Analyst Note
| Michael Hodel, CFA |Vodafone’s fiscal first-quarter revenue performance was very respectable given the hit to revenue caused by the pandemic. Consolidated service revenue declined 1.3% year over year, snapping a three-quarter stretch in which revenue had shown accelerating growth. Lower wireless roaming revenue (down 70% versus the prior year) was the primary culprit. Looking at results in each country, however, Vodafone posted solid customer metrics across its major European markets, adding broadband customers in each. Spain and Italy, both troubled markets for Vodafone in recent quarters, showed improvement despite being hard-hit by the pandemic. Management also reiterated expectations for EUR 5 billion in free cash flow and EBITDA to be flat or down slightly for fiscal 2021. We don’t expect to materially change our GBX 194 fair value estimate or narrow moat rating in response to the trading update (Vodafone only discloses profitability and balance sheet information semiannually). We believe the shares are attractive.