CNBC's UK Exchange newsletter: An all-too-familiar dial tone from Vodafone

Long-term followers of Vodafone could have been forgiven for feeling a touch of déjà vu as they surveyed the mobile operator's full-year results last week.
Of particular interest was the assertion by Chief Executive Margherita Della Valle that Vodafone is at an "inflexion point."
That was reminiscent of how in July 2019 the company, then led by Nick Read, Della Valle's predecessor, claimed it had reached a "turning point" in its financial performance.
Or, further back, the moment in November 2015 when Vittorio Colao, Read's charismatic predecessor, suggested Vodafone had reached an "important turning point."
Such comparisons might be considered unfair. But they underline just how long this company has been disappointing investors.
Vodafone's fortunes are an apt metaphor not just for corporate Britain, but the country as a whole.
The company as we know it today was born in 1982 when, as part of her drive to widen consumer choice, former British Prime Minister Margaret Thatcher awarded Racal Electronics, a military radio specialist, one of two licenses to run what was then called cellular telephone networks (the other went to the then state-owned British Telecom).
After being demerged and renamed Vodafone, it expanded overseas in the late 1990s under Chief Executive Chris Gent just as Tony Blair, Britain's youngest prime minister in nearly 200 years, was wowing diplomatic circles.
This was an exciting time to be reporting on Vodafone's fortunes. It covered the blockbuster $66 billion acquisition of Airtouch, taking Vodafone into the U.S. and other key markets, and the purchase of German mobile operator Mannesmann, valued around $180 billion — the biggest-ever takeover by a British company and the largest foreign takeover of a German company.
It confirmed Vodafone as the world's largest mobile operator and the biggest company in the FTSE 100 index.
That it is, at the time of writing, the 31st most valuable company in the FTSE gives you an idea of what happened next.
From expansion to retrenchment — and a record-breaking annual loss
After years of flag-planting in foreign territories, a long period of retrenchment under Gent's successor Arun Sarin began.
The next decade was marked by disposals and, crucially, write-downs in the valuation of previously acquired assets. Vodafone set another record — this time, unwanted — when, in May 2006, it reported an annual loss of £14.85 billion ($20.13 billion at current prices), the biggest ever for a U.K. company (Royal Bank of Scotland and BP have both since broken the record).
Vodafone gradually retreated from some important markets, most notably the U.S., where in September 2013 it sold its 45% stake in Verizon Wireless for £130 billion. More recently it has exited Italy — previously one of its biggest markets — and Spain.
There are two major exceptions where Vodafone has continued to expand.
The first is Germany, where in 2018 it acquired Liberty Global's cable assets to become the biggest cable operator and second-largest player in converged fixed-line and broadband services after the market leader, Deutsche Telekom.
The second is Vodafone's home market, the U.K., where at the end of last year it was finally allowed to pool its operations with those of Hong Kong-owned Three UK, reducing the number of players in the market from four to three. This is expected to be transformative in a market that, for many years, has been pockmarked by low investment returns.
So the modern Vodafone is smaller than it once was — just as the U.K. economy now feels rather less globally significant than in the recent past.
It also means the company is far more dependent on just a handful of markets.
If shareholders have not exactly benefited from their exposure to Vodafone — shares are down around 40% over the last five years — it is still providing plenty of business for brokers.
It has just completed a 2 billion euro ($2.27 billion) share buyback program and last week announced a fresh 2 billion euro scheme. Investment bankers, who have also enjoyed plenty of fees from Vodafone over the years, will be hoping that the European Commission's ongoing review of merger guidelines leads to further consolidation activity.
For investors, though, the big question is whether Della Valle's assertion last week of an inflexion point is justified.
She can argue, reasonably, that Vodafone is now a simpler business and one that is outperforming rivals in key markets. She can also say, again with some justification, that Vodafone has begun to improve its customer experience — which she identified as her chief priority when she took over as chief executive two years ago.
While heavily dependent on mature European economies, Vodafone also retains market-leading positions in a number of big African markets such as South Africa, Kenya and Mozambique. Africa currently accounts for 20% of Vodafone's revenues but is expected to grow in importance. Turkey, where the company is the second-largest operator and which now accounts for around 8% of group revenues, also offers much promise.
And yet Vodafone remains a deeply frustrating company.
Rather than traditional metrics such as operating profit, it prefers investors to focus on free cash flow and a baffling measurement called EBITDAal (earnings before interest, taxes, depreciation and amortization, after leases). Yet, even on this metric, the numbers went backward in the latest financial year.
There always seems to be something dragging on the bottom line, whether it be hyperinflation in Turkey, write-downs in Romania or a change in cable TV contracts in apartment blocks in Germany.
The latter, Vodafone's biggest single market, is crucial in determining investor sentiment toward Vodafone. Should new Chancellor Friedrich Merz's fiscal loosening stimulate the German economy, Vodafone ought to benefit.
But this is a company that has seen countless false dawns and investors, mindful of its recent past, would be wise to be cautious.
The UK government is on track and focusing on growth, says Barclays CEO
C.S. Venkatakrishnan, Barclays' group chief executive, discusses the global economy, the bank's business outlook, the U.K. economy, M&A and more from the Barclays Leadership Conference in London.
UK doing a 'fairly good job' on foreign policy and trade deals, economist says
Kallum Pickering, chief economist at Peel Hunt, discusses the recent trade deals the U.K. has agreed with the U.S., India and European Union.
Most Brits want UK and EU to have a more pragmatic relationship, Jonathan Portes says
Jonathan Portes, professor of Economics and Public Policy at the School of Politics & Economics at King's College and London senior fellow at UK in a Changing Europe, reacts to emerging details around the U.K.-EU reset deal.Starmer has delivered some key wins for the UK recently. So why is the British prime minister so unpopular with voters?
Britain's economy is showing some positive signs. Economists are divided, however, about what the latest data means for the U.K.'s bigger economic picture.
Summer travel demand is soaring, according to the EasyJet CEO. But delivery delays at Boeing and Airbus are fueling a commercial jet shortage.After a downbeat couple of months dominated by global tariff fears, U.K. stock markets are back on the up in May. The FTSE 100 is currently on course for a gain of around 2.6% this month, which would be its best performance since January. The more domestic-oriented FTSE 250 is over 4% higher over the month to date.
It's also been a strong month for sterling, which has climbed against both the euro and U.S. dollar. These moves were boosted over the last week by better-than-expected retail sales data, consumer confidence and energy prices, which are set to fall more than previously thought.
There was also a surge in inflation to 3.5% in April from 2.6% in March, leading investors to expect more caution from the Bank of England in cutting interest rates this year — with higher rates generally good news for the home currency.
A final tailwind for U.K. assets was provided by Westminster's trade deal with the White House, establishing a 10% baseline tariff rate on its U.S.-bound exports while most other countries remain mired in negotiations.
U.K. government borrowing costs have ticked higher this month, in step with much of the rest of the world. The yields on U.K. bonds, known as gilts, are little changed this week — but investors are monitoring a report from the Financial Times that the U.K.'s Debt Management Office is pivoting to more shorter-term borrowing as demand wanes for longer-dated debt.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Newsweek

an hour ago

• Newsweek

Mercedes Formula One Team Reports Massive $120 Million Revenue Boost

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The Mercedes Formula One team has reported a significant revenue increase of approximately $120 million (as per today's exchange rates). Sixty percent of the earnings come from sponsorship and licensing. From the data published by the UK's Companies House, as published by Mercedes Grand Prix Limited, the parent company of the Mercedes F1 team, reported a turnover of approximately $856 million (£636 million) in 2024, which is a stark increase from 2023's $735 million (£546.5 million). Consequently, profits too have jumped significantly. Mercedes recorded an approximate $112.7 million (£83.8 million) net profit in 2023, with the number rising to $162 million (£120.34 million) in 2024, an increase of approximately $50 million. Mercedes' British driver George Russell pulls into pit lane after winning the 2025 Formula 1 Grand Prix du Canada at Circuit Gilles-Villeneuve in Montreal, Canada, on June 15, 2025. Mercedes' British driver George Russell pulls into pit lane after winning the 2025 Formula 1 Grand Prix du Canada at Circuit Gilles-Villeneuve in Montreal, Canada, on June 15, 2025. TIMOTHY A. CLARY/AFP/Getty Images It is noteworthy that Mercedes received a significant share of the F1 prize money for securing second place in the 2023 Constructors' Championship, which increased its revenue in 2024 since payments are processed the following year. As a result of the positive earnings, the team's three shareholders, Mercedes-Benz Group, team principal Toto Wolff, and Ineos, will receive an ordinary dividend of approximately $168 million (£125 million). However, it remains to be seen what impact Mercedes' performance in the 2024 season will have on its earnings, considering it secured fourth place in the championship. In addition, it would be interesting to see a change in the percentage of earnings from sponsorships, given seven-time world champion Lewis Hamilton's exit from the team after the 2024 season. Speaking of 2025, the season has been dominated by McLaren thus far. Mercedes achieved its first win in the previous round in Montreal, where the team's lead driver, George Russell, started from pole position and led the race for the majority of the laps to secure his first win of the year. However, rumors are doing the rounds that Russell is on Aston Martin's radar for the 2026 season, when the sport enters a new era of regulations. Newsweek Sports reported Russell's comments, who confirmed the interest shown by other teams but emphasized his intention to continue racing for Mercedes. He said: "No, I'm not talking with anybody else and any teams who have shown interest. I have been quite open to say my intentions are to stay with Mercedes. That's always been clear. "And, you know, I am loyal to Mercedes. They gave me this chance to get into Formula 1. There haven't been any hard feelings with any of the talks that have been going around, you know, especially around Max because, like I said numerous times, why wouldn't teams be interested in Max if everybody could, if every driver had a clean, no contracts for next year, Max would be the number one for every single team. And that's understandable. "But ultimately there are two seats for every race team and I knew if I continued to perform as I'm doing, my position would not be under threat whatsoever. So, I feel in a good place. We're in no rush to do contract negotiations."

Chicago Tribune

4 hours ago

• Chicago Tribune

Sunken Bayesian superyacht lifted from waters off Sicily as salvage operation completed

PORTICELLO, Italy — A British-flagged luxury superyacht that sank off Sicily last year, killing U.K. tech magnate Mike Lynch and six others, was lifted from the water Saturday as salvage recovery crews completed the complex operation to bring it ashore for further investigation. The white top and blue hull of the 56-meter (184-foot) Bayesian, covered with algae and mud, was visibly clear of the sea in a holding area of a yellow floating crane barge off the Sicilian port of Porticello. 'The hull of the superyacht Bayesian has today been successfully and safely recovered from the sea off the coast of northern Sicily,' said TMC Maritime, the company conducting the recovery. 'This follows a delicate lifting procedure that began early today.' TMC added that the hull will continue to be held 'in an elevated position to allow expert salvage personnel to complete checks and preparations' ahead of its transportation into the Sicilian port of Termini Imerese on Sunday. The floating crane platform will move the Bayesian to the port, where a special steel cradle is waiting for it. The vessel will be then made available for investigators to help determine the cause of the sinking. The Bayesian sank Aug. 19 off Porticello, near Palermo, during a violent storm as Lynch was treating friends to a cruise to celebrate his acquittal two months earlier in the U.S. on fraud charges. Lynch, his daughter and five others died. Fifteen people survived, including the captain and all crew members except the chef. Italian authorities are conducting a full criminal investigation. The vessel has been slowly raised from the seabed, 50 meters (165-feet) down, over the past three days to allow the steel lifting straps, slings and harnesses to be secured under the keel. Eight steel lifting straps were used to put the hull upright and to form part of a steel wire lifting system that began raising the vessel out of the water Saturday. As the superyacht was raised, seawater was pumped out of the hull. The Bayesian is missing its 72-meter (236-foot) mast, which was cut off and left on the seabed for future removal. The mast had to be detached to allow the hull to be brought to a nearly upright position that would allow the craft to be raised. British investigators said in an interim report issued last month that the yacht was knocked over by 'extreme wind' and couldn't recover. The report said the crew of the Bayesian had chosen the site where it sank as shelter from forecast thunderstorms. Wind speeds exceeded 70 knots (81 mph) at the time of the sinking and 'violently' knocked the vessel over to a 90-degree angle in under 15 seconds. Lynch, who sold Autonomy, a software maker he founded in 1996, to Hewlett-Packard for $11 billion in 2011, had been acquitted of fraud charges in June 2024 by a federal court jury in San Francisco.

USA Today

5 hours ago

• USA Today

This TikTok-famous retro pink toothpaste is 15% off ahead of Prime Day

Get a brighter, fresher smile with the cult-favorite whitening toothpaste on sale at Amazon. If you've ever scrolled through TikTok lately, chances are you've seen the iconic pink tube of Euthymol Whitening Toothpaste. With its vintage-inspired packaging, bold minty flavor and cult following, this British-born toothpaste is making waves stateside. Right now, you can grab the Euthymol Pink Whitening Toothpaste for up to 15% off on Amazon as part of the retailer's early Prime Day deals. Whether you're restocking your bathroom cabinet or want to try a new whitening toothpaste for summer 2025, this is the perfect opportunity to upgrade your oral care routine on a budget. Early Prime Day deal: Euthymol Pink Whitening Toothpaste Euthymol Pink Whitening Toothpaste The Euthymol Pink Whitening Toothpaste is trending on TikTok and 15% off ahead of Amazon Prime Day 2025. Save at Amazon today What makes the Euthymol Pink Whitening Toothpaste so special? Euthymol isn't your average toothpaste. With a unique pink shade, it is immediately a more playful and fun toothpaste. But, it is backed by very serious results like offering visibly brighter teeth and fresher breath. Here are some highlights: Plus, it comes in a recyclable aluminum tube that is a great perk for eco-conscious shoppers. With over 120 years of oral care heritage, Euthymol has earned a loyal fanbase for its no-nonsense formula and retro charm. It's especially loved by those with sensitive gums, thanks to its gentle yet effective ingredients. What are the early Prime Day deals? Save up to 15% at Amazon The Prime Day sale starts on Tuesday, July 8 and will run through the end of day on Friday, July 11.