Vodafone Group (VOD) Q1 2025 earnings summary

Executive summary

• Q1 FY25 results met expectations, with 5.4% service revenue growth driven by strong performance in Africa and Turkey, while Europe saw slower growth due to lower inflation and regulatory changes in Germany.

• Group EBITDA/EBITDAaL grew 5.1% to €2.7 billion, benefiting from operational leverage and lower inflation.

• Major transformation actions included the sale of Spain, a €2 billion share buyback, and a further 10% sell-down in Vantage Towers, reducing the stake to 50%.

• Strategic priorities focus on customer satisfaction, operational simplicity, and growth, with 7,000 role reductions and a new ExCo structure implemented.

• Operating profit rose 42.9% to €1.5 billion, mainly due to a €0.7 billion gain from the Indus Towers stake disposal.

Financial highlights

• Group Q1 service revenue up 5.4% year-over-year, with adjusted EBITDAaL up 5.1% to €2.7 billion and margin at 29.7%.

• Total revenue increased by 2.8% to €9.0 billion, with organic growth partly offset by adverse FX movements.

• All geographical segments grew EBITDA except Germany, which faced headwinds from the MDU transition.

• UK service revenue flat to up 2.0%, Turkey up 91.9% (25% in euro terms), South Africa up 1.8%, Egypt up 43.6%.

• OPEX remained flat, and energy cost headwinds dissipated compared to last year.

Outlook and guidance

• FY25 guidance reiterated: Adjusted EBITDAaL of approximately €11 billion and adjusted free cash flow of at least €2.4 billion.

• Sequential improvement expected in Vodafone Business and Germany, with stronger exit growth rate versus FY24.

• Germany is expected to return to positive contribution in FY26 as MDU headwinds dissipate and B2B demand strengthens.

• UK guidance for low single-digit top-line growth remains unchanged, with expected EBITDA growth and strong commercial momentum.

• Europe as a whole is expected to see a U-shaped recovery, with Q2 as the trough due to MDU and price lapping impacts, followed by improvement in H2.