Peter Dazeley/Getty Images News
Vodafone’s (NASDAQ:VOD) third quarter organic revenue grew 4.2% year-over year, and the telecom operator re-iterated its FY’24 guidance.
However, on a reported basis, total revenue for the third quarter ending Dec. 31, 2023 declined -2.3% year-over-year to €11.37B.
Service Revenue Soars
Organic Service revenue increased 4.7% year-over year to €9.38B, beating the 4.3% average estimate by analysts as per a Bloomberg report. On a reported basis, Service revenue dipped -1.4%.
“We maintained good service revenue momentum in the third quarter across both Europe and Africa, supported by a further acceleration of Vodafone Business, with our Cloud and Internet of Things services growing over 20%,” said Group Chief Executive Margherita Della Valle.
Regional Performance
Organic service revenue in Germany rose 0.3% year-over-year to €2.89B, reflecting business phasing and non-recurring revenue from service providers in the second quarter.
U.K. Service revenue increased by 5.2% (organic basis) to €1.4B, as continued strong growth in the Consumer and Business segments was partly offset by lower fixed wholesale revenue, the company said in its earnings release.
Organic service revenue in Italy declined by 1.3% to €1.06B as a result of continued price pressure in the mobile value segment, partially offset by strong Business demand for fixed line connectivity and digital services.
Spain service revenue dipped -1.1% to €848M, due to continued price competition in the Consumer value segment, a lower customer base and a reduction in mobile termination rates. In October 2023, Vodafone (VOD) agreed to sell its Spanish business to U.K.-based Zegona Communications in a deal worth up to €5B ($5.3B).
The company noted that Vodafone Spain will be reported as discontinued operations in statements for the year ending March 31, 2024.
Service revenue in Other Europe region increased 3.6%, with all six markets growing during the quarter, supported by the company’s price actions in most markets.
Vodacom’s service revenue rose 8.8% with growth in South Africa, Egypt, and Vodacom’s international markets, according to Vodafone.
Vodafone Business Service revenue increased 5% on an organic basis to €2.62B.
Strategic Maneuvers
Vodafone has been trying to reorganize its business. Last week, the U.K.-based company rejected a revised offer from Iliad SA to combine the two companies’ Italian businesses.
Besides the Spain transaction, Vodafone is merging its U.K. telecommunication business Vodafone UK with CK Hutchison’s Three UK to create the country’s largest mobile operator.
“Our announced transactions in the U.K. and Spain are progressing well, and we are in active discussions in Italy. We’ve also begun strategic partnerships with Microsoft and Accenture to fast-track our transformation,” added a Della Valle.
Outlook
Vodafone reieterated its fiscal 2024 guidance for Adjusted EBITDAaL €13.3B and Adjusted free cash flow of €3.3B.
VOD -1.26% to $8.63 premarket
