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Vodafone Group plc (LON: VOD) has announced its financial results for the first quarter of fiscal year 2025 (1QFY25), showcasing robust performance despite challenging external conditions. The company experienced notable growth in revenue and operating profit, driven by strategic asset disposals and strong organic service revenue in key markets.
Revenue and Profit Performance
Vodafone's total revenue for the quarter rose by 2.8% to €9.0 billion, maintaining the same growth rate as in the previous quarter. This increase was fueled by higher organic service revenue, although it was partially offset by adverse foreign exchange movements. The operating profit saw a substantial increase of 42.9%, reaching €1.5 billion. This surge was primarily due to a €0.7 billion gain from the sale of an 18% stake in Indus Towers, reducing Vodafone’s stake to 3.1%.
Organic and Adjusted Revenue Metrics
The company's group service revenue grew by 5.4%, a slight deceleration from the previous quarter's 7.1% growth. This growth was underpinned by continued strong performance in Turkey and Africa. However, service revenue in Germany decreased by 1.5%, reversing the positive growth seen in the previous quarter. This decline was largely attributed to the impact of the MDU TV law change. Excluding this regulatory effect, service revenue in Germany fell by 0.3%, primarily due to the phasing out of prior year price increases and project delays in the Business segment.
Vodafone Business service revenue also grew, albeit at a slower pace of 2.6% compared to 5.4% in the previous quarter. This was influenced by project phasing issues in Germany and Other Europe, though normalization is expected throughout the rest of FY25. In contrast, service revenue in Africa remained strong, growing by 10.0%—a consistent rate from the previous quarter—driven by price increases in South Africa and continued commercial momentum in Egypt.
Adjusted EBITDA and Strategic Developments
Adjusted EBITDA increased by 5.1%, reflecting accelerated growth driven by lower cost inflation and operational expenditure phasing. The Adjusted EBITDA margin improved by 0.1 percentage points year-on-year, reaching 29.7% on an organic basis.
In July, Vodafone announced the sale of an additional 10% stake in Oak Holdings GmbH, which co-controls Vantage Towers, for €1.3 billion. This transaction completed Vodafone's goal of achieving a 50:50 joint ownership structure. Additionally, the company has nearly completed its initial €500 million share buyback tranche, with plans to commence a second tranche shortly.
Outlook for FY25
Vodafone reiterated its guidance for FY25, projecting an Adjusted EBITDA of approximately €11 billion and an Adjusted free cash flow of at least €2.4 billion. The company’s strong performance in the first quarter and strategic initiatives position it well for achieving these targets.
Overall, Vodafone's solid first-quarter results reflect its effective strategic maneuvers and resilience in key markets, positioning it for continued growth in the coming quarters.
