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Trading update for the quarter ended 31 December 2019

5 Feb 2020Technology news
4 minute read


  • Continued organic service revenue growth in Q3, up 0.8%* (Q2: 0.7%*).
  • Similar performance in Europe (Q3: -1.4%*, Q2: -1.4%*), with ongoing recovery in Spain and acceleration in the UK offset by a tougher prior year comparison in Italy. Retail revenues grew in Germany, supported by strong cable broadband net adds.
  • Good growth in Rest of the World (Q3: 9.1%*, Q2: 8.9%*) as continued recovery in South Africa was partially offset by lower growth in Turkey.
  • Good progress on strategic priorities during the quarter: - Deepening customer engagement: Europe mobile contract churn declined year-on-year for a fifth successive quarter, supporting 0.51 million mobile contract net additions. Over 0.4 million NGN broadband net additions in Europe. First in Europe to make Amazon Web Services ultra-low latency mobile edge computing available over our 5G networks. - Radical simplification and digital transformation: 3.0 million Consumer customers on simplified speed-tiered unlimited data plans. On track to achieve the €0.4 billion net opex reduction target in Europe for FY20. - Improving asset utilisation: Further progress on mobile network sharing. Detailed talks with Deutsche Telekom in Germany to address ‘grey spots’, exclusive talks with NOS in Portugal. - Towers monetisation: On track to operationalise our European TowerCo by May 2020 with senior management now appointed. INWIT merger in Italy notified to the EC, decision due by end of February. - Portfolio management: MoU in relation to the sale of our 55% shareholding in Vodafone Egypt for €2.2 billion, implying a September FY20 LTM multiple of 7.0x adjusted EBITDA. Agreement to sell Vodafone Malta for €250 million.
  • Full year guidance reiterated: adjusted EBITDA of €14.8-15.0 billion, free cash flow (pre-spectrum) of around €5.4 billion.

Nick Read, Group Chief Executive, commented:

“I am pleased with the pace at which we have executed our commercial and strategic priorities, which has allowed us to maintain our momentum in the quarter. Competition in Europe remains challenging, primarily in the value segment, however we continued to improve customer loyalty and to grow in broadband, and we achieved good growth in Africa. We expect a further gradual improvement in service revenue growth in Q4, led by Europe.

We have recently announced the proposed sale of our stake in Vodafone Egypt, which simplifies the Group into two scaled regional platforms – Europe and sub-Saharan Africa – and reduces our net debt. We have also appointed the senior management team for our European TowerCo, and we are preparing for a potential IPO in early 2021.”

Notes to Editors

  1. Excludes Italy, which is impacted by significant contract to prepaid migrations.
  2. As explained in the Group’s Preliminary Announcement for the year-end 31 March 2019, revenue in prior quarters was revised for the allocation of, and timing of recognition for, equipment and service revenue. Consequently, revenue for the comparative period has been revised compared to amounts previously disclosed in the trading update for the three months ended 31 December 2018. Europe service revenue decreased by €33 million and other service revenue decreased by €19 million, resulting in a total decrease in Group service revenue of €52 million. Other revenue increased by €54 million, resulting in a net increase in revenue of €2 million.
  3. Alternative performance measures for the comparative period were previously disclosed on an IAS 18 basis in the trading update for the three months ended 31 December 2018. The alternative performance measures have been re-presented on an IFRS 15 basis.
  4. Alternative performance measures are non-GAAP measures that are presented to provide readers with additional financial information that is regularly reviewed by management and should not be viewed in isolation or as an alternative to the equivalent GAAP measure. See “Alternative performance measures” on page 9 for more information and reconciliations to the closest respective equivalent GAAP measure and “Definition of terms” on page 13 for further details. All comparative period alternative performance measures have been re-presented on an IFRS 15 basis.

All amounts in this document marked with an “*” represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity (notably by excluding the disposal of Vodafone New Zealand and the acquired European Liberty Global assets) and movements in foreign exchange rates. Organic growth is an alternative performance measure. See “Alternative performance measures” on page 9 for further details and reconciliations to the respective closest equivalent GAAP measure.

Quarter ended 31 December
2019 €m2018 (restated)2 €mReported Growth %
Group revenue 11,750 10,998+6.8
Europe 8,9708,148+10.1
Rest of the World2,4792,548(2.7)
Alternative performance measures4
2019 €m2018 (re-presented)3 €mOrganic Growth %
Group service revenue9,733 9,1530.8
Rest of the World2,0532,105+9.1

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