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    VOD
    Earnings call· Sep 2025(Q2 FY26)

    VODAFONE GROUP PUBLIC LTD CO VOD

    Nov 11, 2025 Source

    Executive summary

    Vodafone Group Public Limited Company Q2 FY26 — Strong H1 Performance, UK Integration, and Progressive Dividend

    Vodafone reported a solid first half for FY26, marked by accelerated service revenue and EBITDAaL growth, driven by strong performance across Europe and Africa. The company completed its strategic reshaping with the UK-Three merger and Telekom Romania acquisition, positioning it for sustainable growth. Management confirmed full-year guidance at the upper end of the range and announced a progressive dividend policy, underscoring confidence in future cash flow generation. Operational execution in Germany and the U.K. is progressing well, with a focus on customer experience, network investment, and B2B digital services, despite anticipated H2 EBITDA moderation.

    Highlights

    5

    • Group service revenue accelerated to 5.8% in Q2, supported by growth across Europe and Africa.

    • Group EBITDAaL grew by 6.8% in the first half, with nearly all markets posting growth.

    • Completed the merger of Vodafone and Three in the U.K. and the acquisition of Telekom Romania's assets, reshaping the group.

    • Confirmed expectation to close the year at the upper end of the growth guidance set out in May.

    • Announced a new progressive dividend policy, with 2.5% growth expected for the first year.

    Concerns

    3

    • Full-year guidance implies a slowdown in H2 EBITDA growth compared to H1, driven by moderating emerging markets growth and back-end loaded U.K. marketing expenses.

    • Underlying German revenue trends are still declining 2% to 3% when excluding the MDU effect and 1&1 impact.

    • Headwinds in the German TV business are expected to continue.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full-year growth guidance
    upper end of the range
    high materiality
    High
    Africa EBITDAaL growth
    double-digit growth
    medium materiality
    High
    Dividend policy
    progressive dividend policy
    high materiality
    High
    Dividend growth rate
    2.5%
    high materiality
    High
    Share buyback
    EUR 1 billion
    high materiality
    High
    Free cash flow growth
    growth
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Germany
    Turnaround continues with solid operational progress. Improved customer satisfaction and disciplined execution focused on value. Expanding digital services and B2B growth opportunities. Underlying revenue (ex-wholesale) is broadly stable.
    5G stand-alone network coverage: >90% population5G customers: >40 millionIoT SIMs: ~60 millionGigabit connectivity: 3 out of 4 German householdsOXG fiber marketing: 1 million homes
    		————
    U.K.
    Largest mobile operator and fastest-growing broadband provider. Market leader in customer satisfaction. Integration of Vodafone and Three progressing rapidly, with GBP 11 billion network investment for 5G. Good commercial momentum supported by cross-selling and multi-brand approach.
    Mobile customers: ~30 millionGigabit fiber households: ~22 million
    		————

    Operational metrics

    17
    Group Service Revenue Growth
    5.8%accelerated
    Q2

    Supported by growth across Europe and Africa.

    Group EBITDAaL Growth
    6.8%
    H1

    Nearly all markets posted EBITDAaL growth.

    Capital returned to shareholders
    EUR 5 billion
    last 18 months

    Returned via buybacks and dividends.

    1&1 Wholesale Migration Run Rate
    EUR 11 million
    Q4

    Expected full run rate, almost done with migration.

    Wholesale Contribution
    just above EUR 80 million
    Q2

    From 1&1 win and subsequent Lyca loss.

    Wholesale Contribution
    around EUR 100 million
    H2

    Expected from 1&1.

    OXG Fiber JV Equity Contribution
    just above EUR 70 million
    3 years

    Very small, underscoring self-financing.

    Vodafone Turkey EBITDA increase
    close to EUR 300 million
    last 2 years

    In hard currency.

    Vodafone Turkey Cash Flow increase
    close to EUR 300 million
    last 2 years

    In hard currency.

    Vodafone Turkey Service Revenue Growth (hard currency)
    mid-teens
    Q4

    Still significantly outperforming inflation.

    Vodafone Turkey Service Revenue Growth (hard currency)
    more than 20%
    H1

    Still significantly outperforming inflation.

    Service Revenue Growth ex-Turkey
    3%
    Q2

    Reflects strength of the portfolio outside of hyperinflationary environment.

    FWA Net Adds
    17,000accelerated
    Q2

    Included in mobile customer numbers. Seen as an opportunity to bridge time until fiber comes or cover rural areas.

    Digital Services as % of B2B Revenues
    over 1/4
    current

    Growing double-digit.

    MOCN Sites Upgraded
    8,000
    by week-end

    Target for year-end, now achieved. Allows customers to seamlessly use both networks.

    Network Investment Program
    GBP 11 billion
    current

    For building best-in-class 5G network.

    Roles Reduction Program
    —
    this year

    Completing the program announced to simplify the group.

    Industry KPIs

    6
    MetricValueDetails
    Free cash flow FCF guidancegrowth
    Service revenue growth rate5.8%%
    Fiber jv cost synergy programsEUR 7 billionEUR
    Share buyback capital returnedEUR 1 billionEUR
    Spectrum position network benchmarksnoticeably better speeds and coverage
    Fwa subscriber base and capacity model17,000units

    Deals & partnerships

    4
    ThreeCombination of Vodafone UK and Three UK operations.

    Completed in the last 6 months, part of group reshaping.

    Telekom RomaniaAcquisition of Telekom Romania's assets.

    Completed in the last 6 months, part of group reshaping.

    SkaylinkAcquisition of an established cloud service specialist active across Germany and Europe.

    Announced two weeks prior to the call. Expected to contribute to double-digit growth in cloud and security services.

    OXGFiber build-out in Germany.EUR 7 billion6 years of rollout

    CapEx to build a footprint to 7 million homes. Built to 350,000 households, sales open to 1 million homes, 3 million committed construction orders. Equity injection of EUR 70 million over 3 years.

    Risks & headwinds

    5
    H2 EBITDA slowdownH2 FY26

    Implied by high-end full-year guidance vs. H1 performance

    Mitigation: Germany expected to improve, but emerging markets growth moderating and UK marketing expenses are back-end loaded.

    German TV HeadwindOngoing, into FY27

    Expected to continue

    Mitigation: Focus on other growth areas like B2B digital services and mobile/fixed ARPU.

    Underlying German Revenue DeclineCurrent

    Declining 2% to 3% (excluding MDU and 1&1 impact)

    Mitigation: Actions focused on customer experience, churn reduction, ARPU support, and B2B growth are expected to support long-term topline performance.

    Emerging Markets Growth ModerationH2 FY26 and into FY27

    Expected to trend down

    Mitigation: Balanced by improving European performance.

    UK B2B Tough CompsQ3 FY26

    Due to a positive one-off last year

    Mitigation: Expected to sequentially increase and improve going into Q4 and beyond FY27.

    What to watch in Q3 FY26

    5

    Germany underlying revenue trend

    Next quarter / H2 FY26
    Currentdeclining 2% to 3% (ex-wholesale)
    TargetImprovement towards stability or growth

    Why it matters

    Indicates effectiveness of turnaround actions beyond wholesale effects.

    But over time⏳, the actions I was referring to in my introduction, which are all speaking to the long-term health of the business, will actually support our topline performance.

    Q&A highlights

    5

    Why does H2 guidance imply a slowdown despite Germany's easier comps? What are the H2 EBITDA levers and FY27 building blocks?

    H2 slowdown is expected due to moderating emerging markets growth and back-end loaded U.K. marketing expenses. Germany is expected to continue improving with dissipating MDU impact and full 1&1 wholesale run rate. For FY27, the U.K. is expected to be a strong contributor due to synergies, Germany will have mixed effects, and emerging markets growth will continue to be a challenge. The mix of EBITDA contribution is shifting more favorably towards Europe.

    “If you look forward to the second half, yes, our outlook at the high end of the range implies a slowdown. And there are 3 factors that I would call out for that.”

    asked by Maurice Patrick · answered by Luka Mucic

    2 min read5 chapters

    Detailed Narrative

    01

    Group Reshaping and Strategic Focus

    Vodafone has completed the reshaping of its group, including the merger of Vodafone and Three in the U.K. and the acquisition of Telekom Romania's assets. All operations are now at scale in their markets with sustainable structures. The company is focused on operational excellence, boosting customer satisfaction, simplifying operations, and expanding digital and financial services beyond traditional connectivity. This strategic repositioning underpins confidence in future growth and cash flow generation.

    02

    Germany Turnaround Progress

    In Germany, the turnaround continues with significant operational progress. The 5G stand-alone network covers over 90% of the population, serving over 40 million customers and nearly 60 million IoT SIMs. Gigabit connectivity is available to three out of four German households, and OXG fiber is being marketed to 1 million homes. Customer satisfaction has improved, and the company is focused on increasing front book ARPUs in fixed and expanding B2B digital services, exemplified by the recent Skaylink acquisition.

    03

    U.K. Integration and Network Investment

    The U.K. market is seeing rapid integration of Vodafone and Three, with significant network investments planned, including GBP 11 billion for a best-in-class 5G network. Early actions include spectrum sharing and the rollout of the multi-operator core network (MOCN) to 8,000 sites. Commercial momentum is strong, driven by improving churn, home broadband net adds, and initial cross-selling opportunities, which are contributing to revenue synergies on top of the GBP 700 million cost and CapEx synergies.

    04

    Digital Services and B2B Growth

    Digital services now constitute over a quarter of Vodafone's B2B revenues and are growing double-digit across areas like IoT, cloud, and security. The company sees significant growth opportunities, particularly in the SME segment, where it leverages existing customer relationships and trust. Vodafone plans to continue building capabilities in this space, potentially through small bolt-on M&A, to meet strong customer demand for services like sovereign cloud.

    05

    Capital Structure and Shareholder Returns

    Vodafone has reset its capital structure, resulting in a stronger balance sheet. The company has returned over EUR 5 billion to shareholders via buybacks and dividends over the last 18 months, with a further EUR 1 billion in buybacks planned for the next six months. A new progressive dividend policy has been announced, signaling expected year-on-year dividend growth, starting with 2.5% for the first year, reflecting confidence in midterm free cash flow growth.

    AI-generated summary of the company’s earnings call. Not investment advice.