Vodafone Group NASDAQ: VOD said it is entering “a new chapter” as a simpler and stronger business after a three-year transformation spanning its portfolio, capital structure and operating model, while management pointed to continued growth in fiscal 2027 and beyond.
Group Chief Executive Margherita Della Valle told analysts that Vodafone achieved results at the upper end of expectations for FY26. She said group service revenue growth remained strong in the fourth quarter at 5.1%, with growth across both Europe and Africa. Adjusted EBITDA grew 4.5% organically for the full year, in line with the upper end of guidance, and adjusted free cash flow reached 2.6 billion euros.
Following the company’s announcement of a progressive dividend policy, Vodafone increased its full-year FY26 dividend by 2.5%. For FY27, management guided for “continued good growth” in both adjusted EBITDA and adjusted free cash flow.
Germany Remains Under Pressure, but Management Cites Operational Progress
Della Valle said Vodafone’s performance in Germany has improved despite ongoing pressure in television and a competitive mobile market. She said the company is now growing in business-to-business services and consumer broadband, attributing those gains to operational actions including customer satisfaction improvements, higher front-book prices and growth in digital services such as cloud, security and AI.
Still, management acknowledged that Germany remains a key pressure point. Group CFO Pilar López said Vodafone expects a decline in Germany in FY27, with fourth-quarter trends continuing into the new year. Della Valle said EBITDA in Germany is expected to remain under pressure, while retail service revenue growth is still negative due to the flow-through of prior mobile pricing resets.
Della Valle said Vodafone does not expect further pressure from commercial costs because prior increases have annualized. She also pointed to productivity initiatives in headcount, automation and IT simplification, partially offset by inflation.
On customer trends, Della Valle said broadband gross additions have been affected by price increases, but churn levels remain favorable. She said customer satisfaction on the cable network reached its highest-ever level and that fixed-line trends in Germany have stabilized overall despite the drag from television.
U.K. Integration Expected to Deliver Growth and Synergies
In the U.K., Vodafone said it has made significant progress less than a year into the integration of VodafoneThree. Della Valle said independent tests show material improvements in mobile network quality, which are feeding through into customer satisfaction and loyalty. She also said Vodafone recorded its fastest-ever year of home broadband customer growth and has the largest gigabit footprint of any operator.
The company has announced it will take full ownership of VodafoneThree, and Della Valle said FY27 will bring the first meaningful cost and capital expenditure synergies. She also said Vodafone will continue to pursue revenue synergies through a multi-brand portfolio, a unified store footprint and cross-selling opportunities. As one example, she cited the company’s announcement that fixed wireless access will be brought to an additional 3.7 million homes.
Asked about the U.K. growth outlook, Della Valle said Vodafone’s plans assume price competition will continue. She said the merger’s value comes from better returns on capital employed, enabling greater investment through scaled infrastructure. She highlighted churn reduction and cross-selling to a larger customer base as key revenue opportunities.
López said U.K. service revenue declined in the fourth quarter due to lower B2B project activity and the interruption of revenue from a large customer. However, she said consumer trends improved quarter over quarter, with ARPU growth in mobile and fixed, churn reductions across brands and strong fixed broadband net additions. López said Vodafone expects the U.K. to grow in FY27, with a step-up in B2B revenue as the company laps the impact of terminated managed service contracts.
Africa and Emerging Markets Support Growth Outlook
Della Valle described Africa as Vodafone’s second-largest division and said it reported strong results across all markets, delivering its highest service revenue growth in almost two decades. She also highlighted Vodafone’s fintech platform in Africa, which she said has more than 100 million users and millions of merchants.
Management said structural opportunities in Africa include population growth, customer growth, rising smartphone penetration and growing data usage. López said Vodafone expects continued growth in the rest of the world, supported by strong performance in Africa and continued growth in Turkey in euros. She said the company manages its emerging markets for euro growth.
Della Valle said Vodafone is increasing its exposure to Africa through the Safaricom transaction, which she described as taking control of “one of the most successful companies in telecom and financial services” on the continent. However, when asked whether Vodacom could expand into new African markets or increase stakes in existing assets, she said Vodafone is “very happy” with its current geographic shape in Africa.
Midterm Free Cash Flow Ambition and Capital Allocation
Vodafone introduced a midterm ambition to deliver double-digit organic growth in adjusted free cash flow. Della Valle said the company’s confidence stems from its simplified structure, scaled positions in all of its markets and what she described as a more supportive environment for connectivity, including sustainable pricing models, pro-investment spectrum decisions and greater recognition of in-market scale benefits.
On leverage, Della Valle said Vodafone still aims to operate in the lower half of its leverage range. She said the U.K. buyout was always part of the plan, though it is occurring earlier than expected. The deal will temporarily move Vodafone slightly above its preferred range, but she said the company expects to return to the lower half by the end of FY27, helped by proceeds from the Netherlands transaction and the growth outlook.
Della Valle said she is “very happy” with the current shape of the group and that Vodafone’s focus remains on organic execution and driving double-digit organic free cash flow growth. She also said a dedicated Vodafone Investments team will continue managing non-core stakes and infrastructure and innovation holdings “with agility and discipline” to create value.
AI Seen as Both Growth Enabler and Productivity Tool
Asked about artificial intelligence, Della Valle said AI affects Vodafone across networks, productivity and future demand. She said AI can make networks more efficient, while future AI use cases in vehicles, robotics and other physical-world applications will require stronger network infrastructure, low latency and faster speeds.
López said AI is already an enabler of cost efficiencies and productivity and is one of the key drivers behind Vodafone’s operating expense savings targets. She cited customer care applications such as TOBi and SuperTOBi, as well as AI use in shared operations and procurement.
Della Valle also said AI introduces new risks in fraud and cybersecurity, but can improve defenses. She pointed to fraud alerts being rolled out across European markets to warn customers about suspicious calls.
Closing the call, Della Valle said Vodafone has posted an online presentation summarizing where the company stands and where it is headed as it begins its next phase.
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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