Vodafone endures more pain in Spain and Germany

Vodafone reported a steeper-than expected slowdown in its third quarter, the first under interim boss Margherita Della Valle, after service revenue in Spain slumped and there was a further deterioration in Germany, its biggest market.

The mobile and broadband operator reported group service revenue growth of 1.8% in the third quarter, down from 2.5% in the second and missing market expectations.

Hyperinflation in Turkey helped that figure, Della Valle said. Without it, service revenue in Europe fell 1.1%.

"Declining service revenue in three of our four largest European markets is simply not good enough and I know we are capable of doing better," she told reporters on Wednesday.

The quarter was expected to be a low point for Europe, she said, and there would be "a gradual improvement from now on".

Shares in Vodafone fell 2.6% in morning trading, as analysts said there was no substantive strategy update from the interim boss, who has been in the job for less than two months.

Della Valle, who stepped up after Nick Read resigned in December, kept the full-year forecast unchanged.

She said she'd already taken action to simplify the group's structure to give local markets full autonomy.

Around 500 jobs were being cut in Vodafone's head office in this process, she said, helping deliver around half of the 1 billion euro savings target set by her predecessor in November.

Read had sought to appease investors' concerns by announcing the savings target, through to March 2026, after he cut this year's earnings range and cash flow guidance as higher energy costs and inflation took a toll.

Less than a month later, he had resigned.

Della Valle declined to comment on the search for a permanent replacement, saying it was a matter for the board.

Vodafone said intense competition in Spain resulted in a fall of 8.7% in service revenue in the quarter.

It also reported a worsening performance in Germany, with a fall of 1.8% in service revenue reflecting customer losses after it was badly prepared for past changes in legislation.

Della Valle said remedial action in Germany would deliver growth from Vodafone's new financial year starting in April.

Service revenue in Italy fell 3.3%, but Britain continued to perform strongly, with a rise of 5.3% driven by good customer growth and price increases.