Vodafone Q1 revenues rise as Europe, Africa return to growth

Telecoms operator Vodafone reported a better-than-expected rise in first quarter revenue as European and African services returned to growth.

The company on Friday said total revenue grew 5.7% to €11.1bn with Europe mobile churn 1.6 percentage points lower than the same period last year, although commercial activity had yet to return to pre-pandemic levels.

Reported service revenue grew 3.1% to €9.3bn and 3.3% on an organic basis against analyst expectations of 1.4%.

"I am pleased to report that we are back to service revenue growth in Europe, as well as Africa. This growth was broad-based within both Consumer and Business segments, with the vast majority of our markets contributing,” said chief executive Nick Read.

However, the mobile phone giant said it continues to suffer from a fall in international travel and the associated decline in revenue from expensive roaming charges.

Vodafone said roaming and visitor revenues grew 56% year-on-year as some restrictions eased compared to the height of the pandemic but remain down 54% on the period before the pandemic.

Physical stores reopened during the three months to the end of June, helping increase revenues across most regions, although there was a significant fall in Italy. Despite some restrictions easing on high streets, store visitors remain down 40% on pre-pandemic levels, the company added.

In the UK, Vodafone said service revenues grew 2.5% in the three months to the end of June, with notable growth in prepaid services. This compares to a 0.6% fall in the first three months of 2021.

AJ Bell investment director Russ Mould said the company had to do more after full-year results in May fell short of expectations along with news of more spending on Vodafone's network.

"Vodafone continues to push a message of becoming a ‘next generation’ provider of digital services and connectivity in Europe and Africa – we may get more detail on what that actually means in English at an investor event in September," he said.

“Chief executive Nick Read has now had nearly three years at the helm, and while the pandemic has disrupted nearly half that period, he needs to do more to win over shareholders or another candidate may be dialled up to lead the business.”