Vodafone's stock climbed 4.3% to 119.5 pence on Monday after the telecom giant delivered a more solid first-quarter performance than expected and raised its full-year earnings outlook.
Profit Gains and Market Highlights
For the quarter ending June 30, Vodafone reported total revenue of €10.3 billion, marking a 9.7% increase year-on-year. Service revenue rose 9.8% to €8.6 billion, expanding organically by 5.2%, led by solid growth across key markets. Adjusted EBITDAaL increased by 6.7% to €2.9 billion, reflecting higher service revenue and improved operating use.
Germany, Vodafone’s largest market, posted a 1.2% organic service revenue increase, beating expectations and defying the anticipated slowdown in growth, which Morgan Stanley highlighted as the standout aspect of the quarterly results. Africa's service revenue growth accelerated sharply to 15% from 7% in the previous quarter, fueled by strong performances in Egypt and Vodacom’s international markets. The UK also exceeded projections with a 0.6% organic service revenue rise, buoyed by fixed-line services.
Vodafone's CEO, Margherita Della Valle, commented on the positive momentum, emphasizing the broad-based growth across all regions and segments as a promising start to the financial year.
Following the acquisition of an additional 20% stake in Safaricom, consolidated from July 1, 2026, Vodafone upgraded its full-year guidance. The company now anticipates adjusted core earnings between €13 billion and €13.3 billion and adjusted free cash flow ranging from €2.6 billion to €2.9 billion, aiming to hit the upper end of these targets.
Analysts from Morgan Stanley noted this guidance upgrade comes from organic business improvements rather than solely from the Safaricom consolidation. They expect earnings to outpace consensus by 1.1%, and free cash flow forecasts by 4.3%. Despite the optimistic outlook, restructuring and integration costs linked to the acquisition are projected to peak around €700 million.
