Vodafone Group NASDAQ: VOD reported continued service revenue growth in its fiscal third quarter, supported by contributions across both Europe and Africa, and reiterated that it remains on track to deliver the upper end of its guidance range.
On the call, CEO Margherita Della Valle also introduced Pilar as the company’s new Group CFO. Management said Group service revenue grew 5.4% in the quarter, with growth in Germany and “strong contributions” from Africa and Turkey. Group EBITDA increased 2.3% in Q3 and 5.3% year-to-date, which the company said was “fully in line” with expectations and its trajectory to deliver the upper end of FY26 guidance.
Germany: improving customer experience while managing price actions
In Germany, management emphasized customer experience improvements alongside the financial impact of pricing actions and wholesale tailwinds. Della Valle said mobile network test results have continued to improve despite completing the migration of 12 million 1&1 customers, which she described as “one of the largest in European telcos.” She added that Vodafone now has more mobile customers using its network than any other operator in the country.
On fixed broadband, Della Valle pointed to rising Net Promoter Scores and a nationwide increase in upload speeds across Vodafone’s cable network. She said pricing actions affected gross additions during the quarter, but that higher-value inflows helped stabilize consumer broadband revenue. Specifically, management said new customer ARPUs in Germany were 21% higher year-on-year, contributing to stabilized consumer broadband revenues even as the market remains competitive.
Responding to analyst questions on Germany’s EBITDA trajectory, Pilar said the second half of the year should be better than the first half, but the company does not expect Germany’s EBITDA to return to positive growth in the second half. She cited ongoing pressures including mobile pricing effects, TV headwinds, and year-over-year impacts from prior acquisition and retention activity. She also identified tailwinds in the second half, including lapping MDU impacts, completion of the 1&1 wholesale migration, and lapping MVNO effects.
Looking into next year, Della Valle said Vodafone has “good visibility” on several factors in Germany, including:
- Continued TV headwinds in the near term;
- Ongoing, though lower, positive wholesale support versus this year;
- Improvement in B2B performance as the company builds pipeline and grows digital services;
- Cost benefits as simplification actions flow through the P&L.
She said uncertainty remains around consumer market dynamics, particularly in mobile, where price moves made roughly a year ago continue to “wash through” the base.
On Germany broadband, Della Valle reiterated a “value over volume” approach, noting that broadband penetration has plateaued and that Altnets are the primary source of growth in rural areas. She highlighted churn performance as a key volume metric, stating that fixed broadband churn in Germany is now below most European markets and below the UK. For Q4, she said Vodafone expects similar gross-add trends given another price action taken “just a week ago,” described as a “more-for-more” move across the cable portfolio supported by higher speeds, particularly uplink speeds.
On wholesale contributions from 1&1, Della Valle said the transfer was completed in December and that Vodafone is now at a run-rate of approximately EUR 0.1 billion of quarterly revenue “from now onwards.” She added that, on MDUs, Vodafone has completed the transformation and that the “low impact is fully behind us.”
UK: early integration progress and a long-term network investment plan
In the UK, Vodafone said integration and network investment plans are progressing after what management described as an “exceptionally fast start.” Della Valle said initial network upgrades were delivered ahead of schedule and are already improving mobile coverage and data speeds. She added that progress is visible in independent network tests and has been noted by the UK regulator, while emphasizing this is the beginning of a 10-year plan to invest GBP 11 billion to build the UK’s leading 5G network.
Management said it has “clear line of sight” to GBP 700 million of annual cost and CapEx synergies, with potential revenue synergies as well. Pilar noted that the first meaningful cost synergies in the UK are expected to be delivered in 2027. She also said FY2027 will include a full year of integration costs in the UK, which the company has previously guided would be front-loaded.
On the UK broadband market and potential industry consolidation, Della Valle said Vodafone is pleased with its “multi-partner” wholesale model, sourcing access from multiple partners including Openreach, CityFibre, and Community Fibre. She said the strategy is to provide customers access to the largest gigabit footprint available, and that Vodafone expects this approach to continue even amid consolidation.
On fixed wireless access (FWA) in the UK, Della Valle said the quarter’s lower net adds reflected seasonality and Black Friday price competition, particularly at lower speeds, but that Vodafone expects FWA to continue to grow. She framed FWA primarily as a bridge for customers “on the way to fiber,” with fiber expected to drive the “big numbers” in fixed broadband over time. In Germany, she noted Vodafone has offered an FWA product (GigaCube) for many years but characterized the market as less dynamic due in part to cable gigabit penetration and consumer behavior.
Africa and portfolio: Safaricom control and bolt-on M&A focus
Della Valle highlighted Africa as a key growth pillar, pointing to population growth, rising data usage, and accelerating demand for digital and financial services. She said Vodafone announced in December that it would acquire a controlling stake in Safaricom, describing it as a step that simplifies the Vodacom structure and reinforces leadership. She also cited cross-market platform leverage, pointing to Vodafone Cash in Egypt as an example of sharing best practices and scaling platforms across the continent.
While acknowledging that Africa is taking a larger role in the portfolio, Della Valle said the company’s M&A focus is now primarily on “bolt-on” acquisitions in the B2B space to expand capabilities, citing the Skaylink acquisition as an example and suggesting there could be more such moves, including in Africa.
Separately, Vodafone said it has completed the acquisition of Skaylink, which management said will support growth in digital services such as cloud and security.
Towers and regulation: Vantage position and EU policy developments
On towers, Della Valle said Vodafone is satisfied with having achieved its targeted 50/50 position in Vantage and said Vantage is growing and contributing dividends to the group. She noted the tower market is evolving and that further consolidation could occur across Vodafone’s European footprint. Regarding INWIT, she said she is “pretty happy” with Vodafone’s current position, while adding that decisions around participations sit with the Vantage board.
On European regulation, Della Valle described 2026 as an important moment for potential reform, though she stressed proposals remain in early stages. She welcomed the concept of perpetual spectrum licenses with automatic renewals as potentially improving investment certainty, but said draft cybersecurity proposals could introduce uncertainty, particularly given the role of member states in security matters. She also cited positive elements related to “single-market” steps, including passporting that could benefit digital platforms such as IoT, and a single satellite authorization framework across the EU. However, she said the company continues to push for changes to Europe’s net neutrality framework, arguing the current approach can limit innovation in B2B services such as slicing.
Outlook: confidence in multi-year trajectory, with moving parts into 2027
Management reiterated it is trading in line with expectations and expects to close the year at the upper end of its guidance range. Looking further out, Pilar said the company remains confident in its multi-year outlook for adjusted free cash flow growth in 2027, while flagging key moving parts including a UK CapEx step-up in FY2027 as the investment program peaks, integration costs in the UK, and spectrum-related items including the second installment of Turkey spectrum and the potential for spectrum in Egypt.
Della Valle closed by saying operational progress across the group is consistent with Vodafone’s multi-year growth trajectory and that the company will provide further detail at its full-year results in May.
About Vodafone Group NASDAQ: VOD
Vodafone Group plc is a British multinational telecommunications company headquartered in London. It provides a wide range of communications services to consumer and enterprise customers, including mobile voice and data, fixed-line broadband, cable and pay-TV, and wholesale network services. The company also offers business-oriented solutions such as cloud and hosting, managed networks, unified communications, and Internet of Things (IoT) connectivity and platform services.
Vodafone operates through a combination of wholly owned subsidiaries, joint ventures and partner arrangements across multiple countries, with a particularly large presence in Europe and in several African markets.
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