Vodafone shares sank on Tuesday after the group said EBITDAL fell 2.6% due to a legal settlement in the prior year, and underperformance in their German business.
There was general uptick in revenue but cash flow from operating activities dipped due to working capital movements and higher tax payments.
Vodafone’s customer numbers increased, but by a very small increment. The number of European mobile customers rose just 700,000 to 66.7m while European broadband customers dipped by 100,000.
“With tiny revenue growth, a flat dividend and guidance for earnings to be at the lower end of previous guidance, telecoms group Vodafone is not exactly firing on all cylinders,” said AJ Bell investment director Russ Mould.
The painfully slow rate of progress in Europe was partially offset rising by African customers, although the growth here was disappointing given the opportunity the region offers.
Vodafone shares sank 5% in the immediate market aftermath.
“It’s certainly not plain sailing at Vodafone right now, warnings that weaker economic conditions and rising costs are set to bring full year results down from previous guidance put a dampener on half year results. A €1bn extension of the existing cost savings programme and further pricing actions are being brought in to try and keep rising costs in check,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.
“Challenges remain in Germany, the group’s largest region, with the group losing customers in both broadband and TV. New legislation came into effect at the start of the year and Vodafone’s battled with compliance with the new rules and finding essential cross-selling opportunities under the new way of operating.”