Vodafone sees revenues rise as Three UK merger will complete in 'next few months'
Vodafone sees revenues rise as Three UK merger will complete in 'next few months'
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Mobile phone giant Vodafone has reported a bounce back in UK revenues as it anticipates the completion of its £15bn mega-merger with Three UK in the upcoming months. The company experienced an acceleration in UK organic service revenue growth to 3.3% in its third quarter, up from 1.2% in the preceding three months. This was attributed to "significant investments we have made to our customer experience", while UK mobile service revenues returned to growth in the quarter – up 1.8% – as it gained more customers.
However, trading in Germany – its largest market, contributing 34% of group service revenues – deteriorated as total sales plunged by 7.6% to 3.1 billion euros (£2.6bn) and service revenues fell 6.4%. The German division has been impacted by a law that has prohibited housing associations from bundling TV packages with rent. This update arrives as Vodafone readies to finalise its merger with Three UK in the "next few months" after receiving approval from regulators at the end of last year in a deal that will establish the UK’s largest mobile operator, boasting around 27 million customers.
Group chief executive Margherita Della Valle stated: "When the UK merger completes in the next few months, we will have fully executed Vodafone’s reshaping for growth. We are on track to grow in line with our full-year guidance for this year, which we reiterate today, and are looking forward to a stronger Vodafone in the years ahead. "We are continuing to invest in the turnaround of our German business and we are starting to see improving customer trends, although conditions have become more challenging in the mobile market.".
Additionally, the UK's robust results assisted in driving the group's revenue up by 5% to €9.8 billion (£8.1bn), surpassing expectations with a 5.2% rise in service revenues. As part of Ms Della Valle’s strategy to rejuvenate the company, which also involves divesting businesses in Italy, Spain, and elsewhere, the UK merger is a key component. However, Vodafone and Three UK have committed to massive investments towards establishing a joint 5G network in the UK to alleviate regulator concerns about competition in the country. The firms have also agreed to provide short-term consumer safeguards, including price caps on specific mobile plans for three years.
