Vodafone has upgraded its annual profit and cash flow forecasts after reporting stronger first-half trading, as the telecommunications group continues restructuring its European operations and reducing operating costs.
The company now expects adjusted earnings before interest, tax, depreciation, and amortisation after leases (EBITDAaL) of between €13.2bn and €13.4bn for the financial year ending March 2027.
That compares with its previous forecast of €13bn to €13.3bn. Adjusted free cash flow guidance has increased from €2.6bn–€2.9bn to €2.8bn–€3bn.
The improved outlook follows organic growth of 6.4% in adjusted EBITDAaL during the six months to September, with first-half earnings reaching approximately €6.5bn.
Organic service revenue increased 5.8%, accelerating to 6.4% during the second quarter as the company’s business services and African operations delivered stronger performance.
Chief executive Margherita Della Valle said Vodafone Business recorded its strongest growth to date, supported by demand for digital services among corporate and public-sector customers.
The African division also performed strongly, with service revenue increasing 13.4% organically as connectivity and financial services supported growth across Vodacom’s markets.
However, performance remained uneven across Europe. German service revenue declined 0.5% organically during the second quarter, following growth of 1.2% in the first.
Management attributed the weakness to continued pressure on mobile operations and declining television revenue, partly offset by stronger fixed-line and business services.
Workforce reductions and cost savings —
The group has delivered approximately €200m in gross operating savings during the first half, including the removal of around 3,000 roles across its European businesses and shared operations.
Vodafone has separately announced a further 2,300 role reductions in Germany as it seeks to simplify the business and improve operating performance.
These measures form part of a wider productivity programme targeting more than €2bn in annual gross operating efficiencies by the 2030 financial year.
The company expects the programme to deliver annual net savings exceeding €1bn, after accounting for reinvestment and other operating requirements.
Previous restructuring programmes have already reduced Vodafone’s cost base. Between the 2023 and 2026 financial years, the company delivered approximately €700m in annual gross savings and reduced its workforce by 11,000 roles.
The latest programme extends that approach, combining organisational simplification with investment in customer services, technology, and commercial operations.
In the UK, organic service revenue grew 0.9%, supported by fixed-line services and increased mobile wholesale revenue.
The group also delivered approximately €50m in synergies from the combination of Vodafone UK and Three during the first half.
Integrating those businesses remains a substantial financial undertaking. Vodafone expects restructuring and integration expenditure to reach approximately €700m during the current financial year, including around €400m associated with VodafoneThree.
The company has retained its full-year adjusted EBITDAaL expectations for Europe of €7.6bn–€7.9bn, despite upgrading the consolidated group forecasts.
At the midpoint of its revised guidance, Vodafone expects approximately 7% organic growth in adjusted EBITDAaL and 21% organic growth in adjusted free cash flow during the financial year.
The improved outlook reflects stronger group trading and ongoing cost reductions, although the German business continues to present a challenge for management’s wider European restructuring programme.
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