Vodafone reports leap in broadband services, drop in roaming over COVID

Vodafone, the world’s second largest cellular operator, raised its earnings outlook on Monday, saying it is increasingly confident after a “stable” first half, despite COVID-19 affecting underlying momentum.

The British company was hit by the loss of roaming revenue as international travel was restricted by the pandemic, which resulted in a 0.4 percent drop in corporate service revenue in the second quarter.

Without roaming, service revenue rose 1.5 percent. This was supported by an increase in the European contract customer base to 65 million and broadband customers to 25.4 million, as well as unlimited mobile data plans in nine markets.

CEO Nick Read said the results underscore “increased confidence” in the outlook and show progress in increasing customer loyalty, expanding the fixed broadband base and efficiently delivering 5G through network sharing.

“Overall, I am satisfied with the pace and performance against our plan,” he told reporters on Monday.

Vodafone has adjusted its core earnings target for the year to the end of March of EUR 14.4 billion (approx. 1.26,900 billion rupees) to EUR 14.6 billion (approx. 1.28,600 billion rupees) compared to 14.5 billion euros. EUR (around EUR 14.5 billion) set Rs. 1,27,800 crores) for the previous year.

It had previously said that they would be “flat to slightly downward”. Analysts forecast 14.37 billion euros (around 1.26,700 rupees).

The shares rose 4 percent to 125 pence (about 100 rupees), their highest level since late July.

Vodafone, which plans to list the spin-off of its tower business in Frankfurt early next year, confirmed its full-year free cash flow forecast of at least EUR 5 billion (approx. Rs.44,000 billion) before spectrum and restructuring costs on Monday.

Read that further details of the IPO plan will be shared with investors on Tuesday.

However, he said Vodafone plans to include its stake in its CTIL joint venture with Telefonica in the spin-off.

“We have worked a lot with Tef (Telefonica) and we intend to eventually move our stake in CTIL to Vantage Towers, ideally before the IPO,” he said.

In the six months to the end of September, Vodafone posted adjusted earnings of EUR 7 billion (around Rs. 61,600 billion), a decrease of 1.9 percent. This corresponds to a decline in group sales of 2.3 percent to EUR 21.4 billion (around 1.88,500 billion rupees).

© Thomson Reuters 2020

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