Vodafone Group cites forex headwinds and change in reporting standard as reasons for revenue drop

25 Jul 2018

UK-based telecoms giant Vodafone Group has published a trading update for the quarter ended 30 June 2018, revealing a 4.9% drop in revenues, which it attributed to the adoption of the IFRS 15 reporting standard and foreign exchange headwinds. In the three-month period under review the carrier generated a total turnover of EUR10.910 billion (USD12.75 billion), down from EUR11.474 billion a year earlier, with its European and African, Middle East & Asia Pacific (AMAP) units reporting a reduction in revenues, of 4.0% and 7.9% year-on-year, respectively. Meanwhile, Vodafone Group claimed that on an organic basis, service revenue – which totalled EUR9.220 billion – had increased 0.3% y-o-y, which it said reflected ‘strong growth in AMAP, which was mitigated by a decline in Europe driven by the drag from UK handset financing and EU roaming regulation’.

Meanwhile, Vodafone Group said it had continued to make good progress in its strategic ‘growth engines’ of mobile data, fixed/convergence, and Enterprise. It noted that data traffic had increased by 57% during the quarter, while it said its NGN customer base in Europe grew by 351,000 and its converged customers base in the region increased by a record 289,000. However, it noted that new broadband accesses were added at a slower pace than in recent quarters – rising by 128,000 in Europe in Q1 2019 – due to customer losses in Spain and competitor promotions in Germany. Nevertheless, Vodafone Group closed out June 2018 with a total mobile subscriber base of 274.58 million, in addition to around 16.27 million fixed broadband accesses.

With Vodafone Group saying that trading during the quarter under review was in line with management’s expectations, it confirmed it expects organic adjusted EBITDA (excluding settlements and UK handset financing) to grow by between 1% and 5%, with free cash flow generation (pre-spectrum) of at least EUR5.2 billion.

United Kingdom, Vodafone Group