Vodafone has reported second-quarter sales growth after a surprise increase in service revenue in Germany. The rising sales are backed by a series of price hikes across Europe to counteract declining smartphone sales, a trend that has been plaguing the industry throughout 2023.

The British telecommunications company saw sales growth in the second quarter rise 4.7%, Vodafone said on Tuesday (14 November). 

Vodafone CEO, Margherita Della Valle, has been looking to improve the company’s dwindling share price following a 26% decrease over the last 12 months. 

The company’s customers in Germany, its largest market, and other European countries saw an increase in their average monthly bills this year. The risky move seems to have paid off for Vodafone as it may have caused consumers to look elsewhere for cheaper rates.

Robert Pritchard, principal analyst at research company GlobalData, says the company has benefited from greater focus on turning round its main European markets, evidenced by improving net promoter score ratings, as well as growth in emerging markets such as Africa.

Pritchard added that the success of the business segment has also been driven by greater management attention and growth in internet of things (IoT), cloud and security services.

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Vodafone Germany led the mobile services market in 2022 with a 40.7% share of total subscriptions in 2022, research company GlobalData reported in its Germany Telecom Operators Country Intelligence Report. This was followed by Deutsche Telekom (25.4%) and O2 Germany (17.9%).

Della Valle let go of around 2,700 employees at the beginning of the year, kicking off Vodafone’s plan to cut the number of employees by 11,000 over the next three years.

The news comes as the German mobile data market looks set to continue growing expentionally, according to GlobalData forecasts.

Germany's mobile data market size in 2019 totalled $3.3bn and this is expected to grow to $8bn by 2027, marking a compound annual growth rate (CAGR) of 17.05%.

The entire telecom services market size in Germany was valued at $42.7bn in 2022, GlobalData states in its Germany Telecom Intelligence Report. The market is expected to grow at a CAGR of more than 3% during the forecast period, 2022-2027.

GlobalData said that machine to machine and IoT subscriptions will be the main driver of total mobile subscription growth in Germany. The company forecasts mobile subscriptions rising from 165 million in 2022 to 237 million in 2027.

"Growth in smartphone and tablet subscriptions will also complement the increase in mobile subscriptions," GlobalData stated.