Vodafone raises full year profit and cash flow guidance as revenue climbs to €21.9 billion despite €3.6 billion statutory loss

Vodafone Group raised its full year operating profit and free cash flow targets on Tuesday morning after reporting an 11.4 percent jump in first half revenue to €21.9 billion, signaling stronger underlying cash generation across Europe and Africa even as accounting writedowns pushed the British telecom operator to a €3.6 billion statutory loss.

For the fiscal year ending March 31, 2027, the Newbury headquartered group told investors via its Vodafone results and presentations portal that it now expects adjusted earnings before interest, taxes, depreciation, and amortization after leases to reach between €13.2 billion and €13.4 billion, up from the €13.0 billion to €13.3 billion range set in July. Adjusted free cash flow guidance rose by €200 million at the bottom end and €100 million at the top to a new range of €2.8 billion to €3.0 billion.

At the midpoint of those upgraded ranges, management’s targets imply roughly 7 percent organic operating earnings growth and 21 percent organic free cash flow growth for the year. Alongside the upgrade, the board raised its interim dividend by 2.5 percent to 2.306 euro cents per share on London Stock Exchange listed Vodafone shares.

Understanding why a company can raise its dividend and cash flow forecast on the very morning it posts a €3.6 billion net loss requires separating cash operations from balance sheet valuation rules. Both sets of numbers carry real consequences, one for shareholders weighing capital returns and the other for tens of millions of households and businesses paying monthly mobile and broadband bills across Europe and Africa.

Why accounting charges diverged from cash flow

A year ago, Vodafone recorded a €1.1 billion profit for the corresponding six months ended September 30. The swing to a €3.6 billion statutory loss in the first half of fiscal 2027 stemmed from accounting adjustments that did not drain current operating cash.

Two items drove the red ink. First, higher market interest rates increased the discount rate applied to future cash flows in Germany, triggering a goodwill impairment on Vodafone’s largest European unit. Second, Vodafone wrote down deferred tax assets in Britain following its buyout of CK Hutchison’s remaining stake in the combined VodafoneThree mobile business, with those two charges only partly offset by an accounting gain from consolidating East African operator Safaricom.

Stripping out those balance sheet revaluations, Group Chief Executive Margherita Della Valle pointed to broader top line expansion supported by cost reductions, workforce streamlining, and the consolidation of VodafoneThree, Safaricom, and Telekom Romania. First half service revenue rose 12.8 percent on a reported basis to €18.4 billion, while capital additions climbed to €3.32 billion from €2.80 billion a year earlier as the company funded fifth generation mobile and fiber rollouts.

Investor scrutiny of corporate cash generation versus paper accounting swings has sharpened across global markets this earnings season, a theme equally visible in Berkshire Hathaway’s third quarter cash and buyback disclosures. For Vodafone, however, sustaining cash flow growth ultimately rests on whether network upgrades allow it to hold onto subscribers while charging more per connection.

British merger savings rise as German subscribers slip

Nowhere is that balancing act clearer than in Vodafone’s two largest European markets, Britain and Germany, according to the detailed regional breakdown of Vodafone’s first half results. In the United Kingdom, first half revenue rose 10.2 percent to €4.86 billion and service revenue grew 10.3 percent to €4.04 billion, with organic service revenue up 0.9 percent and organic fixed line revenue up 4.8 percent.

Following its full takeover of VodafoneThree, Vodafone raised its annual UK cost and capital expenditure synergy target to £800 million by fiscal 2030, climbing to £1 billion annually by fiscal 2032, while executing an £11 billion multiyear British network investment plan. Capital additions in Britain increased to €667 million during the half from €562 million a year earlier.

For British consumers, the combined operator now reaches 26.5 million households with gigabit broadband through wholesale fiber partnerships and another 3.2 million homes outside fiber zones through its fifth generation fixed wireless broadband product launched in May 2026. During the half, Vodafone added 76,000 UK broadband subscribers and 54,000 fixed wireless households, while consumer contract churn improved by 0.6 percentage points and prepaid youth and value brands VOXI and SMARTY added 166,000 users, offsetting a drop of 62,000 contract mobile lines that included 40,000 low revenue business cards.

Germany tells a more difficult competitive story despite remaining Vodafone’s biggest European revenue contributor at €6.05 billion in first half sales, up 1 percent, with €5.48 billion in service revenue and €949 million in capital spending. Standalone fifth generation mobile coverage now reaches more than 94 percent of Germany’s population, and Vodafone’s gigabit footprint spans 31.5 million households across 25 million cable homes and 6.5 million marketable fiber connections, bolstered by its OXG fiber joint venture passing 1.1 million homes with construction orders for 3.6 million.

Yet intense German retail competition cost Vodafone 198,000 broadband subscribers during the six months, including 119,000 customers on its gigabit network, alongside 75,000 lost mobile contract accounts as mobile service revenue edged down 0.4 percent. Fixed service revenue in Germany still rose 2.4 percent because average revenue per user from new broadband signups jumped 25 percent under higher retail pricing, illustrating a deliberate trade of subscriber volume for higher monthly revenue per household.

Elsewhere in Europe, performance varied by country as Vodafone leaned on wholesale fiber alliances rather than building duplicate trenches alone. Portugal added 73,000 mobile contract accounts and 7,000 broadband homes, Ireland added 8,000 broadband subscribers across a 2 million home gigabit footprint, and Greece gained 33,000 mobile contract users while exploring a fiber joint venture with PPC Group covering more than 1.6 million homes.

Africa, Türkiye, and enterprise cloud power growth

Fast growing emerging markets and corporate digital services did much of the heavy lifting behind Tuesday’s guidance upgrade. Revenue across Vodafone’s African operations surged 37.4 percent to €5.43 billion, backed by 13.4 percent organic service revenue growth and an increase in regional capital spending from €456 million to €703 million.

Vodacom added 7.6 million customers during the six months across Africa, expanding fifth generation mobile service into seven African nations. South Africa added 120,000 contract subscribers to reach 7.1 million alongside 41.9 million prepaid users and 3.2 million fiber accessible homes via the Maziv open access venture, while Safaricom added 2.8 million users to reach 79 million subscribers and Vodafone Egypt added 2.1 million prepaid accounts.

In Türkiye, first half revenue climbed 14.7 percent to €1.84 billion and organic service revenue rose 32.8 percent following the country’s April 2026 fifth generation launch. Vodafone Türkiye has already surpassed 7 million fifth generation subscribers across all 81 provinces while adding 222,000 contract mobile customers and lifting enterprise service revenue by 40 percent organically.

Across the wider group, Vodafone Business posted 5.8 percent organic service revenue growth for the half, accelerating to 6.6 percent in the second quarter as corporate demand for cloud hosting, software subscriptions, and managed cybersecurity outpaced legacy voice and data lines. Recent commercial agreements include a small business artificial intelligence customer service tool developed with Google, expanded managed security services in Portugal, Ireland, and Romania, and an exclusive telecom partnership supporting Amazon Web Services sovereign cloud infrastructure in Germany.

Whether Tuesday’s upgraded cash flow trajectory proves durable into fiscal 2028 will depend on two operational tests over the coming quarters: stabilizing broadband subscriber defections in Germany without surrendering pricing gains, and converting British network consolidation into measurable reliability improvements before Vodafone delivers its third quarter trading update on February 4, 2027.