Germany remains a drag on Vodafone while BT shed a record number of broadband customers in a quarter at just under 200,000
Vodafone Group’s profits rose 2.8% in Q1 to the end of June, rising to €9 billion. Africa and Turkey were the stars of the show, while lower inflation was blamed for the lack of growth in Europe.
Total revenue in Africa increased by 3.2% to €1.8 billion due to higher service and equipment revenue. Total revenue increased by 45.6% to €0.7 billion, with service revenue growth somewhat offset by devaluation of the local currency.
Germany, Vodafone’s biggest market continues to drag on revenues. German revenue fell by 1.7% in the quarter to €3.095 billion compared to the same quarter last year. The operator says this “is expected” due to the change in the law that means those living in multi-tenanted dwellings (MTD) are no longer obliged to accept the landlord’s chosen TV service provider but each unit can choose its own supplier.
The change came into effect this July, later than originally scheduled. Vodafone says, “We have continued to migrate end users to new contracts at scale. We continue to expect to retain around 50% of the 8.5 million MDU TV households.”
Focus on the big ticket stuff
The UK, Vodafone’s second biggest country market continues in a state of quasi-limbo (revenues up 0.3% to €1.689 billion while the Competition and Markets Authority ploughs on with its investigation into the possible effects of Vodafone merging with Three UK.
The group’s CEO, MargheritaDella Valle focused on big number income from disposing of assets: “During the last few months, we have announced the final step in reducing our stake in Vantage Towers to 50% for €1.3 billion and commenced our €2 billion share buyback programme following the sale of Spain.
“We continue to progress our transactions in Italy and the UK as well as the broader transformation of Vodafone, focused on customer experience, Business growth and operational execution in Germany. The actions we are taking now will deliver improved performance and underpin the turnaround of Vodafone.”
In line with expectations
Meanwhile, BT Group hasn’t got that much to celebrate either in its first quarter which ended on 30 June. BT reported a 2% drop its underlying Q1 revenue to £5.1 billion. Its EBITDA still rose 1% to £2.1 billion, thanks apparently to “transformation and tight cost control, including lower staff costs,” according to the group’s still new CEO, Allison Kirkby.
She added, “Our ongoing cost transformation contributed to EBITDA growth, and more than offset the expected revenue declines in Consumer and Business in the quarter. There is much more to do to simplify BT Group and deliver for our customers. We remain on track to deliver our financial outlook for this year.”
Putting a shine on it
BT’s semi-detached wholesale fibre unit, Openreach, passed more than 1 million premises in Q1, which is a rate of 78,000 a week. In total, it has now passed 15 million premises and during the quarter, its FTTP customer base passed 5 million. It said, “strong demand for such services has resulted in a 29% year-on-year increase in orders and net additions of 387,000.
On the other hand, it lost a record 196,000 broadband customers in a single quarter as competition and its price hikes bite. Kirby’s positive take on this is that in the Consumer segment, “the widespread availability of FTTP and 5G, combined with our new EE propositions, has contributed to an improved trend in our customer base, in what remains a very competitive market”.
She also highlighted “improved trends” across its struggling Business unit but reported adjusted revenues down 5% from £2 billion to £1.9 billion over the same period last year.
Not helpful
In May Ofcom fined BT £2.8 million after an investigation concluded it had failed to follow clear and simple contract information rules resulting in at least 1.1 million EE and Plusnet customers had not received contract information and key terms before they signed up, such as information on price, speed and early exit fees. BT must also identity and refund any customer who may have been charged an early exit fee on a contract taken out where the correct information wasn’t given.
In addition, earlier this month BT received a fine from Ofcom of £17.5 million for being ill-prepared to respond to a catastrophic failure of its emergency call handling service last summer. BT was unable to connect calls to emergency services between 06:24 and 16:56 on 25 June 2023. During that time nearly 14,000 call attempts – from 12,392 different callers – were unsuccessful.