Report Overview

Vodafone UK: Growth dips due to COVID and more

Vodafone’s performance this quarter was hit both by COVID and an underlying deterioration in its operational momentum—disappointing given regulatory easing and easier comparables

Vodafone’s guidance has been more prudent than most going into this pandemic and these results support that cautious stance. Whether it’s a case of Vodafone underperforming or the sector being less resilient than expected will emerge over the coming weeks

The IPO of Vodafone’s towers business is imperative to maintaining its leverage targets and dividend. It will need to sell a chunky slice of equity and realise a hefty multiple in challenging market conditions. The profile of the asset for sale will help but it all remains very finely balanced

Contents

Underlying performance deteriorated

Vodafone’s relative performance remains to be seen

Towers IPO imperative to maintain leverage

UK— hard hit

Germany—still flat

Italy—kicked while down

Spain—back in the doldrums

List of charts/tables

Figure 1: Q4 to Q1 Group service revenue progression

Figure 2: Service revenue growth in ‘top 4’ markets—organic and excluding COVID

Figure 3: Service revenue growth—organic and excluding COVID

Figure 4: Q4 to Q1 service revenue progression in other markets

Figure 5: Q4 to Q1 service revenue progression

Figure 6: Organic service revenue growth

Figure 7: Vodafone fixed service revenue growth in the ‘top 4’ markets

Figure 8: Mobile service revenue growth versus peers

Figure 9: German converged customer net adds (000)

Figure 10: Vodafone’s forecasted use of cash (€m)

Figure 11: Vodafone forecast net debt to EBITDA scenarios

Figure 12: Q4 to Q1 service revenue progression in the UK

Figure 13: UK operational and financial metrics

Figure 14: UK fixed performance

Figure 15: Vodafone mobile revenue and service revenue growth under IFRS 15

Figure 16: UK contract net additions (000)

Figure 17: UK service revenue growth by operator

Figure 18: ‘Sweet spot’ bundle with iPhone 6s/7/8/XR/11

Figure 19: SIM-only unlimited data bundle pricing (£/month)

Figure 20: 18-24-month, SIM-only unlimited data pricing (£/month)

Figure 21: Q4 to Q1 service revenue progression in Germany

Figure 22: Germany operational and financial metrics

Figure 23: Germany fixed performance

Figure 24: Germany contract net additions (000)

Figure 25: German operator contract ARPU growth

Figure 26: Q4 to Q1 service revenue progression in Italy

Figure 27: Italy operational and financial metrics

Figure 28: Italy fixed performance

Figure 29: Italy service revenue growth by operator

Figure 30: Italy total subscriber net additions (000)

Figure 31: Q4 to Q1 service revenue progression in Spain

Figure 32: Spain operational and financial metrics

Figure 33: Spain fixed performance

Figure 34: Spain service revenue growth by operator

Figure 35: Spain contract net additions (000)