Vodafone Revenue Rises in Q1 Despite Lower Inflation Slowing Growth in Europe

Telecommunications giant Vodafone (LON: VOD) reported a 2.8% increase in total revenue for the first quarter, reaching €9 billion in its first quarter trading update.

While this figure indicates overall growth, the company is facing a complex operating environment.

A key challenge is the impact of lower inflation, which is slowing revenue growth in the European market. This counterbalances the strong performance in regions like Africa and Turkey, where Vodafone has been experiencing robust expansion.

‘We continue to deliver strong revenue growth in Africa and Turkey, whilst lower inflation is slowing revenue growth in Europe and accelerating Group EBITDAaL growth,” said Margherita Della Valle, Vodafone's Chief Executive.

The German market, in particular, has presented difficulties due to the ongoing effects of the TV law change, leading to a decline in service revenue. However, group service revenue grew by 5.4% in the quarter.

Group EBITDAaL for the quarter came in at €2.68 billion, rising 2.1% from the same period last year.

Despite this, Vodafone remains committed to its turnaround strategy for Germany, focusing on enhancing customer experience, driving business growth, and optimising operational efficiency.

To bolster its financial position, Vodafone has undertaken strategic moves. The company has reduced its stake in Vantage Towers and initiated a €2 billion share buyback program. Additionally, it is progressing with transactions in Italy and the UK.

Vodafone's operating profit increased by 42.9% to €1.5 billion in the quarter, primarily driven by a €0.7 billion gain on the disposal of an 18% stake in Indus Towers, leaving the company with a 3.1% shareholding.

“We continue to progress our transactions in Italy and the UK as well as the broader transformation of Vodafone, focused on customer experience, Business growth and operational execution in Germany,” added Della Valle.

While the operating environment remains challenging, Vodafone reiterates its full-year guidance of approximately €11 billion in adjusted EBITDAal and at least €2.4 billion in adjusted free cash flow. The company's ability to navigate these complexities and capitalise on growth opportunities will be crucial in determining its future trajectory.