UPDATE: Vodafone To Take EUR200 Million Hit From Huawei 5G Curb

(Alliance News) - Vodafone Group PLC said it would cost EUR200 million over five years to remove ...

Alliance News 5 February, 2020 | 9:37AM
Email Form

(Alliance News) - Vodafone Group PLC said it would cost EUR200 million over five years to remove the equipment of controversial Chinese group Huawei Technologies Co Ltd from core 5G European activities, AFP reported on Wednesday.

"We have now decided, as a result of the EU (recommendations) and the UK government's decision, to take out Huawei equipment from the core," Vodafone Chief Executive Nick Read said in a third quarter conference call with reporters.

"It will take around five years to implement at a cost of approximately EUR200 million," he added, stressing that the cost would mostly apply to its European activities outside of Britain.

The UK government decided last month to exclude Huawei from core parts of the 5G network and also to cap its share of the market at 35%, insisting that "high risk vendors" would be excluded from "sensitive" activities.

The London-listed company had already decided last year to pause Huawei usage in core systems in Europe, AFP noted.

Earlier on Wednesday, Vodafone backed its full-year financial expectations after reporting a rise in third quarter revenue.

The telecommunications firm added that it is preparing for a potential IPO of its European tower infrastructure in early 2021.

In the three-month period to December 31, revenue rose 6.8% to EUR11.75 billion from EUR11.00 billion the year prior. Service revenue was 0.8% higher art EUR9.73 billion.

Vodafone reiterated its guidance for the full year to March 31 of adjusted earnings before interest, tax, depreciation and amortisation of between EUR14.8 billion and EUR15 billion.

Revenue in Europe was 10% higher at EUR8.97 billion, though in the Rest of the World segment it contracted by 2.7% to EUR2.50 billion.

Vodafone reported "ongoing recovery in Spain", improvements in the UK, but a tougher comparison in Italy. Retail revenue grew in Germany, the FTSE 100 firm added.

Elsewhere, there was a "continued recovery in South Africa", though this was offset by lower growth in Turkey.

Read said: "I am pleased with the pace at which we have executed our commercial and strategic priorities, which has allowed us to maintain our momentum in the quarter.

"Competition in Europe remains challenging, primarily in the value segment, however we continued to improve customer loyalty and to grow in broadband, and we achieved good growth in Africa. We expect a further gradual improvement in service revenue growth in the fourth quarter, led by Europe."

In Europe, the company reported that it has launched its 5G mobile technology offering in seven markets.

Vodafone added that it is preparing for a float next year of European TowerCo, its infrastructure business. In November, it named Vivek Badrinath as the unit's chief executive.

Also getting a nod in the update was the company's sale of its Egypt arm, announced back in January.

Read on Wednesday said the deal "simplifies the group into two scaled regional platforms - Europe and sub-Saharan Africa - and reduces our net debt."

Vodafone to sell its majority 55% holding in its Egypt business to Saudi Telecom Co for USD2.39 billion. The deal gives Vodafone Egypt an enterprise value of USD4.35 billion.

The latest disposal follows Vodafone in December announcing that it agreed to sell its Malta unit to Monaco Telecom SAM for EUR250 million.

The company completed the disposal of its New Zealand unit in July for EUR2.0 billion to a consortium featuring investment firm Infratil Ltd and Canadian alternative asset manager Brookfield Asset Management Inc.

Vodafone shares 1.0% higher at 152.68 pence each in London during early trade on Wednesday.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

Email Form

Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Vodafone Group PLC 110.30 GBX 0.64

About Author

Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.

Audience Confirmation

By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites