Vodafone has delivered a robust opening to its financial year, with revenue and profit growth bolstered by the recent completion of its UK merger with Three, now integrated into its financial results.
The transaction has established the UK’s biggest mobile operator and generated double-digit growth in domestic revenues during the first quarter, as reported by City AM.
“We are making a fast start to integrate the businesses, and the combination of our networks and spectrum will deliver a significant step change in experience for over 28 million customers up and down the country,” said group chief executive Margherita Della Valle on Thursday’s results call.
The FTSE 100 telecommunications behemoth posted a 3.9 per cent increase in group revenue to €9.4bn (£8.15bn) for the first quarter, whilst adjusted EBITDAal – its favoured profit metric – climbed 4.9 per cent on an organic basis, to €2.7bn.
Group service revenue advanced 5.3 per cent to €7.9bn, propelled by the consolidation of Three UK and robust expansion in Africa, despite ongoing headwinds from Germany.
Vodafone’s recently completed, long-awaited merger with Three propelled total revenue in the UK upwards by 14.5 per cent year on year, to €1.93bn.
The transaction, which concluded on 31 May, has created ‘VodafoneThree’ – now the nation’s largest mobile network serving 28.8 million customers.
VodafoneThree has moved swiftly post-merger, implementing network integration that has already delivered up to 40 per cent faster 4G speeds for approximately seven million customers. The firm indicated it anticipates the integration will eliminate 16,500 square kilometres of mobile ‘not spots’ throughout the UK by the year’s end.
“Already for a month now, the Three base has experienced speeds up to 40 per cent higher. That’s a massive change all across the country,” Della Valle added.
“We have also started bringing together the networks… this will eliminate the not spots that the Three and Vodafone customers are experiencing in a quite drastic way already this year.”
Beyond VodafoneThree merger
Service revenue in the UK climbed 15.2 per cent to €1.65bn, though organic expansion registered a more modest 0.9 per cent, as legacy business contract terminations and reduced pricing impacted performance.
Vodafone Business revenue fell three per cent on an organic basis, yet fixed-line broadband remained strong, securing 44,000 additional customers during the quarter.
“The UK’s performance and outlook are entirely in line with our business plan, and we expect to see good EBITDA and free cash flow growth this year and over time,” she added.
The business reaffirmed its full-year guidance, projecting adjusted EBITDAal between €11.3bn and €11.6bn and free cash flow of €2.4bn to €2.6bn.
The announcement arrives just weeks after Vodafone secured a £342m cash injection from Virgin Media O2, in exchange for a tranche of radio spectrum.
The agreement represents part of a broader network sharing arrangement that will witness VodafoneThree and Virgin Media O2 collaboratively deploying infrastructure over the coming decade. The spectrum agreement is anticipated to reduce congestion and enhance connectivity in crucial areas including London, where worries over inconsistent 5G deployment have placed pressure on the sector.
VodafoneThree intends to invest £11bn in UK network improvements over the next ten years, a strategy executives claim will position the UK “at the forefront of European connectivity.”
