Vodafone lost 71,000 TV customers during its fiscal first half thanks largely to its loss of football rights in Spain, which has allowed rivals Telefónica and Orange to pick off disgruntled sports fans from its subscriber base. Vodafone said that, “following challenging current trading and economic conditions” in the Spanish market, its cash flow would be lower than expected and it recorded an impairment charge of €2.9 billion on its Spanish investment for the six months to September.
Vodafone Spain’s TV base decline d by 98,000 customers in the first half, thanks to the decision not invest in “unprofitable” rights to Champions League and La Liga football. Vodafone’s broadband base in Spain also fell by 118,000 oer the same period. The company admitted that its Spanish unti had been hit by discounted TV and football offerings launched by Telefónica/Movistar. Vodafone had 1.262 million Spanish TV customers at the end of September compared with 1.37 million a year earlier.
On the positive side, Vodafone said that, its mobile contract base grew by 35,000.
Service revenue in Spain fell by 4.7% over the first half, including a dip of 7.2% in the second quarter, when the loss of football made its impact. Adjusted EBITDA excluding one-offs declined by 20.7%.
Overall, Vodafone had 13.7 million television customers at the end of the quarter, and 6.2 million converged customers. The company added 384,000 broadband customers and 616,000 converged customers – partly due to the first-time recognition of prepaid mobile customers in Germany in this category. Vodafone added 744,000 customers to its next-generation network in the quarter.
Vodafone Germany had 7.63 million TV customers at the end of the period, down from 7.697 million a year earlier, and down 43,000 over the course of the first half.
In Germany, Vodafone added 115,000 broadband customers in the first half, boosted by its GigaKombi offer. The company also completed analogue switch off for 42% of its cable customer base, which it said was enabling the efficient rollout of DOCSIS 3.1. Vodafone is targeting eight million homes to be covered by Gigabit-capable technology by the end of this year.
Vodafone’s TV losses in Spain and Germany were partly offset by modest gains in smaller markets including Italy and Portugal. Overall, Vodafone had 9.677 million TV customers at the end of the period.
Overall, Vodafone posted revenues of €21.8 billion for the first half down 5.5%, and an operating loss of €2.1 billion, compared with a profit of €2 billion fo the same period last year.
Vodafone’s new CEO Nick Read said the group had “taken decisive commercial and operational actions to respond to challenging competitive conditions in Italy and Spain” and was on track to reduce net operating expenses.
Read said that a focus on organic growth and the planned acquisition of Liberty Global’s German and CEE assets provided confidence that it would be able to grow free cash flow, which underpins its dividend, despite concerns about the debt the group has taken on to finance the Liberty acquisition.
Commenting on the results, Paolo Pescatore, SVP of consumer services at MIDiA Research, said: “Another challenging quarter. Everything points towards growth in convergence underlined by fixed line broadband, especially fibre; in some part this reinforces the acquisition of Liberty Global’s selected European assets. Retaining subscribers will be tough given the breadth of promotional offers especially in Southern Europe.”
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20th January 2020