A conscious weakness. The performance of Vodafone's 2023 annual report (which closed at the end of March) could be defined as follows: a year with "slowing performance as expected" says a note from the British telecommunications group recently in the hands of the new CEO, Margaret of the Valley. The new CEO, in announcing a simplification plan "to recover competitiveness" highlighted that this year's revenues will be largely flat. On the stock market, the stock lost 4,8% to 85,71 pounds in the late morning.
Revenues almost flat, with Africa growing and Europe declining
In 2023, i revenues The UK telecoms group's total assets rose just 0,3% to £45,7 billion from £45,6 billion last year. In this result they are growing Africa and equipment sales, while lower revenues come from services in Europe and unfavorable exchange rate movements, the note said. L'adjusted profit before interest, taxes and depreciation and amortization decreased by 1,3% to 14,7 billion, under the guidance of the company, because of the majors energy costs and due to “increased costs and commercial underperformance in Germany".
The profit grows only thanks to the sale of Vantage Towers
Operating profit increased to €14,3 billion and net profit amounted to €12,3 billion (it was €2,8 billion in 2022) “largely reflecting a capital gain on the sale of Vantage Towers”.
The total dividend per share is 9 cents, including a final dividend per share of 4,5 cents.
Della Valle: Vodafone must change. Cut of 11.000 seats, 1.000 in Italy
“Our performance was not good enough. To get consistent results, Vodafone must change”, Della Valle explained in the press release on the occasion of the accounts. In the restructuring plans of the English group there are a "recovery plan in Germany" and a "continuous action on prices and strategic review in Spain".
Add to that 11.000 cuts of jobs planned in three years. Vodafone employs around 104.000 people, so the one announced by Della Valle is an intervention that will affect over 10% of the group's organic plant.
In Italy: business and places in decline
For Italy, the British company as early as last March had announced to the unions a corporate restructuring plan that would have about 1.000 "efficiencies", or almost 20% of the workforce in the Peninsula.
Italy, which accounts for 11% of the group's service revenues (the third largest market after Germany and the UK), closed the fiscal year with declining revenues by 4,2% to 4,8 billion euros, with revenues from services down by 2,9%. In the third quarter revenues had seen a -3,3% and in the fourth quarter a -2,7%), "due to the continued pressure on prices in the mobile sector". Indeed “mobile services revenues decreased by 5,4%, with a third quarter at -5,7% and a fourth quarter at -5,4%. Weighs the competition though “Our second brand 'ho.' it has continued to grow and now has 3 million customers.” On the other hand "fixed services revenues increased by 3,3% supported by strong business demand for connectivity".
Vodafone focuses on the growth of the Business unit
“My priorities are customers, simplicity and growth. We will simplify our organization, eliminating complexity to regain our competitiveness” said Della Valle, confirmed CEO at the end of April after five months of interim, adding that he would reallocate resources to focus on "quality service that customers expect" and grow the unit Vodafone Business.
Its predecessor Nick Read he had resigned in early December after a four-year term marred by a sharp drop in the company's stock price. Read left as Vodafone was in talks to merge its UK operations with Hong Kong-based rival Three UK, owned by CK Hutchison. According to local media, the deal worth £15bn (over £17,2bn) is nearing completion. According to some media outlets, Vodafone in the UK is looking for a buyer for a minority stake in the £1bn IoT unit.
For the next 3 years: focus on shareholder returns
The three-year plan signed by Margherita Della Valle starts fromanalysis of telecommunications in Europe and immediately touch the sensitive key of shareholder return: “The European telecommunications sector has among the lowest ROCE (return on invested capital, ed) in Europe, alongside the highest required investment capital” with an impact on shareholder returns. But for Vodafone, explains Della Valle, "the performance has worsened over time" and the customer experience is connected to this, with differences from country to country.
A strategy in four directions
“We have to overcome some obvious challenges. We are more complex than we need to be, which limits our local business agility” adds the CEO and sets his strategy on four directions. “We will rebalance our organization to maximize the potential of Vodafone Business, which continues to accelerate growth; to win in our consumer markets, we will refocus on the basics and deliver the simple and predictable experience our customers expect; we will be a leaner, simpler organization and will focus our resources on a portfolio of products and geographies right sized for growth and returns over time.”
