• Vodafone has weathered the pandemic storm
• Investors are encouraged by its numbers
• Now they await details of its Vantage IPO

Vodafone got the week off to a good start with financial results for the six months to the end of September that displayed minimal impact from the Covid-19 pandemic. 

Group service revenues were down less than 1% year-on-year to €18.4 billion, while adjusted earnings dipped 1.9% to €7 billion: A reduction in roaming revenues was the main cause of the slight slips. 

Overall group revenues, including handsets sales and other items, dipped by 2.3% to €21.4 billion, while the operator reported a net profit of €1.56 billion for the six-months period compared with a loss a year ago. The company also reaffirmed its previously stated financial targets for the full fiscal year – adjusted EBITDA of €14.4-14.6 billion – and an interim dividend of 4.5 euro cents for shareholders holding stock on 18 December.

In its earnings report, Vodafone noted that by the end of September it had launched 5G services in 127 cities across nine European countries and had passed 52 million households with its gigabit broadband service. 

The numbers were regarded as positive by investors, as Vodafone’s share price gained 3.7% to 124 pence in early trading on the London Stock Exchange. 

“Today’s results underline increased confidence in our full year outlook. We are reporting a resilient first half performance and we continue to see good commercial momentum across the Group,” noted Group CEO Nick Read. 

“The results demonstrate the success of our strategic priorities to date, namely increasing customer loyalty, growing our fixed broadband base, driving digitisation to simplify the company and capture significant cost savings, and deliver 5G efficiently through network sharing. COVID-19 and the reduction in roaming revenues, through the significant reduction in international travel, is currently obscuring our underlying commercial progress, with Q2 service revenue growing by 1.5% excluding roaming,” continued Read. 

“We are now two years into our longer-term strategy to transform Vodafone into a business that enables a digital society, generating both sustainable growth and attractive returns. We are executing at pace, but there remains more to be done to achieve our goals. Now, more than ever, the connectivity services we provide are critical for society and the demand is growing for our services.”

For the full details of Vodafone’s first fiscal half financials, see this announcement.

The operator announced in its financial report that it was on track for an IPO of its European towers unit, Vantage, in early 2021. 

Speculation over the weekend suggest the details of that IPO could be announced imminently, with a report from Bloomberg suggesting that Vodafone plans to raise $5 billion from the flotation. 

The operator made it clear in July that early next year was its target for an IPO of Vantage stock, and now the markets are keen to see the details around the exact timing of the listing (which is expected to take place on the Frankfurt exchange), the stake being made available and the valuation of the business. 

In July, Vodafone stated that Vantage was the biggest neutral towers company in Europe, with assets in nine markets, but that crown is set to be snatched by Cellnex, which just last week announced a major €10 billion acquisition of Hutchison’s regional towers company that, once closed, will make it the European market leader. The clamour of investors to be a part of the Cellnex story this year – its stock has risen by about 50% since the start of this calendar year and its capital raising efforts have been massively over-subscribed – will give Vodafone heart that it can gain a high-end valuation for Vantage. 

Vodafone is holding a Capital Markets Day for Vantage on Tuesday 17 November and it seems likely the details will be shared during that investor presentation. 

- Ray Le Maistre, Editorial Director, TelecomTV

Tune in to this week's Open RAN Summit to find out what Vodafone's Head of Group Network Architecture, Yago Tenorio, has to say about the potential for disaggregated radio access network architectures. Our Keynote Executive Interview with Tenorio will be available for on-demand viewing on Wednesday 18 November from 9am UK time. For the full summit agenda, click on this link.