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This week, beleaguered operator group Vodafone has announced its latest financial results, the first under the stewardship of interim CEO Margherita Della Valle.
As expected, they company continues to struggle in some of its largest markets, with revenues falling in Germany, Italy, and Spain by 1.8%, 8.7%, and 3.3%, respectively.
These three markets remain highly competitive, with Vodafone’s fibre business in Germany losing subscribers to rivals, and mobile price wars in Spain and Italy driving down revenues.
The UK was the only large market in which Vodafone’s service revenues had increased, rising 5.3%, largely as a result of inflation-linked price rises.
Vodafone is currently seeking to merge its UK operations with those of CK Hutchison’s Three UK, with Della Valle confirming that talks are ongoing between the two companies.
In total, these Q3 results showed total revenues of €11.64 billion, 0.4% lower than those reported for the same time last year.
Nonetheless, Della Valle said the company would not alter its forecasts for the year, still targeting full year EBITDA of €15–15.2 billion.
“Although we’re continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better. We need to do more for our customers by delivering quality connectivity in an easy way,” said Vodafone’s interim CEO Margherita Della Valle.
Vodafone has been struggling to find growth for numerous years now, with key shareholders – notably activist investor Cevian capital –increasingly calling for an organisational shakeup.
Previous CEO Nick Read, who stepped down from the role after four years at the end of 2022, had long argued for market consolidation as the key to returning the organisation to growth, but very few deals at scale were ultimately struck during his tenure. Meanwhile, the company’s share value declined by around 40% during this period.
Della Valle took over as interim CEO at the start of this year, with the search for a permanent replacement still ongoing.
Now, Vodafone is pursuing a number of new strategies in order to reduce costs, having announced last year that it would seek to save €1 billion by 2026.
According to Della Valle, initiatives aimed at generating around €500 million in cost savings are already underway.
“We’ve already taken action, including simplifying our structure to give local markets full autonomy and accountability to make the best commercial decisions for their customers. In addition, we now have initiatives underway to generate around half of our €1 billion cost savings target. There is more to do and our focus is to provide a better service to our customers, become a simpler business and deliver growth,” said Della Valle.
It should be noted that this cost cutting plan includes the loss of at least several hundred jobs across the business, with the first batch of job cuts announced earlier this year. The company’s London office is expected to account for the lion’s share of the losses.
Vodafone is not alone in making job cuts in the UK, with BT also notably announcing a reduction in staff earlier this month.
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Vodacom Group reported a revenue increase of 14.8% to ZAR30.7 billion (US$1.76bn) driven by the recent acquisition of Vodafone Egypt.
Vodacom Group CEO Shameel Joosub said in a statement, Vodafone Egypt was consolidated into the group on December 8 last year, contributing over ZAR1.8 billion to service revenues, a “key factor” alongside currency gains and “operating model resilience”, for its positive results.
Group service revenue increased by 14.8% year-on-year from ZAR20.6 billion to ZAR23.4 billion, “despite ongoing financial market volatility and weaker prospects for the global economy,” said Joosub.
He added the revenue growth « underscores the ongoing resilience of the Group’s portfolio at a time when economic uncertainty prevails in the face of the war in Ukraine and the supply chain impacts of the Covid-19 pandemic.”
In other financial highlights, service revenue in South Africa grew 3% to ZAR15.4 billion on the back of strong performance in prepaid mobile, while international service revenue grew 18% to ZAR6.9 billion, driven by strong data demand and a weak rand.
Financial services revenue surged 30.6% to ZAR2.6 billion largely due to the demand for services on its M-Pesa platform across its footprint, and double-digit growth in insurance and airtime advance sales in South Africa. The company noted financial services “remains a clear strategic priority” as it proved to be a fast-growing contributor to revenues.
The company also highlighted its spectrum acquisitions in Tanzania and Mozambique, in what seems to be hints for further capex this year to bolster service quality across its footprint.
Vodacom completed its acquisition of Vodafone Egypt in December after speculation on the future of the unit had been up in the air since talks with STC fell through.
At the start of this year, the Ghanaian tax regulator announced that it was issuing MTN Ghana a bill of roughly $773 million, including penalties and interest, claiming the operator had underpaid its taxes for multiple years the previous decade.
The announcement came following the Ghana Revenue Authority’s audit of the operator’s finances for the years 2014–2018, with the regulator finding that MTN had under-declared its revenue by around 30% during this period.
“The base component of the assessment (that is, excluding penalties and interest), on MTN Ghana’s analysis, infers that MTN Ghana under-declared its revenue by approximately 30% over the audit period,” explained the regulator in a statement.
MTN “strongly disputes” these findings, saying they are inaccurate and made use of a flawed methodology.
“It is important to also emphasise that we believe MTN Ghana has paid its due taxes during this period under assessment,” MTN’s CEO Ralph Mupita told analysts at a meeting earlier this month.
Legal proceedings are ongoing to resolve the situation.
This week, however, the South African government has begun to weigh in on the dispute, urging the two parties to find an ‘amicable solution’ to the conflict.
The international relations and cooperation minister Dr Naledi Pandor called for fairness in resolving the legal battle, arguing that greater cooperation was needed between the two countries, especially in the telecommunications sector.
“Our common destiny, as outlined in the Agenda 2063 aspirations, depend on win-win intra-African collaboration and cooperation,” she said.
Agenda 2063 is a set of initiatives currently under implementation by the African Union, aimed at improving the continent’s economy and promoting closer collaboration between nations. The plan includes numerous flagship projects, ranging from the establishment of a high-speed continental rail network to the creation of a Great African Museum.
Crucially, many of these projects are directly tied to the telecoms industry, such as the creation of a pan-African digital data network, collaboration on cybersecurity, and the establishment of an open, digital Pan-African University.
In related news, it should also be noted that Ghana is currently experiencing a major economic crisis, with inflation rising above 50% and the government seeking financial aid from the International Monetary Fund. If ever there was a time when the government could do with a financial windfall, this is undeniably it.
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This week, T-Mobile has announced its latest sustainability goals, aiming to reduce its emissions to net-zero across its entire carbon footprint by 2040.
Crucially, this new goal encompasses not only Scope 1 and 2 emissions – those generated directly by the company’s own operations and indirectly by the company’s purchased electricity – but also Scope 3 emissions, those caused by the company’s wider supply chain, its employees, and its customers.
These Scope 3 emissions currently account for two-thirds of the company’s carbon footprint.
The goals have reportedly been validated by the Science Based Targets Initiative (SBTi) using their Net-Zero Standard framework.
“While T-Mobile’s net-zero goal is a decades-long endeavor, we know how important it is to take definitive actions now to reduce our environmental impact for future generations,” said Janice Kapner, chief communications and corporate responsibility officer at T-Mobile. “We’re committed to measurable progress and holding ourselves accountable with strong governance practices, consistent and transparent reporting, and ongoing collaboration with leading sustainability experts.”
In addition to announcing their new net-zero goals, T-Mobile also revealed that that they have signed The Climate Pledge, a commitment to reaching net-zero 10 years ahead of the timeline set out by The Paris Agreement. As part of this pledge, the company has agreed to measure and report its greenhouse gas emissions regularly, implement various decarbonisation strategies, and eliminate any remaining emissions with “additional, quantifiable, real, permanent, and socially beneficial offsets”.
It is worth noting here that T-Mobile’s progress towards this goal is already well underway, with the company having used nothing but renewable energy for around a year now.
T-Mobile’s largest rivals, AT&T and Verizon, meanwhile, have announced their own sustainability targets, though neither of them have announced plans to eliminate Scope 3 emissions.
Verizon, is aiming to reach net-zero operational emissions by 2035, including a 53% reduction in Scope 1 and Scope 2 emissions between 2019 and 2030. It is also aiming for half of its total energy consumption to be derived from renewable sources by 2025.
Since December 2019, the operator has announced numerous Renewable Energy Purchase Agreements, amounting to roughly 2.6 GW, with the latest deal being struck earlier this year.
AT&T has similar goals, aiming for carbon neutrality across its own operations (Scope 1 and 2) by 2035. The operator said it would achieve this target by focussing on using renewable energy, bolstering energy efficiency, and reducing fleet emissions through optimisation and the introduction of hybrid and electric vehicles.
Are US operators doing enough to reduce their carbon footprint and promote a more sustainable future? Join the experts in discussion at this year’s live Connected America conference
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Subscribe to our FREE weekly email newsletters for the latest telecom info in developing and emerging markets globally.
There was a bit of interesting network M&A out in the Midwest this morning. Washington-based Tahoe Network Infrastructure has announced the acquisition of the Midwestern fiber and fixed wireless provider E-Vergent. … [visit site to read more]
This week, the announcement of Telia’s lacklustre Q4 results has been accompanied by an acceleration of job cutting plans, with the company set to reduce its headcount by 1,500 this year.
According to the company’s earnings statement, the first 1,000 of these jobs will be slashed in Q1 this year, with the remaining 500 expected to be cut by the end of the year.
The company currently employs around 20,000 full time staff in various markets.
Telia has been attempting to cut costs significantly for a number of years now, in 2021 laying out a new strategic plan that included job cuts, asset divestiture, and operational streamlining.
At the time, the company said it would aim to cut 1,000 jobs a year until 2025, but now the macroeconomic environment, including rising energy prices and inflation, is forcing the company to accelerate its strategy.
Struggling under the weight of $2 billion in non-financial impairments related to its Norwegian and Finnish units, this year Telia noted a net loss of roughly $1.8 billion –a stark contrast to the profit it recorded for the same period a year ago.
“We are transforming a large, complex business in a challenging market and there are no shortcuts to success. We have known from the start that achieving our ambitious goals demands focus, discipline and perseverance,” said Telia CEO Allison Kirkby. “However, having returned the company to growth, expanded our 5G networks, passed our investment peak and built the foundations for better operational momentum and cash conversion going forward, I remain confident we are on the right track.”
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