Monday 16 November 2020 9:33 am

Vodafone hails 'resilient' first half despite Covid challenges

Mobile giant Vodafone this morning hailed a “resilient” performance in the first half, saying that it had “increased confidence” in its full year outlook.

Group revenue at the world’s second biggest mobile firm declined by 2.3 per cent to €21.4bn, with the acquisition of Liberty Global’s assets in Germany and Central Europe offset by lower revenue from roaming, visitors and handset sales. 

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It was also knocked by foreign exchange headwinds and the disposal of Vodafone New Zealand.

Vodafone made a profit of €1.6bn for the period, with losses from its Idea subsidiary outweighing the €1.1bn gained from the sale of its New Zealand arm.

As a result of the first half performance, the company increased its guidance to between €14.4bn and €14.6bn for its 2021 financial year, compared to €14.5bn for the previous year.

Shares in the group gained 3.5 per cent as markets opened this morning.

Vodafone added that it had launched 5G in 127 cities across nine European markets, with 52m marketable homes now passed with gigabit speeds.

Chief executive Nick Read said: “Today’s results underline increased confidence in our full year outlook. We are reporting a resilient first half performance and we continue to see good commercial momentum across the Group. 

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“The results demonstrate the success of our strategic priorities to date, namely increasing customer loyalty, growing our fixed broadband base, driving digitisation to simplify the company and capture significant cost savings, and deliver 5G efficiently through network sharing.”

CMC Markets’ Michael Hewson said that Vodafone’s “better than expected” performance could prompt shares to rise after months in the doldrums.

“The main focus for investors going forward is the need to address the company’s cash flow issues, and invest in 5G over the next few years, and to that end the main focus is next year’s potential IPO of the company’s Vantage Towers business”, he added.

Richard Hunter of Interactive Investor said that the listing would allow the telecom to pay down some of its hefty debt pile.

It will also maintain a stake in the tower business after the float, allowing it to keep “an eye on the strategic nature of the tower infrastructure and the potential for further value”.

Like almost every company, the pandemic has hit the telecom hard, with a reduction in international travel affecting its take from roaming charges.

Read more: Vodafone shares slide as operator ‘calculates cost’ of Huawei ban

As a result, Vodafone has put in a number of cost-saving measures, which have freed up €300m so far this year.

It also completed the merger of Vodafone Hutchison Australia with TPG Telecom to establish a fully integrated telecommunications operator in Australia, meaning it now holds 25 per cent stake in the Australian-listed entity.