Shares of Vodafone Group (NASDAQ: VOD) soared 3.79% on Monday following the announcement of first-quarter service-revenue growth that beat analysts’ expectations.
The company reported a 3.7% growth in service revenue from the previous year, outperforming the 2.9% average estimate projected by analysts in a Bloomberg survey. This was attributed to the robust performance of its enterprise division, an area of focus for the newly appointed Chief Executive Officer, Margherita Della Valle, and the growth in its African operations.
On the other hand, Vodafone faces a challenging situation in its largest market, Germany. The German division, accounting for almost a third of sales, reported a worrisome 1.3% decline in quarterly service revenue compared to the previous year. This marks the fifth consecutive quarterly drop for the German unit, highlighting the urgency for a turnaround in stagnant growth.
The troubles in the German business have been attributed to strategic missteps, particularly a flawed introduction of a new IT system to comply with local regulations. Former CEO Nick Read characterized this move as “clunky” as it resulted in a loss of customers.
Vodafone has excelled in other key European markets, including Italy and Spain. The sales in these regions shrank slower compared to previous quarters. In the UK, sales even witnessed a boost following strategic price hikes.
Vodafone Business, in particular, exhibited exceptional growth, with revenue increasing to 4.5%, up from 2.9% in the fourth quarter.
In another development, Vodafone has appointed Luka Mucic, a seasoned executive from German enterprise software company SAP SE (NYSE: SAP), as its new Chief Financial Officer (CFO). The appointment will take effect in September. Vodafone Chairman Jean-François van Boxmeer called out Mucic’s experience in the German business market as a highlight.
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