Home5G & BeyondVodafone looking to grow and cut costs through investment

    Vodafone looking to grow and cut costs through investment


    The rise in its annual operating profit suggests the group’s long-term positioning and strategy is starting to pay off.

    The most obviouis and bad news was that Vodafone’s annual sales were down 2.6% to €43.8 billion due to the loss of roaming revenues and being on the wrong end of exchange rate changes.

    Service revenues for the year fell 1.9% to €37.1 billion.

    Better news

    The much better news and arguably more important news is that its operating profit rose by more than 24% to €5.1 billion.

    Vodafone Group’s CEO, Nick Read (pictured), stressed that continuing heavy capital investment in networks is a key plank of its strategy, along with accelerating the development of digital capabilities, and the cash flow generated by more efficient operations was the key to being able to invest – and pay dividends.

    He stated, “We have delivered on the first phase of our strategy to reshape Vodafone as a stronger connectivity provider – including the simplification of the group to Europe and Africa, the successful IPO of Vantage Towers (€13.2 billion market capitalisation), the fast roll out of our next generation mobile and fixed networks, share gain in broadband subscriptions and continued reduction in customer churn”.

    Despite paying off some debt, it still stands at €40.5 billion.

    Critical connectivity

    Read said digital transformation efforts had contributed savings of €0.5 billion over the year while the integration of assets acquired from Liberty Global is ahead of schedule. He continued, “The world has changed. The pandemic has shown how critical connectivity and digital services are to society.

    “Vodafone is strongly positioned and through increased investment, we are taking action now to ensure we play a leadership role and capture the opportunities that these changes create.”

    In a long and detailed statement, Vodafone said that its growth strategy requires “a greater level of investment” in these four areas:
    1.    We will continue to invest in leading gigabit networks by upgrading our fixed networks and rolling out 5G ‘built right’. To help fund this, our new Technology operating model will drive a higher level of efficiency in unitary spend, while greater standardisation will eliminate duplication.
    2.    We will have a stronger, more comprehensive product offering in every market, particularly in Vodafone Business, to accelerate our revenue and profit growth.
    3.    We will accelerate our digital capabilities, which will ultimately help us sustain margin expansion, strengthen our direct channels and build further differentiation in our customer offer.
    4.    We are retaining the flexibility to support Vantage Towers in realising its own growth ambitions, particularly in the high incremental returns opportunities of new build-to-suit sites and ground-lease buyouts.

    Vodafone’s presentation and can be found here.