Vodafone FY26 preliminary results – the big takeaway for retail investors
Vodafone has turned in a better set of full-year numbers than the market was probably braced for. The headline point is simple: revenue rose, service revenue rose, profit improved sharply, cash flow hit the top end of guidance, and management sounds much more confident about the next phase.
That said, this is not a spotless update. Germany is only just getting back on its feet, net debt has gone up, and the group still reported a loss attributable to shareholders. So this is better, but not perfect – and that matters when you are judging whether Vodafone is genuinely fixed or just looking tidier.
Vodafone FY26 key numbers at a glance
| Metric | FY26 | FY25 | Change |
|---|---|---|---|
| Total revenue | €40.5 billion | €37.4 billion | +8.0% |
| Service revenue | €33.5 billion | €30.8 billion | +8.8% |
| Organic service revenue growth | 5.4% | Not disclosed | – |
| Adjusted EBITDAaL | €11.4 billion | €10.9 billion | +3.8% |
| Operating profit | €2.8 billion | Loss of €0.4 billion | Up €3.2 billion |
| Adjusted free cash flow | €2.6 billion | €2.5 billion | +2.9% |
| Net debt | €25.4 billion | €22.4 billion | +13.5% |
| Total dividend per share | 4.6125 eurocents | 4.5 eurocents | +2.5% |
Why Vodafone’s FY26 performance beat matters
The standout line for me is that Vodafone reached the top end of its FY26 guidance range on a guidance basis, with Adjusted EBITDAaL at €11.6 billion and Adjusted free cash flow at €2.6 billion. Adjusted EBITDAaL is a profit measure that strips out some items and includes lease effects – useful, but not the same as statutory profit.
Investors care because Vodafone has spent years talking about simplification, disposals, cost cuts and focus. This update suggests that work is finally showing up in the numbers. When a telecoms group starts converting strategy slides into actual cash flow, the market usually pays attention.
Service revenue is particularly important because it tracks the recurring money coming in from customers rather than one-off handset sales. Vodafone grew service revenue by 8.8% on a reported basis and 5.4% organically, which strips out currency, deal activity and other distortions. That is a healthy result for a business once criticised for drifting.
Germany, UK and Africa – the real story behind Vodafone’s full-year results
Vodafone Germany results – improving, but not fully repaired
Germany remains the key battleground. Full-year organic service revenue slipped 0.2%, but the important detail is that this improved to 1.3% growth in the fourth quarter.
That is a genuine sign of stabilisation. Management highlighted higher wholesale revenue, better broadband pricing and strong digital services demand in business, which helped offset mobile competition and the lingering impact of the TV law change.
The catch is profitability. Germany’s Adjusted EBITDAaL fell 3.2% to €4.2 billion, and the margin dropped to 35.0% from 36.0%. So yes, sales are improving, but margins are still under pressure. For Vodafone shares, Germany is still the market that can make or break the recovery story.
Vodafone UK and Three merger – early progress looks genuinely encouraging
The UK numbers got a big lift from the Three UK merger, with total revenue up 30.0% to €9.2 billion and service revenue up 29.0%. On an organic basis though, service revenue growth was only 0.3%, so investors should not confuse consolidation with booming underlying growth.
Even so, the integration update is better than I expected. Vodafone says network sharing is ahead of plan across 10,000 radio sites, and seven million Three and SMARTY customers are already seeing 4G speed improvements of up to 40%.
More importantly, Vodafone has now agreed to buy out CK Hutchison’s 49% stake in VodafoneThree for £4.3 billion, giving it full ownership once completed. That matters because mergers are messy enough without split control. If Vodafone can move faster and capture the expected £700 million of annual cost and capital expenditure synergies by FY30, the UK could become a much stronger asset.
Vodafone Africa growth – the quiet engine doing the heavy lifting
Africa was excellent again. Organic service revenue grew 12.9%, while Adjusted EBITDAaL rose 14.0% organically to €2.8 billion.
This is not just nice-to-have growth. It is meaningful, diversified and increasingly important to the group’s investment case. South Africa, Egypt and Vodacom’s international markets all contributed, with strong demand for data and financial services such as M-Pesa and Vodafone Cash.
Vodafone dividend, buybacks and cash flow – what shareholders are actually getting
For income investors, the shareholder return angle is solid. Vodafone increased the total dividend by 2.5% to 4.6125 eurocents per share and completed the final €0.5 billion tranche of its second €2.0 billion buyback programme on 11 May 2026.
Total capital returned to shareholders in FY26 was €3.1 billion. That is a decent signal that management believes the reshaped business can support cash returns.
Adjusted free cash flow improved to €2.6 billion, but free cash flow itself dipped 3.0% to €1.8 billion. Net debt also rose to €25.4 billion, mainly because of the VodafoneThree consolidation and the €2.0 billion buyback. So the returns are welcome, but they have not come for free.
Vodafone profits, tax and debt – the weak spots investors should not ignore
There are still a few bruises in these results. Vodafone’s operating profit improved sharply to €2.8 billion, but the group still posted a loss for the year attributable to owners of the parent of €397 million.
Tax was a big issue. The effective tax rate was 96.8%, with charges including a €358 million derecognition of UK deferred tax assets and a €305 million write-down of German deferred tax assets. That is not the sort of thing retail investors usually cheer over breakfast.
There are also legal and regulatory loose ends, though no new financial hit of major scale was disclosed in this results statement. And while management talks confidently about the medium term, restructuring and integration costs are expected to peak at around €0.7 billion in FY27, including around €0.4 billion tied to VodafoneThree.
Vodafone FY27 guidance – is this finally a credible growth story?
Vodafone’s FY27 guidance points to further progress. Management expects Adjusted EBITDAaL of €11.9 billion to €12.2 billion and Adjusted free cash flow of €2.6 billion to €2.9 billion.
That is encouraging because it suggests this year was not a one-off clean-up bounce. The company is also sticking to its medium-term ambition for double-digit organic Adjusted free cash flow growth, which is exactly the metric long-suffering shareholders want to hear about.
My view is that this was a positive update overall. Vodafone looks more focused, Africa is delivering, Germany is no longer getting worse, and the UK merger is off to a stronger start than many feared. The negative is that debt is higher, statutory earnings are still messy, and the turnaround case still leans heavily on management executing properly from here.
In short, Vodafone now looks less like a perpetual restructuring story and more like a telecoms group with an actual plan that might pay off. That does not make it risk-free, but it does make it more interesting.
