Vodafone H1 Pre-tax Profit Edges Up; Sees FY26 Profit At Top End Of View; Starts EUR 500 Mln Buyback

Vodafone Group Plc reported a 7.3% increase in first-half fiscal 2026 total revenue to 19.61 billion euros and a 5.9% rise in Adjusted EBITDAaL to 5.728 billion euros, driven by strong service revenue growth and the consolidation of Three UK. While attributable profit declined and operating profit fell 9.2%, the company now anticipates reaching the upper end of its 11.3 billion to 11.6 billion euro Adjusted EBITDAaL guidance for fiscal 2026, citing accelerating service revenue. Vodafone also announced a new progressive dividend policy, projecting a 2.5% full-year increase, and commenced a 500 million euro share repurchase program.

Analysis

Vodafone Group Plc reported a mixed first half for fiscal 2026, with total revenue increasing 7.3% to 19.61 billion euros and Adjusted EBITDAaL growing 5.9% to 5.728 billion euros, driven by strong service revenue and the consolidation of Three UK. Despite a 9.2% decline in operating profit to 2.162 billion euros and lower attributable profit of 829 million euros, the company now anticipates delivering at the upper end of its fiscal 2026 Adjusted EBITDAaL guidance range of 11.3 billion to 11.6 billion euros. This improved outlook is attributed to accelerating service revenue, particularly in the UK, Türkiye, Africa, and a return to top-line growth in Germany.

The decline in operating profit was primarily due to higher depreciation and amortisation following the Three UK consolidation, alongside lower other income, offsetting the Adjusted EBITDAaL growth. In a move signaling confidence, Vodafone has initiated a share repurchase program of up to 500 million euros and announced a new progressive dividend policy, projecting a 2.5% increase in the full-year dividend per share for fiscal 2026, maintaining the interim dividend at 2.25 eurocents. This strategic capital allocation, coupled with the optimistic tone from management regarding a multi-year growth trajectory, underpins the moderately positive sentiment surrounding the announcement.

Key Decisions for Investors

• Investors should re-evaluate Vodafone's growth trajectory given the accelerated service revenue and upgraded Adjusted EBITDAaL guidance, which suggests improving operational momentum.
• Consider the implications of the 500 million euro share repurchase program and the new progressive dividend policy, as these signal management's commitment to shareholder returns and confidence in future cash flow generation.
• Monitor the sustainability of service revenue growth and the impact of Three UK integration on overall profitability, particularly how the company addresses the decline in operating and attributable profit despite strong Adjusted EBITDAaL performance.