Vodafone signals return to growth as Covid fuels surge in demand for data

Vodafone today delivered some cheer to shareholders as it reported “resilient” quarterly growth after several weak quarters and its chief executive signalled that would now accelerate from here.

Like all telecoms firms, Covid travel bans have meant the mobile and fixed line telecoms giant has suffered from the loss of hundreds of millions of euros in roaming charges since lockdowns started.

That has not only cost it huge amounts of money, but made its revenues look particularly weak, year-on-year.

Today, however, it reported that revenues from services in its third quarter grew 0.4% on the year from the previous minus 0.4%. That was far better than the minus 0.2% analysts had expected.

 Stripping out the impact of roaming, service revenues grew 1.8%.

“A return to growth is what people wanted to see and that’s what we’ve delivered, and we expect that to accelerate,” CEO Nick Read told the Evening Standard.

Shares in the group surged 3% in early trading.

He said lockdowns had driven an overall surge in the amount of data people were using as they communicated by phone and Zoom calls, while its business customers had also been spending heavily on upgrading their systems to be digital.

“Going into the first lockdown a lot of SMEs, in particular, weren’t geared up for online. Smaller businesses tend to use someone like us rather than Microsoft for help,” said Read.

Revenue growth from services grew 1% in the third quarter in its core Germany market against the previous three months’ slight fall of 0.1%, boosted by gains across all its divisions.

Vodafone beat most analysts’ forecasts with its figures amid optimism that it should be able to accelerate its growth from now as its comparisons with last year no longer have to compete with pre-Covid roaming charge levels.

Data usage surged 50% year-on-year and churn - the numbers of people switching away to other suppliers - for mobile phone contracts fell across Europe.