Vodafone chief says group prepared for ‘proactive portfolio’ action

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Vodafone said it was on track to meet its full-year profit targets as the telecoms group, which recently became subject to an activist campaign, reported strong growth in its European and African markets.

Chief executive Nick Read said that the FTSE 100 company was “committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace”.

His remarks came days after it was reported that Europe’s largest activist investor Cevian Capital had built an undisclosed stake in Vodafone. The investor spent several months engaging with Vodafone’s board and management pushing it to focus on markets where it was performing well and dispose of assets that were not, according to people briefed on the discussions.

It particularly underscored the importance of consolidating in some of the more complex and poor performing telecoms markets, including Spain, Italy and the UK, and of realising the value of Vantage Towers, the tower infrastructure business that Vodafone took public last year.

For the past year, Read has been vocal about the need for consolidation in weaker markets, and has been considering the possibility of a merger between Vantage Towers and similar infrastructure outfits at Germany’s Deutsche Telekom or France’s Orange. Read held talks with CK Hutchison about a deal between Vodafone and Three in the UK last year

On Wednesday, Read said that the group was “focused on our operational priorities to strengthen commercial momentum in Germany [and] accelerate our transformation in Spain”.

In a quarterly update Vodafone reported a 4 per cent rise in revenue in the three months to December. Organic service revenue, the money it makes from customers, rose 2.7 per cent to €9.6bn.

In Germany, the company’s most important market, it posted revenue growth of 1.1 per cent, due to lower revenue from variable call usage, and lower retail activity because of the pandemic and the impact of new telecommunications regulations.

The company’s growth was affected last year by a fall in revenue from customer roaming, and as both business and leisure travel were hit by Covid-19 restrictions. Total revenue increased 3.7 per cent quarter on quarter.

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