Published: Tue, May 15, 2018
Worldwide | By Sean Reid

Vodafone sees turnaround as profits for 2018 hit £2.5bn

Vodafone sees turnaround as profits for 2018 hit £2.5bn

Colao has been in the hot seat since 2008, overseeing a period of transformation which has seen the business reorient itself from a consumer focussed mobile operator into a communications empire operating the largest mobile and fixed-generation network in Europe.

Shares in Vodafone (LON:VOD) have fallen deep into the red in London this morning as the blue-chip telco announced that its chief executive Vittorio Colao will step down later this year.

"On behalf of the board, I would like to express our gratitude to Vittorio for an outstanding tenure", said Gerard Kleisterlee, Chairman of Vodafone Group, in the company's statement. "It is the right time ... to start with a new dedicated management team". Margherita Della Valle, VOD's Deputy CFO, will take over as CFO on July 27, 2018.

"Standing down after a decade at the helm, Vodafone's chief executive Vittorio Colao has struggled to do much for the share price under his leadership", Russ Mould, investment director at AJ Bell, said.

With fierce competition in the UK from Sky (SKY), and EE strengthened BT (BT.A) and Virgin Media, 'Vodafone UK is playing catch up, ' believes Megabuyte's Carse. He has also sat on the boards of the company's listed operations in Africa and Qatar, its subsidiaries in India and Egypt and its joint venture in Australia.

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Revenue fell 2.2 per cent to £46.5 billion compared to a year ago, due to the deconsolidation of Vodafone Netherlands and fluctuating currency rates. The company notes that this had it looking at both internal and external candidates.

Organic revenue rose 1.6% as broadband market share gains and demand for data offset a drag from new regulation that allows mobile users in the European Union to use free data roaming across the bloc.

"The chapter that Vodafone is now starting to write is a completely new chapter", he said, pointing to the Liberty deal and a pending merger of Vodafone's India business with Idea Cellular. Vodafone reported a 1.4% fourth quarter increase in service revenue, ahead of forecasts of a 1.1% rise, plus an 11.8% increase in earnings to €14.7 bn.

Vodafone expects organic adjusted EBITDA growth, excluding settlements and United Kingdom handset financing, of 1-5%, implying a range of €14.15-14.65bn. Analysts have speculated that he could move into Italian politics.

"Vittoria Colao has certainly chosen a good time to bow out, having finally consummated a significant and strategically beneficial deal with Liberty Global, as well as reporting a relatively decent year to March 2018", said Carse. "There is still a lot to do between now and October".

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