Vodafone Group Plc: H1 FY26 Results Summary
Business Context and Reporting Period
This Form 6-K reports the unaudited condensed consolidated financial results for Vodafone Group Plc for the six months ended 30 September 2025 (H1 FY26). The period is characterized by the consolidation of the VodafoneThree merger in the UK (completed 31 May 2025), which combines Vodafone UK and Three UK. The Group operates across Germany, the UK, Other Europe, Türkiye, and Africa, focusing on connectivity, digital services, and financial services.
Key Financial Metrics
| Metric | H1 FY26 (€m) | H1 FY25 (€m) | Change |
|---|---|---|---|
| Total Revenue | 19,609 | 18,276 | +7.3% |
| Service Revenue | 16,327 | 15,109 | +8.1% |
| Operating Profit | 2,162 | 2,382 | -9.2% |
| Profit for the Period | 1,052 | 1,221 | -13.8% |
| Basic EPS (Continuing Ops) | 3.38c | 3.92c | -13.8% |
| Operating Cash Flow | 5,092 | 5,644 | -9.8% |
| Borrowings (Gross) | 51,455 | 53,143 | -3.2% |
| Net Debt (Borrowings less Cash) | 44,368 | 42,142 | +5.3% |
Note: Net debt increased primarily due to the VodafoneThree merger impacting lease liabilities and cash positions, despite a reduction in bond borrowings.
Material Changes vs. Prior Period
- Revenue Growth: Driven by service revenue growth and the consolidation of Three UK, partially offset by adverse foreign exchange movements. Organic service revenue grew by 5.7%.
- Profitability Decline: Operating profit decreased by 9.2% due to higher depreciation and amortization from the Three UK consolidation and lower "Other income" (which included M&A gains in the prior period).
- Segment Performance:
- Germany: Service revenue returned to growth in Q2 (+0.5%) after the impact of TV law changes subsided.
- UK: Reported service revenue surged 26.7% due to Three UK consolidation; organic growth was 1.1%.
- Africa: Maintained double-digit organic service revenue growth (13.7%), driven by Egypt and Vodacom's international markets.
- Türkiye: Reported service revenue grew 20.3%, with organic growth of 55.6% (excluding hyperinflation adjustments).
- Effective Tax Rate: Increased to 50.2% (from 42.8%) due to a one-off €269 million tax charge in Germany related to deferred tax write-downs and hyperinflation adjustments in Türkiye.
Guidance, Outlook, and Management Commentary
- Dividend Policy: The Board announced a new progressive dividend policy, expecting to grow the FY26 dividend per share by 2.5%. The interim dividend is set at 2.25 eurocents per share.
- Share Buybacks: €3.0 billion of share buybacks have been completed since May 2024. A new tranche of €500 million commenced on 11 November 2025.
- Strategic Priorities:
- Integration: Fast start on VodafoneThree integration, with immediate network improvements and cost synergy programs.
- Digital Services: Strong growth in Business digital services (Q2: +12.2%) and Financial services in Africa (Q2: +21.8%).
- AI Deployment: "SuperTobi" AI virtual assistant is live in all European markets with a 70% end-to-end resolution rate.
- Risks: Key risks include macroeconomic conditions, regulatory changes (e.g., EU Digital Markets Act), competition, and cyber threats. Specific legal proceedings include the Phones 4U appeal (dismissed) and ongoing competition investigations in Germany.
Investor Verification Checklist
- Merger Integration: Verify the realization of cost synergies and revenue uplift from the VodafoneThree merger in the UK.
- Germany TV Law Impact: Monitor the sustainability of service revenue growth in Germany following the end of the TV law change impact.
- Hyperinflation Accounting: Review the impact of IAS 29 on Türkiye's reported results versus organic performance.
- Capital Allocation: Track the execution of the €500 million new share buyback tranche and the 2.5% dividend growth target.
- Regulatory Fines: Monitor outcomes of regulatory fines in Egypt (network outages) and Greece (microwave link emissions).