Shares of Vodafone Group Plc (LSE: VOD) climbed 5.65 percent on Monday to GBX 93.94 after the company raised its full-year FY26 earnings guidance and outlined a new progressive dividend policy, energizing institutional sentiment across both the United Kingdom and Europe. The sharp rally, which pushed the stock to its highest level since April, followed the publication of robust half-year results that confirmed Vodafone’s transition into a leaner, multi-market digital telecom operator with improving cash flow generation and integration momentum.
The stock’s technical setup on the London Stock Exchange suggests renewed inflows from long-only investors and value-focused funds. The recovery above the GBX 90 mark is being interpreted as a reversal of the downward trend that plagued Vodafone shares through late 2024. With today’s gains, Vodafone has now risen over 20 percent from its May 2025 lows. This rebound coincides with rising buy-side visibility on earnings per share growth, sustained buyback activity, and dividend coverage.
How did Vodafone Group perform in the first half of FY26 compared to prior periods?
Vodafone Group Plc delivered total revenue of 19.6 billion euros in the first half of FY26, up 7.3 percent compared to the previous year’s 18.3 billion euros. Service revenue increased 8.1 percent on a reported basis to 16.3 billion euros, with 5.7 percent organic growth. The company recorded adjusted EBITDAaL of 5.7 billion euros, an increase of 5.9 percent, and 6.8 percent on an organic basis. This was supported by strength in high-growth markets such as Africa and Türkiye, as well as a return to service revenue growth in Germany during the second quarter.
Operating profit for the period declined to 2.2 billion euros, down from 2.4 billion euros in H1 FY25, primarily due to increased depreciation and amortisation following the consolidation of Three UK and lower other income. Basic earnings per share from continuing operations fell to 3.38 eurocents compared to 3.92 eurocents a year ago. However, adjusted basic earnings per share climbed sharply to 6.92 eurocents from 4.84 eurocents, largely due to gains from bond buybacks and lower net financing costs.
Net cash outflow for the half stood at 3.7 billion euros, influenced by investments, share buybacks, and M&A-related expenses including the merger with Three UK. Despite the outflow, Vodafone ended the period with 7 billion euros in cash and equivalents and a total liquidity buffer of 10.9 billion euros.
What does Vodafone’s revised FY26 guidance indicate about its operational confidence?
Vodafone raised its full-year FY26 guidance to the upper end of its previously disclosed range. It now expects adjusted EBITDAaL between 11.3 and 11.6 billion euros, with adjusted free cash flow targeted between 2.4 and 2.6 billion euros. These figures include a contribution of 300 million euros from the UK merger, offset by a 200 million euro drag on free cash flow from integration costs.
The Group also introduced a progressive dividend policy, reflecting its medium-term outlook for cash flow growth. Vodafone will grow the full-year FY26 dividend by 2.5 percent and has declared an interim dividend of 2.25 eurocents per share, payable on February 5, 2026. This represents a commitment to long-term shareholder returns while balancing reinvestment needs and deleveraging.
Vodafone has already returned 3.0 billion euros to shareholders in FY26 via buybacks and dividends, and an additional 500 million euro tranche of share repurchases began today. These moves align with its capital allocation framework announced in February 2024.
Which regional operations contributed most to Vodafone’s earnings rebound?
In the United Kingdom, Vodafone saw total revenue increase by 27.9 percent to 4.4 billion euros, reflecting the consolidation of Three UK. Organic service revenue rose 1.1 percent, while adjusted EBITDAaL grew by 25 percent to 884 million euros. VodafoneThree customers have already experienced improved 4G speeds, with more than 5,000 shared sites upgraded and 16,500 square kilometers of coverage ‘not spots’ expected to be eliminated by year-end.
Germany returned to service revenue growth in the second quarter, aided by the fading impact of regulatory changes affecting bulk TV contracts. Total revenue, however, declined slightly to 6.0 billion euros due to weak fixed-line ARPU. Adjusted EBITDAaL dropped 4.3 percent to 2.2 billion euros, but the region remains Vodafone’s largest EBITDA contributor. Notably, the company has nearly completed the migration of 12 million 1&1 customers onto its mobile network, with full run-rate revenues expected in Q4 FY26.
Africa continued to outperform, generating 3.95 billion euros in revenue with 13.7 percent organic service revenue growth. Adjusted EBITDAaL surged to 1.35 billion euros, underpinned by strong performance in Egypt, South Africa, and across Vodacom’s international markets. The number of financial services customers reached 93.7 million, including 12.7 million active users of Vodafone Cash in Egypt.
In Türkiye, total revenue climbed 15.1 percent to 1.6 billion euros, with organic service revenue growth at 55.6 percent, despite macroeconomic volatility and currency depreciation. Vodafone Türkiye recently secured 100 MHz of 5G spectrum for 539 million euros and plans to launch commercial 5G services in 2026.
How are investors responding to Vodafone’s strategic moves and market positioning?
Investor sentiment has improved significantly following the upgraded guidance and dividend announcement. Market participants tracking institutional flows have pointed to an increase in long-term, quality-focused fund ownership, reflecting greater confidence in Vodafone Group Plc’s earnings visibility and cash generation profile. The introduction of a progressive dividend policy has also led to wider inclusion in dividend-oriented and total-return investment strategies, contributing to the stock’s upward momentum.
Moreover, Vodafone’s accelerated transformation agenda, including its AI-first service model, digital enterprise expansion, and capital discipline, is resonating with asset managers focused on total return strategies. The recent strategic acquisitions of Skaylink in Germany and Telekom Romania Mobile are expected to strengthen Vodafone’s B2B footprint in Europe, while the VodafoneThree merger opens up new cross-sell opportunities in broadband and fixed wireless access.
The stock’s rally on November 11 was accompanied by a sharp uptick in volume, suggesting active interest from both fundamental and technical traders. At GBX 93.94, Vodafone is trading above its 100-day and 200-day moving averages, reinforcing the bullish momentum.
How should investors evaluate Vodafone Group Plc’s debt position, regulatory exposure, and market execution risks over the next 12 to 24 months?
While Vodafone’s operating performance has improved, investors remain cautious about its elevated net debt of 25.9 billion euros. The Group’s reliance on inorganic growth, especially in regions like the United Kingdom and Europe, increases execution risk. Hyperinflation in Türkiye continues to affect earnings translation, although Vodafone excludes this from its organic growth measures.
The taxation environment has also become more complex. Vodafone’s effective tax rate jumped to 50.2 percent in H1 FY26, partly due to a one-off deferred tax write-down in Germany and adjustments in Türkiye. The adjusted effective tax rate rose to 27.4 percent, up from 18 percent a year ago.
Regulatory risks in its European markets, particularly those affecting spectrum costs, consumer pricing controls, and data privacy rules, will also shape medium-term margins. Nevertheless, Vodafone’s pivot to AI-powered efficiencies and strategic simplification efforts are designed to mitigate cost headwinds and drive margin resilience.
Key takeaways from Vodafone Group Plc’s H1 FY26 results and investor reaction
- Vodafone Group Plc upgraded its full-year FY26 guidance to the upper end of prior ranges, with EBITDAaL expected between 11.3 and 11.6 billion euros.
- The company introduced a progressive dividend policy, aiming for a 2.5 percent increase in FY26 dividends and continued mid-term payout growth.
- Service revenue rose 8.1 percent to 16.3 billion euros, while adjusted EBITDAaL increased by 5.9 percent to 5.7 billion euros.
- UK operations delivered strong growth due to the VodafoneThree merger; Africa and Türkiye continued to act as growth engines.
- Net debt rose to 25.9 billion euros, but Vodafone maintained a healthy liquidity buffer and completed 3.0 billion euros in buybacks so far in FY26.
- Investor sentiment has improved sharply, with the stock gaining over 5 percent on results day and breaking past key technical resistance levels.
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