Vodafone – pressure is still on

Report Overview

Vodafone – pressure is still on

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Vodafone – pressure is still on
Vodafone’s operating performance worsened again this quarter with revenues down 3.3% and an extension of its underperformance relative to peers
Vodafone was right to cut its dividend given the extremity of the cash constraint. With financials in Euro terms in negative territory and worsening, an elevated and progressive dividend was not sustainable
In spite of difficult market conditions, the lower end of guidance looks achievable as comparables will become easier and football rights costs decline. The transformation programme will need to pay off fast to deliver any meaningful growth

Contents

Key takeaways

  • Mobile industry outlook is tough

What’s really going on? Unpicking the growth rates

Both fixed and mobile deteriorating

Italy and Spain dip again, UK and Germany languishing

Signs of some progress on churn; convergence not helping

UK – revenues languishing, EBITDA and churn positive

  • Mobile ARPU under pressure
  • Fixed – broadband strong, legacy CWW weak
  • EBITDA growth remains strong
  • Outlook is tough

Germany – mobile steadies, fixed and EBITDA slow

  • Mobile steady but lacklustre
  • Steady slowdown in fixed continues
  • German EBITDA, crucial to Group performance, disappointed

Italy – no reprieve on revenues but reasons to be optimistic

  • Some promising indicators on mobile
  • Italian fixed and EBITDA the brightest notes
  • Pricing developments a source of optimism

Spain – revenue trends worsen again, EBITDA dire

  • Mobile metrics still worsening
  • Fixed revenues not improving but there is cause for optimism
  • Outlook better for EBITDA than revenue

List of charts/tables

Figure 1. Enders' preferred* quarterly revenue and EBITDA growth

Figure 2. Vodafone 'top 4'* mobile service revenue growth

Figure 3. Enders' preferred trends and guidance (year ending March)

Figure 4. Intra-EU calling prices – Euro cents per minute

Figure 5. Scenario analysis – revenue and EBITDA drag from EU calls price cap

Figure 6. Vodafone Group revenue growth

Figure 7. Vodafone Group EBITDA growth

Figure 8. Vodafone Europe organic service revenue growth

Figure 9. Vodafone mobile service revenue growth in the 'top 4' markets

Figure 10. Vodafone fixed service revenue growth in the 'top 4' markets

Figure 11. Organic EBITDA growth

Figure 12. Vodafone 'top 4' markets contract churn

Figure 13. Correlation between convergence and contract churn in Vodafone's 'top 4' markets

Figure 14. UK operational and financial metrics

Figure 15. UK fixed performance

Figure 16. UK contract net additions (000)

Figure 17. UK service revenue growth by operator

Figure 18. Outlook for change in mobile trends in 2019 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. Italy operational and financial metrics

Figure 24. Italy fixed performance

Figure 25. Italy service revenue growth by operator

Figure 26. Italy total subscriber net additions (000)

Figure 27. Italy contract net additions (000)

Figure 28. March 2019, Iliad’s pricing compared to the other MNOs (€)

Figure 29. May 2019, Iliad’s pricing compared to the other MNOs (€)

Figure 30. Spain operational and financial metrics

Figure 31. Spain fixed performance

Figure 32. Spain service revenue growth by operator

Figure 33. Spain total net additions (000)

Figure 34. Spain contract net additions (000)