Vodafone Group Plc announced a return to growth in Germany, its largest and most closely monitored market, under the leadership of CEO Margherita Della Valle, who is driving efforts to enhance performance.
In the statement released on Tuesday, the company revealed that service revenue in Germany increased by 0.2% to €11.45 billion ($12.4 billion) for the year. However, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) after leases declined by 5.8% to €5 billion, primarily due to rising energy and inflationary costs.
Vodafone’s growth in Germany faced challenges due to impending legal changes preventing housing associations from including TV services in rental packages. The company anticipates retaining only half of the 8.5 million households currently on such contracts after the law takes effect in July.
Della Valle acknowledged the ongoing work required, stating that the company aims to streamline its operations globally.
As part of Della Valle’s turnaround strategy, Vodafone is intensifying its focus on the German market and divesting from unprofitable ventures. In February, the CEO expressed optimism about accelerating growth rates in Germany in 2024.
Excluding the Spanish and Italian operations being divested, Vodafone reported a 6.3% increase in overall organic service revenue growth to €29.9 billion for the year. Adjusted EBITDA after leases amounted to €11 billion, aligning with analyst estimates.
For fiscal 2025, the company projected adjusted EBITDA after leases of approximately €11 billion.
Bloomberg Intelligence analyst Erhan Gurses noted that while Vodafone’s exit from struggling markets like Italy and Spain strengthens its position, challenges remain, particularly with cable TV regulation in Germany and questions regarding past management decisions and the valuation of divested operations.
Vodafone is selling its Italian division to Swisscom AG’s Fastweb SpA and expects Spain to finalize the sale of its Spanish unit to Zegona Communications Plc. Additionally, the proposed merger with CK Hutchison Holdings Ltd.’s Three in the UK has cleared national security concerns but is subject to scrutiny from competition regulators.
Vodafone’s shares rose by 2.77% to 71.94 pence in London trading on Tuesday morning.
