Key Highlights
- Shares of Vodafone surged 4.3% to 119.5p following a robust Q1 performance update
- Quarterly revenue increased 9.7% year-over-year to €10.3 billion through June 30
- Company upgraded full-year adjusted core earnings forecast to €13–€13.3 billion
- Management now anticipates delivering results at the top end of both earnings and cash flow projections
- Germany’s service revenue exceeded analyst expectations by 1.2%, identified by Morgan Stanley as the primary driver
Shares of Vodafone rallied 4.3% to 119.5 pence on Monday following the telecom operator’s impressive first-quarter performance and an upward revision to its annual forecast.
Vodafone Group Public Limited Company, VOD
For the three months ending June 30, total revenue reached €10.3 billion, representing a 9.7% increase compared to the same period last year. Service revenue climbed 9.8% to €8.6 billion, while organic service revenue growth came in at 5.2%.
The company’s adjusted EBITDAaL increased 6.7% to €2.9 billion, with organic growth of 6.2%, supported by strong service revenue performance and enhanced operational efficiency.
Chief Executive Margherita Della Valle commented that the company had achieved a “good start to this financial year,” highlighting widespread growth momentum across all business segments.
German and African Markets Drive Performance
In Germany, Vodafone’s most significant market, organic service revenue expanded by 1.2%. Morgan Stanley highlighted that German service revenue of €2.74 billion surpassed consensus forecasts by 1.2% — representing the most notable achievement in the quarterly report.
The anticipated deceleration in Germany’s growth trajectory failed to occur, which market analysts characterized as a distinctly encouraging sign.
The African operations delivered particularly strong results, with service revenue growth jumping to 15% in the first quarter, compared to just 7% in the previous period. This acceleration was primarily driven by Egypt and Vodacom’s international operations.
In the United Kingdom, service revenue also exceeded consensus projections by 70 basis points, supported by robust fixed-line performance.
Forecast Upgraded Following Safaricom Integration
The telecommunications company revised its annual guidance upward after incorporating Safaricom into its consolidated results. Vodacom finalized its acquisition of an additional 20% interest in Safaricom on June 30, with complete consolidation taking effect from July 1, 2026.
The revised outlook now projects adjusted core earnings between €13 and €13.3 billion, with adjusted free cash flow expected to range from €2.6 to €2.9 billion for the fiscal year ending March 2027. Company executives indicated they anticipate achieving results at the higher end of both projected ranges.
Morgan Stanley observed that the upper boundary of the new guidance represents a 1.1% premium to consensus estimates for core earnings and exceeds free cash flow projections by 4.3%.
Significantly, market analysts emphasized that the guidance upgrade reflects “fully organic” improvements — not merely an accounting effect from the Safaricom addition. Contributing factors include stronger-than-anticipated emerging markets results, reduced macroeconomic headwinds, and successful energy hedging strategies.
Morgan Stanley maintains an “equal-weight” rating on Vodafone with a 115 pence price objective. The firm had projected a 3–5% stock price movement in response to the quarterly update.
The company anticipates that restructuring and integration expenses will reach approximately €700 million during the current fiscal year, with about €400 million attributed to the VodafoneThree combination.
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