Vodafone's numbers show turnaround is underway

The operator posted service revenue growth across its footprint for the year to the end of March and reported an uptick in earnings. A hefty slide in operating profit was as expected, leaving the market pretty happy with its performance.

Vodafone's share price was up by about two and a half percent at the time of writing on Tuesday morning; it's not a huge leap, but one that should help appease the telco's long-suffering shareholders, who had confirmation in the results announcement that their 2025 dividend will come in at 4.5 cents per share, half the FY24 figure.

The telco had already made that announcement, alongside a commitment to return €4 billion to shareholders from the sales of its operations in Italy and Spain, in March when it finalised plans for an €8 billion disposal of Vodafone Italia to Swisscom. Those two businesses have now been removed from Vodafone's financials, being categorised as discontinued operations, and as such its previous-year comparative figures were restated.

Germany, still Vodafone's biggest market operation, now accounts for 38% of group service revenue. The operation saw a return to growth in FY24; admittedly, service revenue was only up by 0.2% (see chart), but it's a pretty big deal for Vodafone. The German unit brought in just shy of €13 billion in revenue and contributed €5 billion – or 46% – of group EBITDAaL. That earnings figure was down by 5.8% on year, in no small part due to a 2.7 percentage point hit from higher energy costs, Vodafone said.

In the UK, where Vodafone is still desperately pushing its case to be allowed to merge with rival Three, the telco talked up strong growth, including 5% organic growth in its top line – driven by the mobile segment – and a 4% earnings uptick. That UK merger, which Vodafone expects to complete by around the end of the year, is still going through a competition investigation but took a minor step forward last week when the government cleared it on security grounds.

"We performed slightly ahead of expectations in the financial year, with good organic service revenue growth of 6.3% and organic EBITDAaL growth of 2.2%," said CEO Margherita Della Valle. Those group-level figures came in at just shy of €30 billion and just over €11 billion respectively.

"Our Business division – a key growth driver – achieved 5.4% revenue growth in the fourth quarter," the chief exec added. "Much more still needs to be done in the year ahead. We will step-up investment in our customer experience, improve our underlying performance in Germany and accelerate our momentum in Business, whilst also continuing to simplify our operations throughout the group," she said.

That simplification drive has seen the telco announce thousands of job losses in recent years and work hard to cut costs; clearly there is more of the latter on the horizon. Asset sales may now be at an end, the company having, in its own words, "right-sized" its portfolio, but that turnaround is still far from complete and investors are still watching closely. These full-year numbers show that Vodafone is getting somewhere though, and that's a start.