After successive quarters in decline, the results of the Vodafone group have given the CEO (chief executive officer), Margherita Della Valle, formerly financial director, a breather: revenues from services had an organic growth of 3.7%, boosted by the good health of Vodacom, which brings together the African markets (9%) and the improvement in the United Kingdom, but affected by the problems in Germany (almost a third of the group’s turnover), in Italy and, above all, in Spain, where they fell 3%.
The importance of this quarter resides in the fact that it is the first of a fiscal year that will be entirely under the responsibility of Della Valle, promoted to replace Nick Read, who in December lost the confidence of the board of directors.
Except in these three countries, Europe has restored or improved its growth, largely thanks to Vodafone Business, a branch that deals with business with companies and the public sector: it had a good quarter (4.5% more revenue and good operating margin). Della Valle anticipates that it will be a decisive asset to close the fiscal year in March 2024 with an increase in revenue and pre-tax profits.
Digesting these news, investors have applauded Della Valle in their own way, with a 5% rise in the price, which in the past twelve months had lost 42% in value. “We have taken a step in the right direction –said the CEO– but, with three markets in negative territory, we still have a lot to do. My goal is for service revenue to grow in Europe in the remainder of the year”. Della Valle has had the virtue of calming the frond between shareholders who, driven by their own interests, have been a hair’s breadth away from questioning the integrity of the group.
The foregoing leads one to wonder what is happening with Vodafone Spain to make the strategic review that Della Valle has entrusted to Màrio Vaz, the new CEO of the subsidiary – formerly the CEO of Vodafone Portugal – who these days has come to London to present his first conclusions.
The brief explanation of the ills that Vodafone suffers in Spain refers to a flight of customers and a reduction in prices in the consumer market, which 60% has opted for low-price offers. At the end of June, the customer base was reduced again: 86,000 less in mobile contract, 65,000 less in fixed broadband. Under these conditions, it has been able to mitigate the drop in revenue by correcting the rate hike based on the CPI.
Màrio Vaz is accompanied by a striking signing, that of Federico Colom –a veteran of Orange Spain and one of the negotiators of its merger with Másmóvil– who arrives with the position of Director of Strategy and Transformation. The task entrusted to them by the parent company is focused on rethinking a business model that straightens the accounts and makes it possible to consider all the strategic options, “both organic and inorganic”. Colom’s background has led the media to interpret that he will get the latter.
Analysts were interested in an eventual disinvestment from Vodafone in Spain, a persistent buzz that has returned these days. One of them, David Wright, from Bank of America Merrill Lynch, asked the CEO if the approval by Brussels of the merger between Orange and MasMóvil – expected in the coming weeks – which will open a remodeling of the Spanish market, would facilitate an exit for Vodafone . Della Valle’s response was as elusive as it was suggestive. “Depends”.