To cut to the chase, it is going to be difficult for Vodafone (VOD) to balance its capital investment needs with dividend growth. To charge higher prices without losing too much business, Vodafone needs a better product, be that 5G services, fibre-optic cables or just improved customer support. But all of this needs investment, while at the same time Vodafone’s investors expect a healthy amount of cash returned to them.
As it stands, its businesses aren't growing. Vodafone’s largest market, Germany, saw its customer base fall and organic revenue shrink 1.3 per cent year on year in the first quarter. Spain also saw customer numbers drop, while organic revenue dropped 3 per cent. Italy saw a stabilisation of its customer base, but revenue was down 1.6 per cent. All these markets saw price rises, and consequently all have seen a churn in their user bases.