Despite cancelled merger talks with Liberty Global disappointing shareholders, Vodafone shows it’s well back on track with sales smashing expectations.
Vodafone posted first half results showing the company’s organic service revenue rose one per cent to £18.4bn in the six months to 30 September. This outstripped most analysts’ forecasts, which hovered around 0.8 per cent growth.
Business grew especially fast in Africa, Middle East and Asia-Pacific, where revenue was up 6.7 per cent.
Net earnings before interest, tax, depreciation and amortisation were also up, by 1.9 per cent to £5.8bn.
Vodafone is now expecting earnings before interest, taxation, depreciation and amortisation to land between £11.7-£12bn for the full year. The company's shares, which had risen 1.8 per cent over 2015, soared 4.7 per cent in morning trading, putting stocks back in positive territory for 2015.
Why it’s interesting
This is a return to strength for Vodafone, with revenue smashing expectations and a raised full year guidance, marking the fifth consecutive quarter of strengthening revenue – and a welcome return to organic growth in service revenue.
Shareholders were disappointed when the much-anticipated deal with Liberty Global fell through in late September, with Vodafone shares tumbling to their lowest point in 2015 when talks were terminated.
Despite rumours the companies were planning a merger which would have created a £100bn telecoms colossus, Vodafone always insisted they were simply looking at a “possible exchange of selected assets”.
The return to sales growth comes despite declining sales in Europe, held aloft by soaring revenue in Vodafone’s Africa, Middle East and Asia-Pacific business.
What they said
Chief executive Vittorio Colao said:
We have reached an important turning point for the group with a return to organic growth in service revenue and EBITDA in the first half of the financial year.
We also remain keenly focused on increasing efficiency and improving margins. We expect progress to continue in the second half of the year.