Vodafone Group(VOD) - 2026 Q2 - Quarterly Report

Financial Performance - Total revenue increased by 7.3% to €19.6 billion in H1 FY26, driven by service revenue growth and the consolidation of Three UK[7] - Service revenue grew by 8.1% to €16.3 billion, with organic growth of 5.7%, supported by a return to growth in Germany and double-digit growth in Africa[7] - Operating profit decreased by 9.2% to €2.2 billion, impacted by higher depreciation and lower other income from M&A activity[7] - Basic earnings per share from continuing operations was 3.38 eurocents, down from 3.92 eurocents in H1 FY25, primarily due to lower operating profit and higher income tax expense[15] - Cash inflow from operating activities decreased by 9.8% to €5.1 billion, reflecting cash inflows from discontinued operations in the prior period[19] - Total revenue for H1 FY26 decreased by 2.1% to €6.0 billion, with service revenue declining by 1.4%[23] - Adjusted EBITDAaL for Germany in H1 FY26 was €2.2 billion, representing a margin of 36.5%, down from 37.4% in H1 FY25[22] - Total revenue for the UK increased by 27.9% to €4.4 billion, primarily due to the consolidation of Three UK's financial results following the merger[31] - Adjusted EBITDAaL for the UK rose by 25.0% to €0.9 billion, with an organic growth of 5.4%[34] - Vodafone's share of results from associates and joint ventures increased to €182 million, compared to a loss of €40 million in the previous year[64] - Net financing costs decreased to €49 million in H1 FY26 from €277 million in H1 FY25, reflecting an 82.3% improvement[71] - Basic earnings per share from continuing operations decreased to 3.38 eurocents in H1 FY26 from 3.92 eurocents in H1 FY25[77] - Total equity increased by €2.7 billion to €56.6 billion between March 2025 and September 2025[96] - Non-current liabilities decreased by €1.3 billion to €50.6 billion, driven by a €1.9 billion decrease in borrowings[97] - The Group had undrawn revolving credit facilities of €7.5 billion as of 30 September 2025[84] - Vodafone Group reported a revenue of €19,609 million for the six months ended September 2025, an increase of 7.3% compared to €18,276 million in the same period of 2024[194] - The operating profit decreased to €2,162 million, down 9.2% from €2,382 million year-over-year[194] - Profit for the financial period from continuing operations was €1,052 million, a decline of 12.7% compared to €1,205 million in the previous year[194] - Vodafone's total comprehensive income for the financial period was €499 million, significantly lower than €1,939 million in the same period last year[197] - The company’s total assets increased slightly to €128,859 million as of September 30, 2025, compared to €128,521 million at the end of March 2025[200] - Vodafone's non-current liabilities decreased to €50,553 million from €51,851 million, indicating improved financial stability[200] Dividends and Shareholder Returns - Interim dividend per share is 2.25 eurocents, consistent with H1 FY25, with total capital returned to shareholders in FY26 amounting to €1.5 billion[19] - Vodafone expects to grow the FY26 full-year dividend per share by 2.5% as part of a new progressive dividend policy[18] - An interim dividend of 2.25 eurocents per share was declared, consistent with H1 FY25[87] Mergers and Acquisitions - Vodafone completed the acquisition of Telekom Romania Mobile Communications S.A assets for €30 million, increasing local scale and supporting returns growth[12] - Vodafone completed the acquisition of Telekom Romania Mobile Communications S.A., gaining its post-paid customer base and additional spectrum and towers[104] - The Group announced a binding agreement to acquire 100% of Skaylink GmbH for €175 million, with completion expected by March 2026[105] Customer and Market Performance - The company has launched its 'Ask Once' customer service initiative in three markets, aiming to enhance customer experience[12] - Mobile service revenue in Germany grew by 3.3%, driven by higher wholesale revenue, with 10.5 million 1&1 customers successfully migrated by the end of Q2[25] - Vodafone Business service revenue in the UK increased by 0.4%, while organic service revenue decreased by 2.3% due to planned contract terminations[33] - The broadband customer base in Germany declined by 49,000 in H1, while the TV customer base increased by 90,000[27] - Vodafone UK and Three UK merged on 31 May 2025, creating the largest mobile network operator in the UK with 28.8 million customers[37] - The integration of Vodafone and Three UK has led to improved network performance, benefiting 7 million customers with enhanced 4G speeds[38] - In Türkiye, total revenue increased by 15.1% to €1.6 billion, with service revenue growth of 20.3% and organic service revenue growth of 55.6%[46][49] - Vodafone Türkiye added 511,000 mobile contract customers during H1, with a significant reduction in deep detractors by 34%[51] - In Africa, total revenue increased by 6.6% to €4.0 billion, with service revenue growing by 7.9% and organic service revenue up by 13.7%[53][54] - Service revenue in Egypt grew by 42.5% on an organic basis, driven by customer base growth and increased data demand[56] - Vantage Towers reported a revenue increase of 4.9% to €644 million, supported by 1,027 net new tenancies[65] - VodafoneZiggo's total revenue decreased by 3.1% to €2.0 billion, primarily due to a lower broadband customer base and mobile ARPU in Business[67] - Safaricom service revenue grew by 4.8% to €1.3 billion, with organic growth of 10.2% during H1 FY26[68] Regulatory and Compliance - Key risks include adverse changes in macroeconomic conditions, which could lead to reduced customer spending and higher interest rates[107] - Increasing competition may result in price wars and reduced margins, impacting market share and value[107] - The European Commission is reviewing the merger guidelines, with a timeline for completion expected by the end of 2027[134] - The EU Data Act came into force on 12 September 2025, introducing rules for data access and obligations for cloud providers[130] - Vodafone supports the implementation of the Digital Markets Act and Digital Services Act to ensure fair market conditions[131] - The German National Regulatory Authority extended Vodafone's frequency allocations at 800MHz and 2600MHz by five years, with additional coverage obligations[141] - The Ministry of Digital in Germany is proposing amendments to accelerate Fibre to the home rollout, with draft legislation expected by March 2026[143] - The European Commission is preparing a significant overhaul of the EU's cybersecurity framework through the Digital Omnibus Package, expected on 17 November 2025[137] - Vodafone Ltd has commenced the implementation of a spectrum divestment of 78.8MHz to Telefonica UK Ltd, expected to conclude by 2031[146] - Ofcom's updated Annual Licence Fees resulted in a net reduction in fees paid by VodafoneThree, reflecting current market values[147] - VodafoneThree won 800 MHz of spectrum in the 26 GHz band and 1 GHz in the 40 GHz band at an auction, paying £13 million to HM Treasury[148] - Vodafone Greece faced a fine of €342,000 for unlicensed microwave link frequencies, reduced to €228,000 for early payment[159] - Vodafone Albania is preparing to renew its 15 MHz FDD spectrum in the 2100 MHz band, with a focus on securing an affordable price aligned with regional benchmarks[157] - Vodafone Albania has initiated the gradual shutdown of its 3G network, targeting full deactivation by March 2026, with savings of around €0.5 million from the first phase[171] - Vodafone Egypt's spectrum strategy includes a potential acquisition of an additional 10 MHz in the 1800 MHz band and renewal of 40 MHz at 2600 MHz, with an estimated investment of approximately US$1.07 billion[175] - In Greece, the EETT proposed a glidepath for reducing national fixed termination rates from 0.7 ALL/min to 0.07 ALL/min by March 2027, benefiting Vodafone Albania due to higher outgoing traffic[169] - Vodafone Czech Republic will become one of the universal service providers of subsidy to consumers with social needs, valid from January 2026 to December 2028[168] - Vodafone Portugal continues to appeal against €34.8 million in payment notices regarding extraordinary compensation of USO costs from 2007 to 2014[166] Capital Expenditures - Capital additions for the Group in H1 FY26 amounted to €2.8 billion, compared to €2.987 billion in H1 FY25[20] - The company has committed to a $17 billion investment plan focused on expanding fiber coverage and technological advancements[180] - Vodafone Turkiye acquired 100 MHz of spectrum for 5G at a cost of $627 million, with a license duration until December 31, 2042[177]