Vodafone (VOD.US) reported a 1.7% YoY growth in service revenue in the first half of the year, maintaining its full-year expectations despite the weak German market.

Despite the challenge of losing customers in the German market, Vodafone Group (VOD.US) maintained its full-year earnings outlook. The UK mobile operator achieved a 1.7% growth in service revenue in the first half to 15.1 billion euros, in line with market expectations. Although its performance in Germany declined 6.2% in the second quarter, the company said the decline was offset by growth in other European markets, Turkey and Africa.

It is understood that Vodafone's core earnings grew 3.8% in the first half to 5.4 billion euros, in line with market expectations. However, the poor performance in Germany, where the service revenue fell 6.2% from the first quarter's 1.5% decline, was due to the termination of its business of bulk-selling TVs to apartment blocks following a change in the law.

It is worth noting that the German government's ban on housing associations bundling TV with rent earlier this year affected Vodafone's performance in the previous quarter, and the company had warned it could lose half of its 8.5 million household contracts.

Chief executive Margherita d'Arellano is pushing a turnaround plan, including selling unprofitable businesses in Italy and Spain and merging with Three, the UK unit of Hutchison Whampoa, which is expected to get regulatory approval next month, creating the UK's largest mobile operator by revenue.

Despite the slowdown in Germany, d'Arellano is investing in Germany to strengthen its market position and expand its enterprise-to-business capabilities.

She stressed: "We have had good performance in all markets except Germany, where we have been affected by the changes in the TV law as expected. I believe the actions we are taking will drive Vodafone's growth this year and further accelerate in fiscal 2026."

Despite this, Vodafone reiterated its full-year targets: core profit of about 11 billion euros and adjusted free cash flow of at least 2.4 billion euros.