Turnaround still elusive at Vodafone Europe

Report Overview

Turnaround still elusive at Vodafone Europe

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Turnaround still elusive at Vodafone Europe
Vodafone continues to strike a very shareholder-friendly focus and tone but its operating performance remains decidedly muted, with revenue growth up just a touch but EBITDA growth halved
Vodafone’s drive for convergence is still costing it dearly. German mobile ARPU is down 7% and Liberty Global’s assets disappointed on their first consolidation with cashflow enhancement less than half that expected
Apart from its ill-advised convergence strategy, Vodafone is making many sensible moves and there are indications that its unlimited plans are gaining traction. With leverage tight, pressure is mounting for demonstrable improvements in the financials some time very soon

Contents

Liberty Global disappoints already – convergence costing

Leverage returns to the fore

Relative performance worsened

Mobile – the north disappoints, the south struggles to recover

Fixed performance a bright spot save for Spain

No real European revenue improvement

EBITDA swings, roundabouts and confusion

Rest of World solid quarter plus a currency boost

Churn not improving; convergence not helping

UK – pushing hard

Unlimited plans success

Revenue trend deteriorated

EBITDA growth disappeared

Germany – convergence still costing

Where have the DSL subscribers gone?

EBITDA aided by direct distribution and shifting fixed subscribers

Italy – a disappointingly slow recovery

ARPU firmer but at a cost

EBITDA less impressive and cushioned by restructuring charge

Spain – struggling to bounce

Good take-up of unlimited plans but no visible uplift

Broadband subscribers still leaving

EBITDA trends boosted by content savings and restructuring

List of charts/tables

Figure 1: Group service revenue and EBITDA growth

Figure 2: SIM-only unlimited data bundle pricing

Figure 3: T-Mobile vs Vodafone Germany ARPU growth

Figure 4: Vodafone 'top 4'* mobile service revenue growth

Figure 5: Vodafone mobile service revenue growth in the 'top 4' markets

Figure 6: Vodafone fixed service revenue growth in the 'top 4' markets

Figure 7: Organic service revenue growth

Figure 8: Organic EBITDA growth

Figure 9: Service revenue growth and inflation

Figure 10: 'Rest of World' EBITDA growth

Figure 11: Vodafone 'top 4' markets contract churn

Figure 12: Correlation between convergence and churn in 'top 4' markets

Figure 13: SIM-only pricing by data allowance -direct distribution (GB)

Figure 14: SIM-only unlimited data bundle pricing

Figure 15: UK operational and financial metrics

Figure 16: UK fixed performance

Figure 17: UK contract net additions (000)

Figure 18: UK service revenue growth by operator

Figure 19: Germany operational and financial metrics

Figure 20: Germany fixed performance

Figure 21: Germany contract net additions (000)

Figure 22: Germany service revenue growth by operator

Figure 23: Iliad’s mobile pricing compared to the other MNOs (€), November 2019

Figure 24: Italy operational and financial metrics

Figure 25: Italy fixed performance

Figure 26: Italy service revenue growth by operator

Figure 27: Italy total subscriber net additions (000)

Figure 28: Spain operational and financial metrics

Figure 29: Spain fixed performance

Figure 30: Spain service revenue growth by operator

Figure 31: Spain contract net additions (000)