Vodafone chief shakes off Budget gloom as shares jump
Vodafone’s chief executive has said the forthcoming Budget is “not a big thing for us” after the telco defied wider economic gloom to deliver a dividend hike.
The FTSE 100 firm said it saw 1.2 per cent growth in the UK in the six months to the end of September, while Germany, a key market, returned to growth after a prolonged period of shedding customers after changes to TV contract rules.
“We are betting on the UK as our home market,” chief executive Margherita Della Valle told City PM in a press call.
“We have a unique set of assets, we are leaders in mobile, we are the fastest growing in fixed [line contracts], and I think the results of this quarter underlie the momentum.
“The Budget is not a big thing for us.”
Della Valle’s comments were in stark contrast to BT chief Allison Kirkby, who in September warned the telecoms industry was “already at peak government inflicted costs.”
In an on-stage interview with City PM at the Connected Britain conference, Kirkby said: “We pay in business rates, energy levies and other costs associated with regulation and compliance ten times the amount our peers pay in countries like Germany and the Netherlands.”
Kirkby said investors “need certainty that they’re going to get a return on that investment and they get that certainty through stability on regulatory and fiscal policy.”
“We’re going into what could be a very difficult Budget for the Chancellor,” she said.
“We’ve got to ensure that [for] these massive infrastructure bills that will accrue billions of value to the economy in the coming years, investors and citizens and companies get the return on investment.”
Vodafone dividend hike
Vodafone has said it expects its full-year profit to sit at the top end of forecasts as the company produced its first set of results after completing its blockbuster merger with Three.
The telco giant said it was “driving cost synergies at pace” following the merger, including signing new long term network partnership agreements, beginning a property consolidation on top of large contract rationalisation programmes, in moves which are widely expected to lead to job cuts.
Total group revenue rose 7.3 per cent – due to the inclusion of Three’s financials – to €19.6bn during the period, while pre-tax profit was unchanged at €2.1bn.
Vodafone said it expects its dividend to rise by 2.5 per cent for this financial year.
Vodafone shares rose as much as 5.2 per cent on Tuesday, making the stock the top performer on the FTSE 100. The firm’s shares are up by more than a third since the start of the year.
“There’s still work to do, but the combination of upbeat commentary, improving momentum in the UK and Africa, and a stabilising European core should land well with investors, said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“For a name priced for pessimism, today’s update offers a few glimmers of hope.”