Vodafone's Q1 Revenue Rises 3.9% as German Business Stabilizes

Vodafone Group Plc, a prominent telecommunications company, announced its first-quarter results for the fiscal year 2026, revealing a 3.9% increase in total revenue to 94 billion euros. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to 27 billion euros, exceeding analysts' profit margin expectations. This positive performance was largely attributed to the stabilization of its German business, which had previously faced significant challenges due to intense competition and regulatory changes.

In Germany, Vodafone's largest market, the company's organic service revenue decreased by 3.2% to 27 billion euros, which was better than the anticipated 4.6% decline. This improvement helped drive Vodafone's overall organic service revenue growth to 5.5%, surpassing market expectations of 4.9%. The company maintained its full-year guidance for profit and adjusted free cash flow between 24 billion and 26 billion euros.

Vodafone's CEO, Margherita Della Valle, has been focusing on a major strategic transformation, including the sale of the company's operations in Spain and Italy, and the completion of a merger with Three, a UK operator owned by CK Hutchison Holdings, valued at 150 billion pounds. Additionally, Della Valle has been working to enhance customer service, which has lagged behind competitors. Investors have been closely monitoring the performance in Germany, as the region accounts for approximately one-third of Vodafone's total revenue. A new regulation banning bundled sales has impacted Vodafone's residential TV user base, reducing it by nearly half. This regulatory change has affected Vodafone's overall revenue for several quarters.

In May, Della Valle indicated that the financial impact of the new regulation would persist through the first fiscal quarter. Vodafone reported that, excluding the impact of the bundled sales law, its first-quarter revenue in Germany remained "basically stable." The company also saw an increase in mobile service revenue in Germany compared to the previous year. In June, Vodafone's UK subsidiary completed a merger with Three, forming VodafoneThree, the largest operator in the UK with 28.8 million customers. Vodafone plans to invest 110 billion pounds over the next decade to develop its 5G network.

Following the completion of a 20 billion euro share buyback program, Vodafone announced plans to initiate a new 5 billion euro share buyback program. The company's stock price has risen by 22% this year. The stabilization of Vodafone's German business has provided a critical boost to its financial performance, allowing the company to focus on other growth areas such as expanding its 5G network and enhancing digital services. This strategic shift positions Vodafone to better compete in the rapidly evolving telecommunications market. The company's investments in infrastructure and technology have improved service quality and attracted new customers, demonstrating its resilience and adaptability in the face of market challenges.