Vodafone adjusts the drop in sales to 2.3% and closes franchises to cut costs

Vodafone continues to reduce its revenues in Spain, but it does so at a somewhat slower rate than in the previous quarter. Between April and June, the British operator cut total sales by 2.3%. It suffers from a smaller customer base and “continued competition” in the value segment. The company seeks to adjust costs and for this it has closed 15% of its franchised stores in the country and has renegotiated some commercial agreements with other channels to “increase efficiency in distribution.”

Specifically, in the first quarter of its fiscal year it has recorded total revenue of 965 million euros, representing a decrease of 2.3%. In the two previous periods the fall was 9.8% and 4.2%. Despite everything, it continues to fall. Service sales, which are those that are related to the ‘traditional’ connectivity business and that exclude terminal sales, have suffered 3% to 871 million. In this case, the improvement is lower (0.7 percentage points).

This was the first full quarter in which the rise in CPI-linked prices, announced last year, was perceived. It has not been enough to return revenue to growth. The customer base has fallen by 87,000 mobile lines and 65,000 in broadband. This is, in part, due to a higher dropout rate (known as ‘churn’ in slang) due to linking rates to inflation. The group also speaks of a “continuous price competition in the value segment”.

On the commercial side, the company describes a “slight reactivation” as the impact of the price rise has “diluted”. In addition to the decreases in mobile and broadband, those of television also fell by 33,000. In this context, Lowi continues to contribute but the ‘ultra low cost’ competition such as Digi and others are making a dent. The customer base was fattened with 13,400 new ones in this second brand. It is far from the figures of more than a year ago.

The company loses 87,000 mobile customers and 65,000 broadband customers with a positive contribution of 13,400 from Lowi, its second ‘low cost’ brand

These are the first results presented by Mario Vaz as CEO of the group in Spain. The executive of Portuguese origin landed in the position at the end of March. He appointed Federico Colom, a historical director of telecoms in Spain and who was in charge of leading the ‘joint venture’ with Másmóvil in Orange, as the new Director of Strategy. The company is still “under strategic review” and the CEO, Margherita Della Valle, left the door open at the last conference with analysts to all kinds of corporate operations, including the sale of the entire business in the country.

Reduction of stores

In this context, the company has decided to close 15% of its franchised stores in Spain with the aim of reducing costs in the distribution area. With that same fact of “optimizing” that strategy, it has decided not to renew different sales agreements with other channels. “The net customer growth trends have improved again since the start of June,” the group points out.

It must be remembered that Vodafone has not had its own stores in Spain since financial year 2021. At that time, it parted with the 34 own spaces it had -and in which 237 employees worked- in cities such as Madrid, Barcelona, ​​Bilbao, Seville, Malaga, Granada, Córdoba and Palma de Mallorca. That 15% cut is relevant.

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