Vodafone Group has reported higher sales and profits amid a drive to cut costs, which has led to the shedding of 1,200 jobs in Europe over recent months. The telecoms giant said its cost-saving initiatives had helped deliver the reduction in roles across Europe and in its shared operations in the three months to the end of June.
Job Cuts and Cost Savings
Vodafone did not specify how many UK jobs have been affected. It is understood that some of the reduction was due to natural attrition, as people were not replaced after they left the business. The company is aiming to shave about £700 million a year from its total costs and capital spending by the 2030 financial year. This is partly coming from Vodafone's merger with Three in the UK, which completed last year and formed the nation's largest mobile operator.
Financial Performance
In the latest update to investors, the business said that its service revenues totalled 8.6 billion euro (£7.4 billion) for its first quarter, up by a 10th compared with the previous year. On an organic basis, service revenues increased by 5.2%, while earnings on an adjusted basis were up by 6.7% year-on-year. Vodafone said it now expects adjusted earnings to be between 13 billion euros (£11.1 billion) and 13.3 billion euros (£11.4 billion) for the year, after taking control of Kenya-based Safaricom last month.
UK Performance
In the UK, mobile service revenues declined organically by 0.7% in the three months to the end of June, compared with the year before. Vodafone said this was partly because of the phasing out of mid-contract price rises, bringing down revenue growth per customer, after a crackdown by regulator Ofcom. The number of UK customers with mobile contracts dropped by 48,000 during the quarter, including business SIMs, but it gained about 34,000 broadband customers.
CEO and Analyst Comments
Vodafone has been pushing ahead with a major transformation under chief executive Margherita Della Valle, including a focus on its biggest markets in Germany and the UK, as well as Africa, while pulling out of countries where it has a smaller presence. Mark Crouch, market analyst for Etoro, says: “For years, Vodafone has promised that its turnaround would eventually show through in the numbers. This latest update suggests that promise is finally starting to become reality. While the headline revenue boost was helped by the consolidation of Three UK and Safaricom, the stronger message is that the underlying business is beginning to build momentum.”
