Key Highlights
- Vodafone shares surged 4.3% to reach 119.5p following an impressive Q1 performance
- Quarterly revenue increased 9.7% year-over-year to €10.3 billion through June 30
- Updated full-year adjusted core earnings outlook set at €13–€13.3 billion
- Management anticipates achieving the upper end of both earnings and free cash flow projections
- German market service revenue surpassed analyst estimates by 1.2%, highlighted as a major catalyst by Morgan Stanley
Shares of Vodafone advanced 4.3% to 119.5 pence on Monday following the telecommunications company’s robust first-quarter performance and upwardly revised annual projections.
Vodafone Group Public Limited Company, VOD
Quarterly revenue through June 30 reached €10.3 billion, representing a 9.7% increase compared to the same period last year. Service revenue expanded 9.8% to €8.6 billion, while organic growth registered at 5.2%.
The company’s adjusted EBITDAaL climbed 6.7% to €2.9 billion, with organic growth of 6.2%, supported by expanding service revenue and enhanced operational efficiency.
Chief Executive Margherita Della Valle emphasized the company’s “good start to this financial year,” highlighting widespread expansion across all business divisions.
German and African Markets Drive Performance
In Germany, Vodafone’s most significant market, organic service revenue expanded 1.2%. Morgan Stanley identified German service revenue of €2.74 billion as exceeding consensus forecasts by 1.2% — representing the quarter’s most notable achievement.
Anticipated deceleration in German market growth failed to occur, which industry observers characterized as decidedly encouraging.
African operations also delivered impressive results, with service revenue growth accelerating to 15% in Q1, compared to 7% in the previous quarter. Operations in Egypt and Vodacom’s international territories provided primary momentum.
UK service revenue similarly exceeded consensus projections by 70 basis points, supported by robust fixed-line performance.
Outlook Enhanced Following Safaricom Consolidation
Vodafone upgraded its annual forecast following the integration of Safaricom into its consolidated results. Vodacom finalized the acquisition of an additional 20% ownership in Safaricom on June 30, with complete consolidation taking effect July 1, 2026.
The revised outlook projects adjusted core earnings between €13–€13.3 billion and adjusted free cash flow of €2.6–€2.9 billion for the fiscal year ending March 2027. Management indicated expectations to achieve the upper boundaries of both ranges.
Morgan Stanley observed the new guidance ceiling exceeds consensus expectations by 1.1% for core earnings and 4.3% for free cash flow projections.
Significantly, analysts emphasized the guidance improvement stems from “fully organic” factors — not merely from incorporating Safaricom’s contributions. Strong emerging markets performance, reduced macroeconomic headwinds, and strategic energy hedging all played contributory roles.
Morgan Stanley maintains an “equal-weight” rating on Vodafone with a 115 pence price objective. The firm had projected a 3–5% stock price reaction to the quarterly update.
Restructuring and integration expenditures are projected to reach approximately €700 million this fiscal year, with roughly €400 million attributed to the VodafoneThree combination.
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