Vodafone boss says ‘extra must be achieved’ in simplification drive

Vodafone’s chief executive has said ‘much more needs to be done’ as the telecoms giant continues to offload assets as part of a simplification drive. 

The blue-chip company has exited numerous markets over the past 12 months under a turnaround plan spearheaded by new boss Margherita Della Valle, who is simplifying its operations in an effort to boost performance. 

Last year, it completed the disposal of its Hungarian and Ghanaian divisions and sold its stake in phone masts business Vantage Towers to a joint venture owned by KKR and Global Infrastructure Partners for around €8.6billion (£7.4billion).

Changes: Vodafone has exited numerous markets over the past 12 months under a turnaround plan spearheaded by new boss Margherita Della Valle

Consequently, the firm’s operating profits plunged by 74.6 per cent to €3.7billion in the year ending March.

However, revenues dipped by just 2.5 per cent to €36.7billion.

Turnover was further impacted by adverse currency fluctuations in Africa offsetting price hikes and significant expansion in customers across the continent.

But organic services sales rose by 6.3 per cent, supported by solid results in the UK and Turkey, and its largest market by revenue, Germany, returning to growth in the fourth quarter.

Organic earnings rose 2.2 per cent to roughly €11billion for 2024, in line with forecasts.

‘Much more still needs to be done in the year ahead,’ said Della Valle, who previously ran Vodafone’s Italian division and was its finance boss until being promoted to chief executive in January 2023.

‘We will step up investment in our customer experience, improve our underlying performance in Germany and accelerate our momentum in business whilst also continuing to simplify our operations throughout the group.’

The company intends to finalise the £4.4billion sale of its Spanish segment to Zegona Communications and the £6.8billion sale of its Italian arm to Swisscom later this year.

It has also made around 5,000 job cuts under a programme to eliminate 11,000 positions over three years, equivalent to about a 10th of its global workforce.

Vodafone has struggled for years with underperformance and high net debts, which currently stand at €33.2billion.

Mark Crouch, an analyst at eToro, said: ‘Vodafone investors may have been bracing themselves for another tumultuous earnings report this morning, and while this might not have them jumping for joy, there are signs the business has turned a corner.’

The firm also hopes to receive approval from the Competition & Markets Authority for a £15billion merger with Three UK.

Last week, Vodafone was told by the Cabinet Office to set up a ‘National Security Committee’ owing to concerns regarding the links Three’s parent company, Hong Kong-based CK Hutchison, has with China.

Vodafone shares were 3.4 per cent up at 72.4p on early Tuesday afternoon, making them the FTSE 100 Index’s top riser, although they have still declined by around a fifth over the past year.