Vodafone Q3 results: earnings drop and revenues slide amid fierce competition

The telecoms company managed to keep its full year guidance unchanged despite seeing a decline in revenues in its third quarter as competition heats up across the industry.

Vodafone has recorded a €0.8 billion decline in revenues in its third quarter (Q3) trading update compared with the same period last year.

The telecoms company has blamed the slide in revenues on a accountancy measures that the business was forced to implement by regulators, as well as macroeconomic headwinds that have led to volatility in foreign exchange markets.

‘We have executed at pace this quarter and have improved the consistency of our commercial performance,’ Vodafone CEO Nick Read said. ‘Lower mobile contract churn across our markets and improved customer trends in Italy and Spain are encouraging, however these have not yet translated into our financial results, with a similar revenue trend in Europe to Q2.’

‘We enjoyed good growth across our emerging markets with the exception of South Africa, which was impacted by our pricing transformation initiatives and a challenging macroeconomic environment,’ he added. ‘Overall, this performance underpins our confidence in our full year guidance.’

Vodafone results: key figures

The telecoms company recorded group revenues of €11 billion, down by €0.8 billion. Due to the adoption of the new International Financial Reporting Standard (IFRS 15), the sale of Vodafone Qatar and FX headwinds.

Vodafone’s Q3 performance in the UK was reasonable, with organic service revenue growth of 0.4% compared with 0.3% in the previous quarter. Meanwhile, in Europe, the company saw its Q3 performance near enough in line with the previous quarter.

‘We are moving to implement a radically simpler operating model and to accelerate our digital transformation, as demonstrated by the organisational changes we have announced in Spain and the UK,’ Read said. ‘We are also assessing opportunities across our markets to improve asset utilisation through partnering.’

What do Vodafone’s Q3 results mean for their share price?

The disappointing set of financial results helped drive the Vodafone’s share price even lower, with the telecoms company having what has been a rough start to the year made worse after its share price tumbled more than 4% on Friday.

Since the start of December, the company has seen its share price steadily decline 168p levels all the way down to below 140p a share, representing a 14% decline in nearly two months.

‘This week we announced the intention to extend our existing network sharing agreement with Telefonica O2 in the UK to include 5G services,’ Read said. ‘This will enable us to deploy 5G services to more customers over a wider geographic area, and to do so at a lower cost.’

‘After these arrangements have been finalised, we also intend to explore opportunities to monetise our UK tower assets,’ he added.

Vodafone faces stiff competition from rivals

According to the head of markets at Interactive Investor Richard Hunter, Vodafone has suffered due to the ‘company’s complexity and fierce competition within the sector’.

‘Even so, as has long been the case with Vodafone, the potential if not the execution is evident, which might explain the fact that the market consensus of the shares remains doggedly at a buy,’ he added.

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