German revenue is still declining 2-3% ex-MDU/1&1. What's the timeline for underlying momentum improvement? What is the H2 outlook for Germany revenue/EBITDA including 1&1?

Underlying German revenue (excluding wholesale) is broadly stable, with no big quarter-on-quarter step-ups expected in H2. Long-term actions like improved customer experience, churn reduction, ARPU focus, and B2B digital services (e.g., Skaylink acquisition) are expected to support topline performance into FY27. Wholesale contribution from 1&1 is expected to be around EUR 100 million in H2. “In terms of underlying performance, so if we exclude wholesale, Akhil, you are absolutely right, it's broadly stable.”

Can you provide more color on early integration actions and synergy delivery in the U.K.? Why was Q2 revenue better than expected?

Integration is progressing rapidly, with third-level organizational integration nearing completion. Network improvements include spectrum sharing and MOCN rollout to 8,000 sites by the end of the week. Q2 commercial outperformance was driven by improving churn trends, strong home broadband net adds, and initial cross-selling benefits (FWA), which outweighed the underlying decline in B2B legacy managed services. “I think we are progressing at a pace that has not seen before in U.K. telcos in terms of bringing the 2 companies together.”

What is the impact of proposed Telco Act changes on MDU access/fiber deployment? What are the equity injections for the OXG JV and wholesale costs for the German unit?

Proposed Telco Act changes aim to simplify and accelerate network builds, which is positive. The in-building wiring debate is seen as unnecessary, and any impact on fiber build for housing associations would be marginal, benefiting all players including OXG. OXG equity injections are very small, just above EUR 70 million over three years. There is no obligation for Vodafone cable customers to migrate to OXG fiber, and penetration will build gradually over time. “It's unclear whether this discussion will ever become a draft law, and it's unclear at this point when this draft law will become law.”

VOD

Vodafone Group Public Limited Company (VOD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2025 (Q2 FY26)· Communication Services· Nov 11, 2025

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year growth guidance	upper end of the range high materiality	FY26	High
Africa EBITDAaL growth	double-digit growth medium materiality	medium-term	High
Dividend policy	progressive dividend policy high materiality	over time	High
Dividend growth rate	2.5% high materiality	first year	High
Share buyback	EUR 1 billion high materiality	next 6 months	High
Free cash flow growth	growth high materiality	midterm	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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	—	—	—	—

Deals & partnerships

Three Combination of Vodafone UK and Three UK operations.

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

Telekom Romania Acquisition of Telekom Romania's assets.

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

Skaylink Acquisition 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.

OXG Fiber build-out in Germany. EUR 7 billion 6 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

H2 EBITDA slowdown H2 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 Headwind Ongoing, into FY27

Expected to continue

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

Underlying German Revenue Decline Current

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 Moderation H2 FY26 and into FY27

Expected to trend down

Mitigation:Balanced by improving European performance.

UK B2B Tough Comps Q3 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

Germany underlying revenue trend

Next quarter / H2 FY26

Current declining 2% to 3% (ex-wholesale)

Target Improvement 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.

Find out whether VOD delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.