Company Reports

Vodafone's first-quarter results were positive, with adjusted EBITDAaL up 6.2% year on year and management guiding toward the higher end of its EUR 13.0 billion-EUR 13.3 billion adjusted EBITDAaL guidance.

Vodafone is a telecommunications conglomerate present in more than 20 countries around the world. Its most important markets are Germany and the United Kingdom. Vodafone has historically been a mobile player, but in the last decade, it has carried out several deals to solidify its fixed-line presence, acquiring two cable networks in Germany: Kabel Deutschland (2013) and Liberty Global Germany (2019).

On July 10, Xavier Niel acquired a 16% stake in Vodafone through his family investment vehicle Vega, from the United Arab Emirates group e&. Niel is now Vodafone’s largest shareholder, and we expect him to push hard for a faster turnaround. We view this as a very positive development for the shares.

Vodafone is a telecommunications conglomerate present in more than 20 countries around the world. Its most important markets are Germany and the United Kingdom. Vodafone has historically been a mobile player, but in the last decade, it has carried out several deals to solidify its fixed-line presence, acquiring two cable networks in Germany: Kabel Deutschland (2013) and Liberty Global Germany (2019).

Vodafone's fourth-quarter and fiscal 2026 results were rather disappointing, with subscriber net losses accelerating in Germany and the UK.

Vodafone reiterated its adjusted EBITDAaL guidance of EUR 11.3 billion–EUR 11.6 billion, but underlying operating trends in its two largest segments—Germany and the UK—were softer than anticipated. Shares declined 5% to GBX 109 following the update.

The Morningstar Developed Markets Europe Communication Services Index has returned 23.7% year to date, thanks to renewed hopes for consolidation and modestly improving conditions in markets like Italy.

After 15 months of pain, Vodafone Germany returned to growth in its second-quarter fiscal 2026, booking a 0.5% year-on-year service revenue increase.

Vodafone is a telecommunications conglomerate present in more than 20 countries around the world. Its most important markets are Germany and the United Kingdom. Vodafone has historically been a mobile player, but in the last decade it carried out several deals to solidify its fixed-line presence, acquiring two cable networks in Germany: Kabel Deutschland (2013) and Liberty Global Germany (2019).

Vodafone’s reported 5.5% organic service revenue growth in its first-quarter trading update. Excluding Turkey and Africa, European service revenue grew by 3.1%.

Vodafone met its 2025 guidance of EUR 11.0 billion in adjusted EBITDA after leases after a very tough year when Germany, its largest market, was the main detractor.

Vodafone’s German business struggled in the third fiscal quarter. German service revenue was down 6.4% organically (6.2% and 1.5% decline in previous two quarters), with the TV business as the main underperformance factor. Unsurprisingly, German adjusted EBITDAaL will see a sequential decline in the second half of the year. We are trimming our fair value estimate to GBX 89 from GBX 94, as we model stronger headwinds for Vodafone Germany. We now model a 5.5% decline in Germany service revenue in 2025, followed by a 4.2% and 3.6% decline in 2026 and 2027, respectively, driven by more TV customer losses. We also assume a German adjusted EBITDAaL margin of 36.5% long term, compared with 37.5% previously.

Vodafone is a telecommunications conglomerate present in more than 20 countries around the world. Its most important markets are Germany and the United Kingdom. Vodafone has historically been a mobile player, but in the last decade it carried out several deals to solidify its fixed-line presence, acquiring two cable networks in Germany: Kabel Deutschland (2013) and Liberty Global Germany (2019).

Having previously voiced concerns that a merger deal (without remedies) between Vodafone and Three UK (CK Hutchison) could result in higher consumer prices, the Competition and Markets Authority in the UK has now given conditional approval to the deal, subject to legally binding commitments. These include price caps on certain mobile tariffs and preset wholesale prices for mobile virtual network operators for three years, as well as minimum levels of investment in the combined group's rollout of 5G networks across the UK. While these proposals are less drastic than mandating divestment of certain assets, they are still designed to stifle potential synergies and competitive advantages that could stem from the combined entity. Further, in the short term, they leave the door open for MNVOs to continue taking share from established operators. In the longer term, we believe reducing the number of network operators in the UK from four to three should create a more stable pricing environment and customers will benefit from proposed network upgrades. We plan to review the details of the merger, but do not expect to make any material changes to our fair value estimate or moat rating.

Vodafone is a telecommunications conglomerate in more than 20 countries around the world. Its most important markets are Germany and the United Kingdom. Vodafone has historically been a mobile player, but in the last decade it carried out several deals to solidify its fixed-line presence, acquiring two cable networks in Germany: Kabel Deutschland (2013) and Liberty Global Germany (2019). As of 2024, Vodafone is seeing headwinds in Germany due to regulatory changes in the housing market: in the past, thousands of rental contracts came in with Vodafone as a preset broadband and TV provider. The new regulation allows tenants to choose and many are moving to other operators, with Deutsche Telekom being the main beneficiary.

We reduce our Vodafone fair value estimate to GBX 94 from GBX 100, as performance in the German business, Vodafone's largest, continues to disappoint. German service revenue deteriorated significantly in the second quarter, down 6.2% year over year compared with the more modest 1.5% decline in the first quarter. This has translated into a 9.3% adjusted EBITDAaL decline in the first half of the year, triggering a share price decline of 6%, which we see as justified. Germany lost a staggering 2.2 million TV customers this quarter (compared with 655,000 lost last quarter), as changes in German housing regulation now allow most tenants to freely choose their TV provider and many subscribers are leaving Vodafone. Long term, it will be tough for no-moat Vodafone to recover these subscribers, and even if it does, it would require significant price promotions and discounting, meaning lower average revenue per user. We have reduced our short- and medium-term forecasts for Germany to account for Vodafone's weak performance.

We lower no-moat Vodafone’s fair value to GBX 100 from GBX 125 as we take a more bearish long-term stance. This is supported by our gloomy outlook for the European telecom sector, where regulation is a major strain and Vodafone’s weaker competitive position in Germany and the UK, where it has a network disadvantage compared with Deutsche Telekom and BT Group. We still see shares as 33% undervalued, trading at 5 times EV/EBITDA after leases, in the low range compared with other peers. Investors might need patience as we don't see near-term catalysts.

Vodafone is a telecommunications conglomerate in more than 20 countries around the world. Its most important markets are Germany and the United Kingdom. Vodafone has historically been a mobile player, but in the last decade it carried out several deals to solidify its fixed-line presence, acquiring two cable networks in Germany: Kabel Deutschland (2013) and Liberty Global Germany (2019). As of 2024, Vodafone is seeing headwinds in Germany due to regulatory changes in the housing market: in the past, thousands of rental contracts came in with Vodafone as a preset broadband and TV provider. The new regulation allows tenants to choose and many are moving to other operators, with Deutsche Telekom being the main beneficiary.

The UK’s Competition and Markets Authority will require Vodafone and CK Hutchison to find remedies to get the green light for their proposed merger plan. Given most European mergers between mobile network operators in the past decade have either been blocked or were subject to significant remedies, the regulatory pushback is not surprising to us. In our view, excessive regulation is one of the main obstacles to European telecommunication firms earning acceptable returns on invested capital, in addition to being in a capital-intensive, competitive industry. The CMA has suggested many alternatives for potential remedies in the future, but nothing is definitive yet. We maintain our GBX 125 fair value estimate for Vodafone.

Vodafone recorded a stable quarter, with organic service revenue growth of 5.4%. EBITDAaL of EUR 2.68 billion grew by 5.1% organically, supported by lower cost inflation and seasonality in operating expenses, which should moderate as the year passes. Germany was once again the main laggard, with Vodafone losing 655,000 TV customers (653,000 losses last quarter) because of changes in German housing regulation. German broadband losses also continued, albeit at a much smaller pace, with 55,000 fewer subscribers. Deutsche Telekom is being the main beneficiary of Vodafone customer losses. We are maintaining our GBX 125 fair value estimate.