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Highlights
- Revenue Growth Amid Challenges: Total revenue increased by 1.6% to €18.3 billion, supported by service revenue despite currency headwinds.
- Profit Boosted by Indus Towers Sale: Operating profit rose 28.3% to €2.4 billion due to a stake sale in Indus Towers.
- Strategic Focus on Customer Experience: Vodafone’s ongoing customer transformation has improved satisfaction scores in 9 out of 15 markets.
Vodafone Group (LSE:VOD) announced its half-year (H1) results for FY25, reporting a 1.6% increase in total revenue to €18.3 billion, up from €18.0 billion in H1 FY24. This growth was primarily driven by service revenue, which grew by 1.7% on a reported basis to €15.1 billion, or 4.8% on an organic basis. The uptick reflects strong performances in Europe, Africa, and Turkey, although it was partially offset by adverse currency movements.
In Germany, Vodafone’s largest market, revenue fell as anticipated due to changes in the country’s MDU (multi-dwelling unit) TV law. The law change impacted Vodafone’s revenue in Q2 by 6.2%, compared to a 1.5% decline in Q1. Excluding this regulatory change, Germany’s service revenue decline was limited to 2.4% in Q2, following price adjustments in the prior year. Vodafone retained 4 million households in Germany post-MDU change, aligning with their projections.
The business segment also showed strength, with organic service revenue accelerating to 4.0% growth in Q2, driven by higher demand for digital services. Vodafone’s operations in Africa delivered consistent organic growth, with a 9.7% increase in Q2 compared to 10% in Q1. This performance was fueled by demand for data and financial services, especially in South Africa and Egypt, where price hikes and above-inflation growth further boosted the results.
Vodafone’s operating profit rose significantly, reaching €2.4 billion—an increase of 28.3% from H1 FY24—largely due to a €700 million gain from the sale of an 18% stake in Indus Towers. Adjusted EBITDAaL grew by 3.8% organically to €5.4 billion, supported by service revenue and reduced energy expenses in Europe.
As part of its capital management strategy, Vodafone nearly completed its second tranche of share buybacks by mid-November, with €500 million invested in repurchasing 1.2 billion shares, totaling €1.0 billion. The company reiterated its FY25 guidance, forecasting an adjusted EBITDAaL of approximately €11 billion and free cash flow of at least €2.4 billion.
Vodafone highlighted strategic initiatives that focus on customer experience, operational simplification, and growth. Its customer transformation strategy has already led to a reduction in customer detractors across all segments, with Vodafone achieving top or second-best Net Promoter Scores (NPS) in nine of its fifteen markets. To streamline operations, Vodafone launched a new commercial shared operations unit with Accenture, who invested an initial €150 million commitment in October 2024. Additionally, the company is making progress on its restructuring, with 3,100 role reductions underway in Germany.
From an investment standpoint, Vodafone achieved a pre-tax return on capital employed (ROCE) of 7.2%, up from 6.4% in H1 FY24. The increase was bolstered by a 1.4 percentage point benefit due to a reshaped Group structure but partially offset by deconsolidation impacts from Vantage and the regulatory MDU TV changes in Germany.
