Vodafone shares have taken a hit of over six per cent in early trading today, following the release of the FTSE 100 giant's third-quarter results.
Despite reporting an overall service revenue growth of 5.2 per cent for the quarter, surpassing the average analyst estimate of 4.2 per cent, the company noted that the migration of 1&1 customers in Germany has been slower than anticipated, as reported by .
The telecoms heavyweight reported a 2.2 per cent increase in adjusted EBITDA to €2.8bn (£2.3bn) for the quarter and reiterated its full-year guidance for an adjusted EBITDA of approximately €11bn and an adjusted free cash flow of at least €2.4bn.
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Vodafone's CEO, Margherita Della Vale, commented: "With service revenue growth accelerating to 5.2 per cent, we are making good progress in our transformation."
Matt Britzman, senior equity analyst at Hargreaves Lansdown, observed: "The signal’s getting stronger at Vodafone, with service revenue growth exceeding expectations, thanks to dialled-up performance in the 海角视频, Africa, and Turkey. But Germany remains a dropped call, weighing on overall performance."
He added: "The €8bn Italy sale is in the bag, and the 海角视频 merger with Three has the green light, setting Vodafone up for a network-wide reboot with scale and cost synergies."
"With €2bn in share buybacks on speed dial and over €2.4bn in free cash flow expected for the year, the case for good returns is still alive and well – but investors will want to keep an ear out for static from Germany’s ongoing struggles," said a spokesperson regarding Vodafone's 海角视频 merger.
"The approval of the 海角视频 merger", she continued, marked "a significant reshaping of our portfolio", Della Vale added.
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In December 2024, the 海角视频’s Competition and Markets Authority (CMA) gave the green light to the merger of Vodafone 海角视频 and Three 海角视频. The transaction, which is anticipated to be completed in the coming months, will result in the 海角视频’s largest mobile operator.
Vodafone will retain a 51 per cent stake, with CK Hutchison, parent company of Three 海角视频, owning the remaining 49 per cent.
Albie Amankona, analyst at Third Bridge, commented ahead of today’s results: "The Vodafone-Three merger unlocks significant cost efficiencies through network integration.
By consolidating infrastructure, the new entity can reduce maintenance expenses and strengthen its competitive position against BT-EE and Virgin Media O2."
However, he noted that "Vodafone’s lack of exclusive content remains a weakness, as rivals continue to leverage proprietary entertainment services to drive customer retention".
Despite these strategic moves, Vodafone continues to face pressure in an increasingly competitive market. Its share price has struggled over the past decade, and while progress is evident, analysts remain divided on its long term outlook.
Vodafone's share price has seen a significant drop of 54.76% over the past five years, yet it has shown stability in the last year with an increase of 4.39%.
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Richard Hunter, head of markets at Interactive Investor, commented: "Vodafone’s transformation is well underway, but turning around a business of this scale takes time."
He further noted: "The market remains cautious, with share price movements reflecting ongoing uncertainty. While there are signs of progress, the group still faces challenges in providing that its turnaround strategy will deliver sustained growth."