Business Context and Reporting Period
Company: Vodafone Group Public Limited Company
Filing Type: Form 6-K (Stock Exchange Announcement)
Reporting Period: Third Quarter (Q3) of Fiscal Year 2025, ended December 31, 2024.
Announcement Date: February 4, 2025
Vodafone reported accelerated service revenue growth driven by the UK, Türkiye, and Africa, while Germany faced headwinds from a change in TV law. The quarter marked the completion of the sale of Vodafone Italy for €8 billion and regulatory approval for the merger with Three in the UK.
Key Financial Metrics
| Metric | Q3 FY25 Value | Change vs. Q3 FY24 |
|---|---|---|
| Group Total Revenue | €9.8 billion | +5.0% (Reported) |
| Group Service Revenue | €7.9 billion | +5.6% (Reported) / +5.2% (Organic) |
| Group Adjusted EBITDAaL | €2.8 billion | +2.2% (Organic) |
| Adjusted EBITDAaL Margin | 28.8% | -0.5 percentage points (Organic) |
| Operating Profit | €1.0 billion | -18.4% |
| Share Buybacks (YTD) | €1.5 billion | 1.8 billion shares repurchased since May 2024 |
Material Changes vs. Prior Period
- Revenue Acceleration: Organic service revenue growth accelerated to 5.2% in Q3 (up from 4.2% in Q2), driven by strong performance in the UK (+3.3% organic) and Africa (+11.6% organic).
- Germany Decline: Service revenue declined 6.4% due to the full impact of the TV law change ending bulk TV contracting in Multi Dwelling Units (MDU). Excluding this impact, service revenue declined 2.6%.
- Türkiye Growth: Service revenue increased 97.5% in euro terms (including hyperinflationary adjustments). Excluding these adjustments, growth was 53.1%.
- Profitability: Adjusted EBITDAaL margin decreased 0.5 percentage points year-on-year on an organic basis, primarily due to the Germany TV law impact and continued investment in the German turnaround.
- Discontinued Operations: Results for Vodafone Spain and Vodafone Italy are now classified as discontinued operations. The Italy disposal completed on December 31, 2024.
Guidance, Outlook, and Risks
Guidance and Outlook
- FY25 Guidance Reiterated: Vodafone remains on track to deliver Group Adjusted EBITDAaL of approximately €11 billion and Group Adjusted free cash flow of at least €2.4 billion.
- UK Merger: Regulatory approval received in December 2024; formal completion expected in the next few months.
- Capital Return: The Board targets returning up to €2.0 billion via share buybacks once the current €2 billion programme completes.
- Germany Turnaround: Management expects Adjusted EBITDAaL in Germany to be lower in the second half of FY25 compared to the first half due to continued investment and challenging market conditions.
Risks and Contingencies
- Goodwill Impairment: Due to limited headroom between the recoverable amount and carrying value of Vodafone Germany, the current financial performance increases the likelihood of an impairment charge in FY25 results (to be reported in May).
- Regulatory & Market Risks: Ongoing challenges in the German mobile market, competitive intensity, and potential delays in the 1&1 customer migration.
Investor Verification Checklist
- Germany Impairment Risk: Verify the likelihood and potential magnitude of a goodwill impairment charge for Vodafone Germany in the upcoming FY25 full-year results.
- UK Merger Timeline: Confirm the exact completion date of the Vodafone/Three UK merger and any associated regulatory conditions.
- Germany Customer Trends: Monitor the stabilization of the broadband customer base and the ramp-up of the 1&1 customer migration in H2 FY25.
- Free Cash Flow: Validate the ability to meet the €2.4 billion Adjusted free cash flow guidance given the €8 billion Italy proceeds usage for debt reduction and buybacks.
- Türkiye Inflation: Review the impact of hyperinflationary accounting (IAS 29) on reported revenue growth versus underlying operational performance.