Vodafone feels roaming charge pinch as international travel remains weak

Mobile phone giant Vodafone continues to suffer from a fall in international travel as bosses cannot charge sky-high rates in roaming charges, although the firm has seen a recovery in sales since the height of the pandemic.

The company said roaming and visitor revenues grew 56% year-on-year as some restrictions eased compared to the height of the pandemic but remain down 54% on the period before the pandemic.

Vodafone enjoys a significant chunk of profits from charging overseas visitors to use their networks or join other networks when travelling.

Stores reopened during the three months to the end of June, helping increase revenues across most regions, although there was a significant fall in Italy.

Despite some restrictions easing on high streets, store visitors remain down 40% on pre-pandemic levels, the company added.

In the UK, Vodafone said service revenues grew 2.5% in the three months to the end of June, with notable growth in prepaid services. This compares to a 0.6% fall in the first three months of 2021.

The easing of travel restrictions helped increase roaming charge revenues and work on its fixed line projects in its business division resumed.

There was a reduction in the number of customers cancelling their contracts, although it faced a backlash in London from some, when it quietly scrapped its free wifi services on the London Underground.

With stores reopening again in April, 65,000 new contracts were signed in them. The company also announced an exclusive partnership with Carphone Warehouse’s owner.

The UK business outperformed European rival regions, with Germany up just 1.4% while Italy saw a 3.6% decline and Spain was up just 0.8%.

Overall group service revenues grew 3.3% to 9.4 billion euros (£8 billion) in the three months to the end of June.

Chief executive Nick Read said: “In Europe, the operating and retail environment has not yet returned to normal conditions, but we are delivering a good service revenue performance.

“In our business segment, we are seeing stronger growth with our public sector and corporate customers whilst further building a pipeline of demand for our digital services, such as IoT, security and cloud.”

The growth was at the top end of expectations in the City and shares rose 2.7% by Friday lunchtime.

Nic Ziegelasch, analyst at Killik & Co, explained: “While Covid-19 has impacted revenue from roaming, underlying performance has remained good.

“Vodafone remains a low revenue growth business, however it continues to drive both operating cost efficiencies and asset utilisation efficiency.”