Vodafone reiterates FY guidance as Q3 revenues rise

The company on Wednesday said service revenue grew 3.1% on a reported basis to €9.6bn. Total revenue was up 4.3% to €11.6bn.

Vodafone said it still expects adjusted core earnings of between €15.2bn - €15.4bn and adjusted free cash flow of at least €5.3bn.

Chief executive Nick Read, under pressure to improve the company's struggling share-price performance, also addressed the presence of activist investor Cevian Capital on its share register, saying Vodafone was "committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace".

In Germany, Vodafone's biggest market, revenue grew 1.1% due to lower income from variable call usage and weaker retail activity due to the Covid pandemic and the impact of new telecommunications regulations. Growth suffered last year as roaming revenues plunged on the back of Covid-19 restrictions.

AJ Bell investment director Russ Mould said that the pledge of pacier returns might be enough for the likes of Cevian.

“It could be time for Vodafone to speed up its value generation efforts, and one way is to sharpen its focus on fewer areas rather than have fingers in so many pies. The simplification process has already begun without any activist pressure, but this is a slow-moving beast which could use some gentle prodding to speed along," he said.

“One of the problems is that telecoms by its very nature is a pedestrian sector. That’s illustrated by Vodafone’s mere 2.7% growth in organic service revenue for the third quarter. Activists don’t like to wait around, preferring to look for the quick wins to help drive up business value."

“That could create a culture clash, so expect some fireworks between Vodafone’s management and Cevian if it does decide to take a more aggressive approach to pushing for change.”