Vodafone focuses on infrastructure in next phase of growth strategy

Global telecoms giant, Vodafone Group has placed increased infrastructure investment at the heart of its growth plan.

In its fiscal quarter four 2020, and full 2021 earnings statement, ending March this year, Vodafone draws the curtain on the three-year plan to reshape the company it turns attention to future driven by heavy investment in infrastructure.

The ultimate goal is to boost returns through convergence in Europe, and mobile data and payments in Africa.

It stated it is fully focused on becoming “a new generation connectivity and digital services provider” for Europe and Africa.

This comes at a time when its biggest rival in Africa, MTN Group has stated it is focusing on becoming a digital operator by 2023 and a platform player by 2025.

Vodafone added it had successfully delivered on its previous goals by simplifying its operations in both regions, exceeding a target of €1.3 billion in cost savings over the three years and conducting a successful IPO of infrastructure unit Vantage Towers.

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On its earnings call, CEO Nick Read suggested Vodafone would look to take advantage of a €750 billion European Union Covid-19 (coronavirus) recovery fund, of which 70 per cent will be allocated to the company’s operating markets.

Nick Read, Vodafone Group CEO

Read noted the pandemic had accelerated digitalization by five years, showing how “critical” connectivity and digital services are to society.

“Vodafone is strongly positioned and through increased investment, we are taking action now to ensure we play a leadership role and capture the opportunities that these changes create,” he said.

Read explained increased demand for services supports its ambitions in the medium term, for which it is targeting consistent revenue growth, disciplined capital allocation, and a 20 per cent reduction in operating costs across its European and central units by the end of its 2023 financial year.

Q4
Revenue of €11.2 billion was down slightly from €11.3 billion in fiscal Q4 2020, with its European operations delivering €8.5 billion compared with €8.6 billion. The company does not break out a quarterly profit figure.

Service revenue in the UK was flat at €1.2 billion and fell 7.8 per cent in Italy to €1.1 billion.

Vodafone said it is “competing effectively” in Spain, where service revenue dropped 1.3 per cent to €951 million, with the figure in Germany 1.2 per cent higher at €2.9 billion on ARPU growth and a strong business performance.

African subsidiary Vodacom delivered 7.3 per cent growth in service revenue to €1.1 billion, with strong demand for data and new products in South Africa.

It ended the full fiscal year with net debt of €40.5 billion, down from €42 billion. Revenue fell 2.6 per cent to €44 billion, while it swung back to a profit of €536 million from a loss of €455 million caused by impairment charges and higher financing costs.

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