Group Service Revenue Growth (Q4)
Group service revenue grew 5.1% in Q4, with growth across both Europe and Africa, signalling broad-based top-line momentum.
Vodafone
· VOD
May 12th, 2026
Summary
- Earnings Call Date:
- 2026-05-12
- Change Since:
- -6.60%
- Next Earnings Date:
- 2026-11-10
Earnings Call Sentiment
PositiveThe call presented a constructive outlook driven by tangible operational progress: group service revenue growth, organic EBITDA growth, strong free cash flow generation and clear midterm ambition for double-digit organic free cash flow growth. Key strengths include a standout performance in Africa, U.K. integration momentum with material synergy potential, portfolio simplification and AI-led productivity gains. Offsetting risks are concentrated in Germany where retail service revenue remains negative and FY '27 EBITDA is expected to decline, near-term U.K. revenue timing issues, temporary leverage effects from the U.K. buyout, and ongoing competitive/promotional pressures and inflation. On balance, the positives (broad-based revenue growth, cash flow improvements, strategic simplification and execution of synergies) outweigh the near-term regional headwinds.
Company Guidance
Vodafone guided FY27 to “continued good” growth in adjusted EBITDAaL and adjusted free cash flow after a FY26 where organic adjusted EBITDAaL rose 4.5% (at the upper end of guidance), group service revenue grew 5.1% in Q4, and adjusted free cash flow was €2.6bn; the FY26 dividend was increased 2.5% and management reinstated a mid‑term ambition to deliver double‑digit organic growth in adjusted free cash flow. At the midpoint Europe is expected to be broadly stable, with Germany’s EBITDA expected to decline in FY27 as retail service revenue remains negative despite consumer broadband improvements (front‑book inflow ARPU +30% y/y), the U.K. set to deliver strong FY27 growth on the VodafoneThree buyout (GBP4.2bn) and material synergies (GBP700m cost/CapEx by 2030) plus FWA to 3.7m additional homes, and Africa/Turkey expected to continue strong growth (Africa posting its highest service‑revenue growth in almost two decades and Vodacom targeting double‑digit midterm growth). CapEx is expected to peak in the U.K. in FY27 then be broadly stable by market, guidance and mid‑term targets are presented on an organic basis (ex‑currency/portfolio), and leverage should return to the lower half of the group corridor by end‑FY27.
Adjusted EBITDAaL Organic Growth (FY '26)
Delivered 4.5% organic growth in adjusted EBITDAaL for FY '26, in line with the upper end of guidance.
Adjusted Free Cash Flow and Dividend
Generated EUR 2.6 billion of adjusted free cash flow in FY '26 and increased the full-year dividend by 2.5%; management targets double-digit organic growth in adjusted free cash flow over the midterm.
Africa Performance and Fintech Scale
Africa division delivered its highest service revenue growth in almost two decades; Vodafone runs Africa's largest fintech platform with over 100 million users and millions of merchants, and Vodacom guidance points to double-digit midterm growth.
U.K. Operational and Commercial Progress
U.K. recorded the fastest-ever year of home broadband customer growth, achieved the largest gigabit footprint, is bringing fixed-wireless access to an additional 3.7 million homes, and is on track to deliver the first meaningful cost and CapEx synergies following the VodafoneThree buyout.
Portfolio Simplification and Capital Activity
Continued portfolio simplification with planned transactions (e.g., Netherlands sale) and strategic moves (U.K. buyout, Safaricom consolidation) intended to increase exposure to higher-growth markets and crystallize value.
Customer Experience and NPS Improvement
Consistent Net Promoter Score improvements quarter-on-quarter with highest-ever NPS levels in mobile and cable in Germany and improved churn and customer loyalty in the U.K.
AI and Productivity Initiatives
Embedded AI across operations (Zero Touch operations, TOBi/SuperTOBi customer care, procurement) driving measurable OpEx savings and productivity gains and positioning the business for network and service changes driven by AI.
Germany Broadband ARPU Upside
Consumer broadband inflow ARPU in Germany up ~30% year-on-year, indicating traction from price increases and improved value proposition.
Margherita Della Valle
Good morning, everyone, and thank you for joining us. Before moving to Q&A, I will briefly provide an update on our performance in FY '26 as well as our growth outlook. Vodafone is now entering a new chapter as a simpler and stronger business, simpler because we have gone through a significant transformation over the last 3 years, covering all aspects of our business, including portfolio, capital structure and operating model. And we are stronger because our continued operational progress with our strategic priorities of customer simplicity and growth. With these foundations and the range of opportunities across our diversified and balanced portfolio, we are in a strong position to grow in FY '27 and beyond. And as I mentioned, growth, that leads me on to our financial results. We are pleased with our performance in FY '26 as we have achieved the upper end of our expectations. Group service revenue growth remained strong in the fourth quarter at 5.1% with growth across both Europe and Africa.
In Germany, despite the ongoing pressure in TV and the mobile market remaining competitive, our performance has improved as we are now growing in B2B and consumer broadband. These improvements are a direct result of our actions. In consumer broadband, we have continued to improve customer satisfaction and increased front book prices, and our value equation is working. And in B2B, we are benefiting from the capabilities we have developed in digital services, including cloud, security and AI. In our emerging markets, we grew service revenue in Europe during the year. Our second largest ...
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