US Edition
A steep price rise has delivered growth in Vodafone’s UK business despite falling mobile customer numbers.
The mobile and broadband provider increased fees for contract customers by 14.4pc in April, propelling its domestic arm to core revenue growth of 5.7pc in the first quarter of its financial year.
The higher sales came despite the loss of 66,000 mobile customers, balanced by the addition of 42,000 broadband lines.
The performance at home, where Vodafone is pursuing a merger with Three on claims it cannot make good enough returns, was in contrast to its other major European markets.
In Germany, Italy and Spain, where price rises have not been as steep, Vodafone’s businesses continued to shrink, albeit at a slightly slower rate.
In Germany, Vodafone’s biggest market, the company blamed the decline on customer losses in mobile, broadband and TV over the last 18 months. It also shed customers across the board in Spain, where it is seeking a potential exit from the market.
Overall and also including Vodacom, its fast-growing African business, Vodafone service revenues grew 3.7pc to €10.7bn in the three months to the end of June.
Shares in Vodafone rose almost 5pc as investors welcomed the improved sales growth. The company remains close to its lowest level since before the dotcom boom, however.
Margherita Della Valle, chief executive of Vodafone, hailed a better performance across almost all European markets, but added: “Of course we still have more to do.”
It marks the first set of figures since Vodafone last month confirmed plans to merge with smaller rival Three in a deal that would create Britain’s largest mobile network.
The companies have insisted the tie-up would not lead to higher prices for consumers. However, the deal is still likely to come under scrutiny from competition regulators as the number of players in the market is reduced from four to three.
It could also attract attention due to national security concerns surrounding Three’s links to the Chinese state through Hong Kong-based owner CK Hutchison. Vodafone will hold a 51pc stake in the joint venture, while CK Hutchison will own 49pc.
Ahmed Essam, Vodafone’s UK boss, said the company believed it had a “strong case” in any national security review.
The merger with Three forms part of efforts to rekindle growth after a torrid period that has seen the company’s share price tumble 60pc over the last three years.
Earlier this year, Vodafone said it will cut 11,000 jobs over the next three years in a bid to cut costs. It is also considering options for its business in Spain, including a potential sale.
Vodafone on Monday also announced the appointment of Luka Mucic as its new chief financial officer.
Mr Mucic, previously finance director at German software giant SAP, will join the company at the beginning of September. He will be paid a base salary of £760,000, with a potential bonus of up to £1.5m.
Vodafone reiterated its guidance for full-year earnings of €13.3bn and adjusted free cash flow of €3.3bn.