Vodafone Group PLC (VOD.US) reported that organic revenue growth for the previous quarter exceeded analyst expectations, driven by the company's focus on core markets and a return to growth in its German operations. The Newbury, England-based telecommunications group stated on Tuesday that for the fourth fiscal quarter ended March, organic service revenue increased by 5.1% year-over-year to €8.6 billion (approximately $10.1 billion), surpassing the average analyst forecast of 4.9%.
Vodafone Group PLC anticipates that adjusted EBITDA after leases (EBITDAal) for fiscal year 2027 will be in the range of €11.9 billion to €12.2 billion, with adjusted free cash flow projected between €2.6 billion and €2.9 billion. For fiscal year 2026, EBITDAal grew by 3.8% to €11.4 billion. This metric is commonly used in industries with significant leasing obligations to reflect cash flow performance.
At the time of reporting, Vodafone Group PLC shares declined by 3.74% in after-hours trading to $15.71. Since the beginning of the year, the stock has accumulated a gain of 23%.
The German market performed better than expected, benefiting from the company's concentrated efforts on its core operations. Driven by wholesale agreements—including the completion of migrating 1&1 customers to its network—organic service revenue in Germany grew by 1.3% last quarter, outperforming market expectations. In contrast, the UK market saw a slight decline of 0.2%, attributed to reduced commercial project activity, including what was described as "a strategic adjustment by a major customer."
Vodafone Group PLC Chief Executive Officer Margherita Della Valle stated, "Following three years of transformation, we are now a simpler company with stronger growth prospects. We have returned to revenue growth in Germany while delivering robust performance in Africa and Turkey." Since taking leadership in 2023, Della Valle has exited Vodafone Group PLC's operations in smaller countries to concentrate on deepening its presence in core markets.
Last week, Vodafone Group PLC announced the acquisition of CK Hutchison Holdings' stake in VodafoneThree for £4.3 billion (approximately $5.9 billion), a move that will give it full control of the UK's largest mobile operator. Under Della Valle's leadership, Vodafone Group PLC has become a key player in the consolidation wave within the European telecommunications sector, an industry long pressured by market fragmentation and intense competition.
There is a broad consensus within the European and UK telecommunications industries that companies need to achieve scale to benefit from investments in network infrastructure, particularly as the costs associated with upgrading to 5G standards are challenging to pass on to customers. Unlike German rival Deutsche Telekom and UK-based BT Group, which are intensifying their focus on infrastructure build-out, Vodafone Group PLC favors a more asset-light, software-driven model. The company has monetized its tower assets, such as by reducing its stake in Vantage Towers, and collaborates with technology giants like Microsoft and Amazon to operate data centers.
Della Valle has previously divested Vodafone Group PLC's operations in Italy and Spain and sold a portion of its stake in Dutch operator VodafoneZiggo earlier this year, significantly shrinking the footprint of what was once a telecommunications giant spanning from the United States to Africa.
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