Vodafone raises outlook as Business unit supports first-half growth

Vodafone Group PLC on Tuesday raised full-year guidance as it revealed a record performance in its Business division but said there is still work to be done to improve its German operation.

The Newbury, England-based telecommunications provider now expects adjusted earnings before interest, tax, depreciation and amortisation after leases of EUR13.2 billion to EUR13.4 billion, lifted from EUR13.0 billion to EUR13.3 billion before.

Adjusted free cash flow is now projected of EUR2.8 billion to EUR3.0 billion, raised from EUR2.6 billion to EUR2.9 billion previously.

Vodafone reported a pretax loss of EUR373 million in the six months ended September 30, swung from a EUR2.11 billion profit ayear prior, reflecting a EUR4.85 billion impairment charge in Germany.

Adjusted Ebitdaal increased 13% to EUR6.45 billion from EUR5.73 billion.

Revenue rose 11% to EUR21.85 billion from EUR19.61 billion, driven by strong service revenue growth and the consolidation of Safaricom, VodafoneThree, and Telekom Romania. This was partially offset by adverse foreign exchange movements.

Service revenue grew 13% to EUR18.4 billion from EUR16.3 billion, and increased 5.8% on an organic basis, with growth across all segments.

In Germany, organic service revenue edged up 0.4%, with higher wholesale revenue and fixed line growth, reflecting good broadband growth in Consumer and strong digital services growth in Business, offsetting the ongoing TV decline and continued mobile pressure.

In the UK, organic service revenue grew 0.9%, driven by strong fixed line growth and higher mobile wholesale revenue.

In Africa, organic service revenue growth accelerated to 13%, with growth in all of Vodacom's markets across both connectivity and financial services.

Business service organic revenue increased 5.8% in the first half and by a record 6.6% in the second quarter, driven by double-digit growth in digital services in Europe, as well as an improvement in core connectivity.

Chief Executive Margherita Della Valle highlights said: "I am very happy about our overall group performance, but Germany is not yet where it needs to be. We have a clear action plan in progress, which is structurally simplifying our German operations and improving customer satisfaction across all of our services."

Vodafone raised its interim dividend by 2.5% to 2.31 euro cents per share from 2.25 cents a year before.

In financial 2027, Vodafone expects to see a net reduction of Europe operating expenditure of over EUR200 million, a "good first step" in delivering an overall net target of over EUR1 billion.

The firm said over EUR200 million gross savings have already been delivered in the first half through a range of initiatives, including EUR50 million synergies in the UK and 3,000 new role reductions across Europe and shared operations. Further, the firm has already announced an additional 2,300 role reductions in Germany.

Shares in Vodafone were marginally lower at 116.90p each in London in early trading on Tuesday morning. The wider FTSE 100 index was up 0.4%.

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