UK price rises help Vodafone offset its German woes

Mobile phone giant Vodafone has reported rising first-quarter sales as price rises in the UK helped it offset a weaker German market.

The group said total revenues rose by 1.6% over the quarter, with service revenues up 2.5%.

Germany – its largest market – saw a 0.5% fall in service revenue, with its TV customer base dropping by 79,000, while it also suffered a 34,000 decline across its cable broadband service.

But this was countered as growth picked up pace across the UK, where service revenues jumped by 6.5%, up from growth of 2% in the previous three months.

The group said the UK improvement was partly driven by a price increase of around 8% to 9% (£1 or £2) for each customer, although the company insisted it did not see a “material” rise in customers quitting the group. It also added 18,000 phone contract and 22,000 broadband customers in the quarter.

Vodafone group chief executive Nick Read said: “Whilst we are not immune to the current macroeconomic challenges, we’re on track to deliver financial results for the year in line with our guidance.”

He added the group is hoping to stem customer losses in Germany and resolve issues with IT and systems by the end of the summer.

“We’ve made good progress towards stabilising our commercial performance in Germany, and we continue to actively pursue opportunities with Vantage Towers and to strengthen our market positions in Europe,” he said.

Mr Read said the group was not yet seeing signs of customer stress due to the cost-of-living crisis, despite the price increases, although it froze prices for vulnerable customers.

It is also raising tariffs across Europe as it faces soaring energy costs, with its annual energy bill set to be 300 million euros (£255 million) higher year-on-year – 100 million euros (£85 million) more than it expected just two months ago.

He said the group was “aware that people need to manage their spend” and that pressure will build on customers as energy prices peak in the winter.

But he added: “Telecoms spend is considered fairly essential to people’s lives.

“That’s not to say there won’t be people that struggle with payments for a month or two and we need to be there to support them.”

He declined to comment on recent reports that Vodafone is considering merging with rival UK network Three, but said it would be “healthy” to have more deals in the UK market.

Mr Read said: “There’s room for consolidation in the UK.

“It would be healthy for the sector and healthy for investment and there would still be healthy competition.”