Vodafone raises cash guidance to €3.0 billion despite €3.597 billion loss
Key Facts
On 10 November, Vodafone raised its fiscal 2027 guidance for adjusted free cash flow to €2.8–3.0 billion and adjusted earnings before interest, tax, depreciation and amortisation after leases to €13.2–13.4 billion. The announcement accompanied results for the six months ended 30 September 2026, during which the group recorded a loss of €3.597 billion, compared with a profit of €1.052 billion in the year-earlier period. The company said the new guidance, at the midpoint of the range, implies adjusted free cash flow growth of more than 20% for the year. In July, Vodafone had set a range of €2.6–2.9 billion for adjusted free cash flow and €13.0–13.3 billion for adjusted earnings. The results therefore pair an improvement in operating and cash expectations with a sharp swing in net income to a loss.
Group revenue reached €21.853 billion in the first half, compared with €19.609 billion a year earlier. Vodafone said the comparison was affected by the inclusion of Three UK and the acquisitions of Safaricom and Telekom Romania. Service revenue rose to €18.4 billion from €16.3 billion, with organic growth of 5.8%, which the company said was achieved across all its segments. First-half results included three months of Safaricom, whose integration contributed 0.6 percentage points to the growth in group service revenue in the second quarter. Organic service revenue growth in Africa was 13.4% during the period, while Vodafone Business recorded growth of 5.8% in the first half. Service revenue growth in the business unit was 6.6% in the second quarter, its highest quarterly rate, according to the company.
Adjusted earnings before interest, tax, depreciation and amortisation after leases rose to €6.5 billion from €5.7 billion, with organic growth of 6.4%. The margin on this measure also increased to 29.5% from 29.2% in the year-earlier period. Adjusted free cash flow, however, remained negative at €0.4 billion in the first half, despite improving by €140 million year on year. Vodafone said about 60% of its annual capital expenditure would fall in the second half of fiscal 2027. This spending schedule places the bulk of expenditure in the remaining period, while the revised full-year outlook includes a higher range for free cash flow.
Vodafone attributed the loss to accounting factors, including a non-cash impairment of €4.85 billion related to Germany, which it said mainly reflected higher German government bond yields and the impact of a European Court of Justice ruling. The company also wrote off €2.2 billion of deferred tax assets in the UK. It said the accounting adjustment would have no current cash tax impact. By contrast, the year-earlier period included a one-off gain of €0.8 billion from the redemption of bonds repurchased below their face value before maturity. These items reflect differences in the components of net income between the two periods, alongside the performance of the operating business.
Growth remained uneven across markets, with service revenue rising organically by 0.4% in Germany and 0.9% in the UK in the first half. The chief executive said financial performance in Germany in recent years had been disappointing and that the company was taking steps to accelerate improvements in customer experience and simplify operations. During the results announcement session on 10 November, Vodafone shares fell 1.88%, while Vodacom shares rose 2.21%. Vodafone shares listed in London had closed at 116.95 pence on 9 November, the day before the results announcement. The company set its fiscal 2027 third-quarter trading update for 3 February 2027 and its fiscal-year results announcement for 18 May 2027. It also raised its target for annual cost and capital expenditure savings from the VodafoneThree integration to £800 million by fiscal 2030, while targeting annual savings of £1 billion by fiscal 2032.