Wednesday 3 February 2021 8:55 am

Surge in pandemic data demand pushes up Vodafone revenues

Vodafone’s revenue rose for the first time since March as demand for high-speed broadband soared across Europe.

The British-based mobile carrier saw revenue rise 0.4 per cent in the third quarter, outperforming the 0.2 per cent decline predicted by analysts.

Shares leaped by 3.2 per cent as several analysts backed Vodafone as a stock to buy.

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Group CEO Nick Read believes Vodafone’s resilient trading performance underlines the group’s confidence in the year ahead.

Read said: “We are now firmly back into growth and I expect that growth to accelerate from here.

“Our networks have successfully delivered another quarter of record data traffic as many countries continue to endure Covid-19 lockdowns and customers depend on our services.

“I continue to be proud of the hard work of my colleagues, and that of the industry more broadly, who have kept societies connected and supported in key sectors such as education and healthcare.”

Renewed optimism

Vodafone’s shares have dropped 16 per cent in the last year, but the recent leap in sales ends a run of two quarters of declines.

Total revenues are down by 4.7 per cent year-on-year, with the pandemic’s effect on roaming and visitor revenues a clear strain.

Vodafone stuck to its full-year guidance for taxes, earnings before interest and depreciation of between $17.3bn to $17.6bn.

Its initial public offering of its mast business, Vantage Towers, was a key strategy to streamline the company and cut costs.

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Analyst reactions

Dan Thomas, analyst at investment researchers Third Bridge, said: “Infrastructure assets are commanding premium valuations at present, and Vodafone benefits from being highly asset rich.

“The anticipated IPO of Vodafone’s tower business, Vantage, could lead to a multi-billion pounds windfall.

“The proceeds could be used to deleverage Vodafone’s balance sheet, or to invest in capex heavy 5G deployment, plus enterprise cloud and SD-WAN opportunities.”

Richard Hunter, head of markets at Interactive Investor, added: “Despite the challenges, Vodafone remains a cash generating behemoth, with its multi-million customer base making a powerful cumulative contribution to income.”

Richard Flood, investment manager at Brewin Dolphin, said: Vodafone’s quarterly results today show a steady and solid performance, ahead of expectations across its mobile and increasingly important broadband services.

“The company has confirmed it is on track to spin off its network of 82,000 mobile masts in the coming months, which is also likely to release significant value.”

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