vodafone

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  • July 26, 2018

    The drive for convergence: a value-destructive strategy

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    Many European telecoms operators are pursuing a fixed/mobile convergence strategy on the pretext that the addition of mobile reduces churn. We see no evidence of churn reduction from this strategy. Discounts required to encourage take-up of fixed/mobile services are often value-destructive, even before competitor reaction: a 10% bundle discount necessitates a 2ppt improvement in churn to wash its face economically. M&A premia on the basis of convergence synergies raise the hurdle even higher. Most UK operators offer very limited discounts on fixed/mobile bundles for now, sensibly focusing on enhanced services. Vodafone is the most aggressive, albeit less so than it is elsewhere. All UK players should hope that it stays this way.
  • October 6, 2017

    European mobile in Q2 2017

    European mobile service revenue growth witnessed a rare growth spike this quarter with growth rising to 0.5%, likely due in large part to the reduced impact this quarter from the European roaming cut regulation, but also helped by a slight softening of MTR cuts and continued ‘more-for-more’ price increases. In the upcoming September quarter this roaming regulation holiday will end and the full impact of ‘free roaming’ will be felt, with the impact intensified by the quarter containing the main summer holiday season, thus the spike in mobile service revenue growth is likely to more-than-reverse. ‘Worry free’ data has always had consumer appeal, but it appears to have also reached operator appeal given its improved economics, and given its reported success at improving ARPUs we expect zero-rated launches to continue

  • July 31, 2017

    Vodafone Q1 2017/18 results: Broadly flat, but promising signs

    Vodafone Europe’s revenue growth bounced back from a weak previous quarter, but its top 4 markets combined were broadly flat in underlying terms. There are nonetheless promising underlying signs, including reduced churn, (slowly) improving subscriber growth and steady NPS. Vodafone has launched all-you-can-eat social/music/video bundles under the ‘Vodafone Pass’ moniker in several markets, which appear both popular and ARPU-enhancing, and being early to market with such an innovation is laudable. Next quarter Vodafone will be hit by the full force of the EU roaming regulation, but excluding this factor the performance is likely to be steady at least, helped in part by the UK business recovering from its recent weaknesses
  • June 29, 2017

    European mobile in Q1 2017: Stuck at zero

    European mobile service revenue growth remained stuck at zero in Q1, with a heightened impact from the mobile termination rate cuts in Germany and price promotional activity in southern Europe mitigating improving markets in the UK and France.‘More-for-more’ price rises continued both during the quarter and after, and appear to be more widespread than the 2016 increases. This should be driving revenue growth at a healthier rate than zero, and may well do as out-of-bundle revenue declines fade away in significance and regulated MTR and roaming cuts annualise out. The regulatory impact should improve next quarter, as the UK MTR impact drops, Germany at least gets no worse, and the roaming impact has a lull prior to the ‘free roaming’ mandate taking effect towards the end of the quarter. From Q3, however, the ‘free roaming’ effect will be in full force, and will negatively impact operators in northern European and smaller European countries in particular

  • February 28, 2017

    ComCom says no to ‘Skodafone’ – What now?

    The proposed merger of Sky TV and Vodafone in New Zealand was rejected by the Commerce Commission on 23rd February 2017. We discuss the reasoning behind this decision as well as the wider implications for Sky TV, Vodafone and the industry.
  • November 24, 2016

    Vodafone Q2 2016/17 results: Strong in parts

    Vodafone Europe has improved its mobile service revenue growth to near zero (-0.2%), and narrowed its revenue growth gap to competitors to a mere slither (0.2ppts), allowing it to return to significant EBITDA growth (3.1%). The primary driver for this was however ‘more-for-more’ price increases, which have been followed by competitors only in part, and it is still losing contract subscriber share across its major markets (with significant local variation). Its overall network performance statistics are flat, and customer NPS statistics are improving in some markets and worsening in others. Future outperformance is possible, but by no means guaranteed, and we believe that stabilising market share should be more of a priority than price rises.

  • July 26, 2016

    Vodafone Q1 2016/17 results: Price-led growth

    Vodafone Europe’s mobile service revenue growth continued to recover, despite regulatory and calendric headwinds, and continued customer service issues in its UK business. The improvement was driven by fairly aggressive price increases, most acutely in Spain, which drove fairly dramatic ARPU growth improvements but also subscriber growth slowdowns.

  • February 10, 2016

    Vodafone Q3 2015/16 results: Almost stable

    Vodafone Europe’s service revenue growth continued its trend of gradual improvement, helped by solid contract net adds and sustained high data traffic growth, and is now almost stable. Project Spring network metrics performed strongly in the quarter, and there is some evidence of this translating into better operating performance in Italy, which enjoyed positive mobile service revenue growth for the first time since 2010. Problems remain for the company in its other key mobile markets however, all of which remain in decline. Although these issues may prove temporary, and Project Spring may yet offer them a boost, further pressure is on the horizon due to competitor consolidation and associated regulatory remedies.
  • November 13, 2015

    Vodafone Q2 2015/16 results: Growing fixed disguises weakening mo [...]

    Vodafone Europe’s revenue growth trend continued to improve, and the improved operating leverage allowed it to return to EBITDA growth after years of decline. Its mobile business was however more mixed, with improved contract net adds but worsening ARPU and revenue still firmly in decline, with growth from its recently acquired cable businesses partially disguising this. The benefits of its Project Spring investment are not yet clear, and the current wave of in-market mobile consolidation may leave Vodafone a weaker player across much of its footprint.
  • August 6, 2015

    EE Q2 2015 results: Margin boost on lost costs

    EE remains the slowest growing of the ‘big 4’ UK MNOs or the only one in decline with service revenue growth at -1.8%, a touch lower in reported terms despite a slight underlying improvement. Adjusted EBITDA margin improved to a record 26.6%, a somewhat fortunate compromise on the loss of gross adds share since the demise of Phones 4U – and associated reduction in (expensive) third-party gross adds. In a seasonally low broadband quarter, EE actually gained net adds share, showing resilience to heightened marketing from Sky and underscoring the merits of EE’s in-store cross-selling strategy.

  • August 5, 2015

    Vodafone Q1 2015/16 results: Steady improvement continues

    Vodafone Europe’s slow but steady improvement in service revenue growth continued into the June quarter to reach -1.5% from -2.6% in the previous quarter, and -8.2% just one year ago. This was driven in roughly equal parts by subscriber growth improvements and ARPU, with both likely benefiting from Vodafone’s Project Spring investment, rapidly growing mobile data and an easing of competitive aggression. Mobile service revenue is still declining at 2-3%, making margin stabilisation still challenging for now, but there remains room for further improvement, and revenue stabilisation is at last in sight

  • June 4, 2015

    Vodafone Q4 2014/15 results: Modest improvement, but not in Germa [...]

    Vodafone Europe’s revenue growth improved again in the March quarter, but not by as much as the previous trend, or by as much as the mobile market in general. Operational trends look more solid, with data growth continuing to accelerate and Project Spring delivering improvements in some markets. The biggest blip was in Germany, a quad play market for Vodafone, and we remain sceptical of the operational benefits of convergence as Liberty Global merger speculation re-surfaces.