Vodafone Faces Setback in German Market Despite Strong Growth in Africa and Turkey

Vodafone reported a decline in top-line growth due to changes in selling TV services in Germany. Despite this, the company observed strong growth in Africa and Turkey. CEO Margherita Della Valle is confident about future improvements. Vodafone's financial guidance for the year remains unchanged.

Vodafone reported a slowdown in top-line growth on Thursday, ending a record of four consecutive quarters of improvement. Changes in German TV service laws led to a decline in its largest market. The European and African mobile operator had anticipated this and is maintaining its financial guidance for the full year. Service revenue rose 5.4% in the first quarter.

Chief Executive Margherita Della Valle highlighted robust revenue growth in Africa and Turkey. She noted that lower inflation in Europe was slowing revenue growth but accelerating core earnings. 'We are progressing with transactions in Italy and the UK, and broader transformation efforts in Vodafone are focused on customer experience, business growth, and operational execution in Germany,' she said.

Della Valle expects performance to improve in the latter half of the fiscal year. Vodafone's shares dropped 2%, trading at similar levels as at the start of 2024. The company faced changes in Germany with the end of bulk TV sales to apartment blocks, affecting its customer base. Della Valle remained confident about retaining around half of its TV subscribers despite these challenges.

Since taking the permanent CEO role in April 2023, Della Valle has simplified Vodafone's structure, including selling operations in Spain and Italy, agreeing to a merger with Hutchison's Three in the UK, and announcing around 11,000 job cuts. Talks with Britain's competition regulator on the Three deal are progressing well, with a decision expected by year-end. For the year ending March 2025, Vodafone anticipates core earnings of approximately 11 billion euros ($11.92 billion) and a free cash flow of at least 2.4 billion euros.

($1 = 0.9228 euros)