Wait for deals continues at Vodafone as CEO Nick Read warns of inflation impact

The telecoms giant announced a 4% rise in revenues to e45.6 billion and a 5% rise in adjusted earnings to e15.2 billion for the 12 months just ended. But the company warned adjusted earnings for the year ahead would be more or less flat and may even decline.

CEO Nick Read said Vodafone was “not immune” to the rising costs seen around the world and to upward pressure on wages. He insisted the business was “executing well” and defended “a good set of number in what is a challenging macroeconomic environment.”

Read has talked up the possibility of deal-making and has been under pressure from activists Cevian and Coast Capital to slim down the business.

There had been hopes that deals could be announced as soon as today, with reports that Vodafone was deep in talks about a possible merger of its UK consumer arm with mobile operator Three.

That failed to materialise today but Read said he remained “actively engaged” in talks about “in market consolidation.” He wouldn’t be drawn on talks with Three specifically but said they “would be a logical partner.”

Lack of progress on deals and concerns about the impact of inflation sent Vodafone tumbling to the bottom of the FTSE 100, down 1.6%.

The company enjoyed some welcome relief over the weekend after Abu Dhabi telecoms group e& paid above the odds to buy a 9.8% stake in Voda for £3.5 billion.

e& is run by former Vodafone executive Hatem Dowidar who has known Read for many years. The pair reconnected at an industry dinner at Mobile World Congress in Barcelona in February, which led to a more in-depth catch-up. Dowidar then called Read on Saturday to inform him of e&’s investment.

Dowidar has publicly said he is supportive of Read strategy for the business, providing a counterweight to activist pressure.

“It’s always nice to have any shareholder step forward and take a large stake in the company,” Read said.

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