IoT surges as Vodafone claims solid third quarter

Mixed bag of growth in key European markets but global operator claims steady progress in third quarter of financial year, with IoT showing demand in flagship arena

Global communications provider Vodafone Group has reported a third quarter in which it saw total revenue increase year-on-year by 4.3%, with growth in both Europe and Africa, in what it claimed was a performance that kept it on track to deliver full year results in line with the higher guidance it previously set out in November 2021.

For the quarter ended 31 December 2021, Vodafone reported revenues of €11.684bn. Of this total, leading market Germany contributed €3.373bn, up 1.1% on an annual basis, followed by the UK on €1.737bn, inching by 0.9% on an annual basis.

Total revenues in Spain and Italy fell by 1.3% and 1.6% respectively, compared with the third quarter a year ago, to €1.256bn and €1.077bn. The group ended the quarter with a total of 25.7 broadband customers in Europe, virtually the same as a year ago, and 142 million IoT SIM connections, an annual rise of 20.33%.

Looking at performance standouts in these markets over the quarter, service revenue in Germany increased by 1.1% with quarterly trends remaining broadly similar to Q2 of the 2022 financial year, as acceleration in its business segment was partially offset by lower variable call usage revenue.

Retail service revenue grew by 1.7% and fixed service revenue increased by 0.7%, driven by continued broadband ARPU growth. Fixed commercial performance was also impacted by specific operational challenges related to compliance with new telecommunications law, which came into effect in December 2021. Half of our cable broadband customers now subscribe to speeds of at least 250Mbps, and Gigabit speeds are available to 23.7 million households across our hybrid fibre cable network.

Mobile service revenue increased by 1.7%, driven by customer base and ARPU growth, themselves due to a reacceleration in Vodafone Germany’s commercial performance, as well as what was described as strong business demand. Tapping into a sector that is growing strongly at this moment in time, the operator reported 378,000 IoT connections in the quarter, supported by strong demand from the automotive sector.

Vodafone UK service revenue was said to have been driven by continued good commercial performance in Consumer with higher MVNO, roaming and visitor revenue. This, however, was partially offset by further slowdown in Business, with continued ARPU pressure on recontracting multinational corporations and the division’s decision to end an unprofitable multinational contract in the prior quarter.

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Our commercial momentum accelerated this quarter, with 152,000 mobile contract customer additions. In the fixed sector, UK broadband customer base increased by 29,000 in the quarter supported by what was said to be good demand for the Pro Broadband product delivering in-home Wi-Fi coverage with 4G back-up connectivity. At the end of the quarter, Vodafone UK had almost a million broadband customers, of which 496,000 are converged.

“Our team has delivered another solid quarter, demonstrating the sustainability of our growth strategy and medium-term ambition,” said Vodafone group chief executive Nick Read, commenting on the third quarter results.

“This performance keeps us firmly on track to deliver FY22 results in line with the higher guidance we set out in November,” he said. “We remain focused on our operational priorities to strengthen commercial momentum in Germany, accelerate our transformation in Spain and position Vodafone Business to maximise EU recovery funding opportunities. We are also committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace.”

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