Vodafone Group said it had resumed growth in Germany, its largest and most watched market, as Chief Executive Margherita Della Valle sought to improve performance.
Services revenue in Germany rose 0.2% this year to 11.45 billion euros ($12.4 billion), the company said in a statement on Tuesday. Adjusted market earnings before interest, taxes, depreciation and amortization fell 5.8% to 5.0 billion euros, which the company attributed to energy and other inflationary costs.
Vodafone’s growth in Germany has been hit by looming legal changes that ban housing associations from bundling TVs with rental fees. The company expects only half of the 8.5 million households to retain such contracts after the law takes effect in July.
“There is still a lot of work to be done in the year ahead,” Della Valle said in a statement, adding that the company planned to “simplify operations across the group.”
As part of Della Valle’s turnaround strategy, Vodafone is increasing its focus on the German market and exiting unprofitable markets. The CEO said in February that the company expected “underlying growth to accelerate” in Germany in 2024.
Excluding Vodafone’s Spanish and Italian businesses, which are being sold, the company reported that overall organic services revenue rose 6.3% this year to 29.9 billion euros. Adjusted advance profit before interest, taxes, depreciation and amortization was 11 billion euros, in line with analyst estimates compiled by the company.
The company expects adjusted earnings before interest, tax, depreciation and amortization to be approximately 11 billion euros in fiscal 2025.
“Vodafone’s exit from troubled businesses in Italy and Spain puts the group on healthier footing,” Bloomberg Intelligence analyst Erhan Gurses said. “But we think there are reasons to be cautious as Vodafone faces cable TV regulations in Germany this year headwinds, while management’s past missteps and the sale of the business at a relatively low valuation raise some questions about its ability to drive shareholder value.
The company is selling its Italian unit to Swisscom AG’s Fastweb SpA, while Spain is expected to approve the sale of its Spanish unit to Zegona Communications Plc soon, Bloomberg reported earlier. The company’s proposed merger with CK Hutchison Group’s UK-based No. 3 unit has been approved on national security grounds but is under review by the country’s competition watchdog.
Vodafone shares were up 2.77% at 71.94 pence at 8:24 a.m. in London on Tuesday.
