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Vodafone : sites/vodafone ir/files/2021 07/vodafone q1 fy22 transcript.pdf

07/26/2021 | 11:28am EDT

Vodafone Q1 FY22 Trading update Live Q&A Webcast

Friday, 23rd July 2021

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Vodafone Q1 FY22 Trading update Live Q&A Webcast

Friday, 23rd July 2021

By accessing this communication, you agree to be bound by the following conditions. You may not disseminate this communication or any copy thereof, in whole or in part, without the prior consent of Vodafone Group Plc. Information in this communication relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This communication does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire or dispose of securities in Vodafone Group Plc of any of its subsidiaries, joint ventures or investments.

This report contains "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group's financial condition, results of operations and businesses and certain of the Group's plans and objectives. In particular, such forward-looking statements include, but are not limited to, statements with respect to: expectations regarding the Group's financial condition or results of operations and the guidance for Adjusted EBITDA and adjusted free cash flow for the financial year ending 31 March 2022; the Group's sustainable business strategy and 2025 targets; expectations for the Group's future performance generally; expectations regarding the operating environment and market conditions and trends, including customer usage, competitive position and macroeconomic pressures, price trends, commercial momentum and opportunities in specific geographic markets; intentions and expectations regarding the development, launch and expansion of products, services and technologies, either introduced by Vodafone or by Vodafone in conjunction with third parties or by third parties independently including digital and financial services such as VodaPay, sharing infrastructure and its benefits and sharing mobile networks in Europe and Africa; expectations regarding the integration or performance of current and future investments, associates, joint ventures, non-controlled interests and newly acquired businesses. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "will", "anticipates", "could", "may", "should", "expects", "believes", "intends", "plans" or "targets" (including in their negative form or other variations). By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

Furthermore, a review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found under "Forward-looking statements" and "Risk management" in the Group's annual report for the financial year ended 31 March 2021. The annual report can be found on the Group's website (https://investors.vodafone.com/reports-information/latest-annual-results). All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking


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Vodafone Q1 FY22 Trading update Live Q&A Webcast

Friday, 23rd July 2021

statements in this document will be realised. Any forward-looking statements are made of the date of this presentation. Subject to compliance with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so.

This communication also contains non-GAAP financial information which Vodafone Group Plc's management believes is valuable in understanding the performance of Vodafone Group Plc. However, non-GAAP information is not uniformly defined by all companies and therefore it may not be comparable with similarly titled measures disclosed by other companies, including those in Vodafone Group Plc's industry. Although these measures are important in the assessment and management of Vodafone Group Plc's business, they should not be viewed in isolation or as replacements for, but rather as complementary to, the comparable GAAP measures. Although we try to accurately reflect speeches delivered, the actual speech as it was delivered may deviate from the script made available on Vodafone Group Plc's website.

References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and The future is exciting. Ready? are trade marks owned by Vodafone. The Vantage Towers Logo and the VT Monogram Logo are trade marks owned by Vantage Towers GmbH. Other product and company names mentioned herein may be the trade marks of their respective owners.


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Vodafone Q1 FY22 Trading update Live Q&A Webcast

Friday, 23rd July 2021


Nick Read

CEO, Vodafone


Good morning, everyone, and thank you for taking the time to join us, Margherita and myself, at our Q1 Trading Results announcement. You will find on our website hopefully a comprehensive set of materials to help you understand our results. But I thought I would just take an opportunity just to touch very briefly, 30 seconds, on just the key highlights before we then go on to questions.

Key Highlights

We are back to service revenue growth in Europe as well as Africa with over a 3% growth in the quarter, and we are growing in both Consumer and Business. Around 1 percentage point of that growth was clearly a lapping effect of COVID-19 last year that obviously suppressed our results. But even excluding that, I would say that is a very healthy growth rate for us as a business and we are firmly on track on our guidance.

Now, clearly, we are not back to normal yet on our trading activity, our commercial activity and sales volumes. Footfall in the big four European countries in aggregate was around 40% below pre-COVID levels. So we have yet to see that retail pickup that we are looking for, and this was particularly evident and heavy in Germany.

We have seen in more recent weeks as retail stores have started to open up volumes increasing, and therefore, we look forward to the back-to-school season that we are going to see. Obviously, if activity was low, you can see from our churn numbers that, in Europe mobile contract, if we exclude Spain, which had a specific legislation adjustment in COVID last year, you see that we were down 1.4 percentage points year-over-year. So we had good churn trends across the vast majority of our markets.

In Business, we saw service revenues grow 2.7%. We saw a good growth rate in our digital services. Clearly, the 2.7% was enhanced slightly because of obviously, again, the COVID impacts of last year, but we definitely expect and have been engaging with governments in terms of the EU recovery funds, which we should start to see coming through in the second half of this year. In Europe, more broadly, we grew service revenue in all markets, except Italy, and we had a particularly good rebound in the UK and our cluster Europe, other markets.

Vodacom maintained a strong momentum, and particularly in Financial Services, which were up 34% in Q1, and we are due to launch Vodacom's Super App, called the VodaPay Super App, in the coming months in South Africa.

Clearly, more to do, particularly in accelerating and improving shareholder value, and we remain still very focused on optimising our portfolio moving forward, to ensure that we keep our shareholder very much in our forefront of things that we are focused on.

And, on that, Margherita and I will take your questions.


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Vodafone Q1 FY22 Trading update Live Q&A Webcast

Friday, 23rd July 2021


Andrew Lee (Goldman Sachs): I had a question on the revenue growth outlook. In the first quarter, as great trends with easy comps but suppressed commercial momentum, particularly in Germany. So the question is, is the first quarter 2022 growth rate a high watermark for growth during the year? And how should we think about commercial recovery through the years, especially in Germany?

Nick Read: Well, I will let Margherita answer in terms of service revenue sort of outlook or view. Just say in terms of trading, I mean, clearly these remain challenging times. I am not just talking our industry, challenging times for everyone. And it was always very clear that this would not be a linear recovery. So we should expect bumps in the road. We are expecting bumps in the road in terms of how we are looking at things.

Clearly, as I said, I am pleased with the 3% growth and the underlying growth rate that we had. And we are firmly on track on our guidance. I would say in terms of commercial activity, if I look, it clearly has been suppressed. If we pick Germany as your example, what we saw in April-May was footfall down 80%. It did then start to improve to June, but still down 50%. So we are by far not there yet in terms of normalisation.

If you look at examples of Spain, Italy on mobile net ports, these are still down year-over- year. So I would say overall you are just seeing a lower level of activity. And as I say, you see that in our churn.

So I think this is a case of let us see as we move into the back to the school period. I think that becomes a very important. We have certainly focused on the propositions, the promotions, the above-the-line campaigns that we will be hitting on back-to-school. And we think that that will reignite our commercial momentum.

Margherita Della Valle: On the service revenue growth, of course, Q1 was a very special quarter. We have seen roaming moving from being a headwind to a tailwind now. And on top of that, we have had these, what I call one-off effects from last year at this time, seeing the effectively shock of the pandemic in our markets.

If you remember the presentation we did a year ago, in Q1, we were calling out a number of effects, particularly things like business projects being delayed from Q1 into Q2 or prepaid top-ups being more difficult in some markets. And I would say, probably the market which was most affected by the beginning of the pandemic was Spain, where the Emergency Decree was particularly severe.

Taken in aggregate, these one-offs are worth about 1 percentage points, which, as we say, is not going to recur as we move into the next few quarters. But we are well on track to deliver growth this year both in Europe and Africa, and we are pleased with the momentum, as Nick was mentioning, on service revenue.

One data point that I would call out from that perspective is that now we have all of the data from the last 12 months, and what we have seen is that if you take the 12 months to March 2021 through the pandemic, we have outperformed in retail service revenue growth, all the incumbents and all of the scaled players in our major European markets, both in fixed and in mobile service revenue growth. So we are pleased with where we are.


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This is an excerpt of the original content. To continue reading it, access the original document here.


Vodafone Group plc published this content on 26 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2021 15:27:01 UTC.

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Sales 2022 45 064 M 52 703 M 52 703 M
Net income 2022 2 381 M 2 784 M 2 784 M
Net Debt 2022 42 178 M 49 328 M 49 328 M
P/E ratio 2022 14,8x
Yield 2022 7,84%
Capitalization 31 928 M 43 769 M 37 339 M
EV / Sales 2022 1,64x
EV / Sales 2023 1,60x
Nbr of Employees 105 000
Free-Float 97,8%
Duration : Period :
Vodafone Group Plc Technical Analysis Chart | VOD | GB00BH4HKS39 | MarketScreener
Technical analysis trends VODAFONE GROUP PLC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 24
Last Close Price 1,16 €
Average target price 1,96 €
Spread / Average Target 69,0%
EPS Revisions
Managers and Directors
Nicholas Jonathan Read Group Chief Executive Officer & Executive Director
Margherita Della Valle Group Chief Financial Officer & Director
Jean-Franšois M. L. van Boxmeer Chairman
Johan Wibergh Group Chief Technology Officer
Valerie Frances Gooding Senior Independent Director
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