4 percent to just under 2.9 billion euros. In this country, in addition to the rising roaming income, the fiber optic connections in particular drove business forward. “Far more than half of the new customers opt for 250 Mbit / s or more. And that drives our growth,” said Vodafone Germany boss Hannes Ametsreiter according to the announcement.

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The South African Vodacom, which focuses on the continent of Africa, made particularly significant gains. Service sales here rose by almost 8 percent to 1.4 billion euros. However, this was not due to revenues from the telecommunications business, but to a “significant growth” in the transaction volume of the M-Pesa payment service as well as reintroduced fees that were temporarily suspended during the pandemic. With M-Pesa, users can make cashless payments and send money to other M-Pesa customers.
Vodafone confirmed the annual forecast. Accordingly, the Management Board continues to expect adjusted operating earnings before leasing costs (Ebitda AL) in Europe of 15 to 15.4 billion euros and an adjusted cash inflow (free cash flow) of at least 5.2 billion euros.

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