Vodafone Q3 FY26: Europe and Africa deliver while guidance shifts to the upper end
Vodafone has posted a tidy third quarter: revenue grew, Europe stabilised, Africa accelerated, and management now expects to land at the top end of full-year profit and cash flow guidance. The UK integration is off to a fast start, and shareholder returns keep coming via buybacks and a guided dividend uplift.
| Key numbers (Q3 FY26) | Detail |
|---|---|
| Group revenue | €10.5 billion, up 6.5% |
| Service revenue | €8.5 billion, up 7.3% (organic +5.4%) |
| Adjusted EBITDAaL | €2.8 billion, organic +2.3% (margin 26.9%) |
| Operating profit | €0.5 billion, down 52.7% (driven by M&A and temporary non-cash effects from Indian simplification) |
| Buybacks to date | €3.5 billion completed since May 2024; new €500 million tranche starts today |
| FY26 guidance | Upper end of €11.3-11.6 billion Adjusted EBITDAaL and €2.4-2.6 billion Adjusted free cash flow reiterated |
| Dividend policy | Expect to grow FY26 DPS by 2.5% (announced November 2025) |
Quick jargon check: “Service revenue” excludes equipment sales and reflects ongoing connectivity and related services. “Organic growth” strips out FX, M&A and other adjustments. “Adjusted EBITDAaL” is a profit measure before interest, tax, depreciation and amortisation, adjusted for leases and significant one-offs – a cleaner read on operating performance.
Top-line momentum is broad-based, profit quality mixed
Group service revenue rose 7.3% to €8.5 billion, with organic growth of 5.4%. Africa delivered double-digit organic growth again, Türkiye was strong on an organic basis despite currency and hyperinflation accounting, and Europe nudged up with Germany back in positive territory.
Adjusted EBITDAaL rose 2.3% organically to €2.8 billion, in line with the “phasing” Vodafone flagged for the year. The margin sits at 26.9% this quarter. Operating profit fell to €0.5 billion, but the company points to M&A and temporary non-cash accounting impacts from Indian simplification – not a signal of underlying trading weakness.
Shareholder returns remain front and centre: €3.5 billion in buybacks already completed and another €500 million kicking off today, alongside an expected 2.5% dividend per share increase for FY26. Together with upper-end guidance for both profit and cash flow, that’s a confident stance.
Regional performance: what stood out and why it matters
Germany: wholesale helps, broadband value focus bites
Service revenue ticked up 0.7% (Q2: 0.5%). Mobile service revenue rose 2.8%, aided by higher wholesale revenue, while fixed declined 1.1% as TV headwinds lingered. Vodafone finished migrating 1&1 customers to its network – over 12 million now on its 5G footprint – with full run-rate revenue expected in Q4 FY26. That should support momentum into year-end.
Broadband customers fell by 63,000 as the company prioritised value over volume after pricing actions. The trade-off looks deliberate: new-customer broadband ARPU rose 21.0% year-on-year in the quarter, and January’s portfolio tweaks plus “more-for-more” speed upgrades should support ARPU further.
UK: integration first, growth later
Reported service revenue jumped 31.1% due to consolidating Three UK. Organically, service revenue dipped 0.5% as expected given tough comparatives in Business. Mobile organic service revenue was -1.8% while fixed organic grew 4.8%, helped by strong Consumer broadband.
The operational integration is moving quickly. Spectrum and network sharing are ahead of plan: 28.6 million customers already roam seamlessly across both networks; over 8,000 radio sites upgraded; 16,500 km² of “not spots” removed; and 4G speeds up to 40% faster for 7 million Three and SMARTY customers. Near-term, UK Business is lapping a one-off project last year and Vodafone deliberately disconnected 53,000 very low-value Business SIMs, contributing to 73,000 contract net losses. Counterpoint: broadband added 64,000 customers, backing the “mobile-plus-broadband” strategy.
Other Europe: back to growth, led by Business
Service revenue rose 3.5% reported and 1.2% organic, with Albania, Czech Republic, Ireland and Greece offsetting pressure in Portugal and Romania. Business service revenue grew 4.7% organically on project delivery and digital services demand. Integration of Telekom Romania Mobile assets is underway after the €30 million deal completed on 1 October 2025.
Türkiye: strong organic growth despite IAS 29 and FX
Reported service revenue fell 13.5% due to hyperinflation accounting (IAS 29) and currency effects, but organic service revenue was up 38.5%. Excluding the hyperinflation adjustment, service revenue increased 3.7% in euro terms. Business grew 54.8% organically, and 212,000 mobile contract customers were added. Vodafone Türkiye acquired 100 MHz of 5G spectrum for US$627 million (€539 million), with payments phased over three years and a 2026 launch planned. Existing spectrum was extended to 2042 – strategic capacity secured.
Africa: double-digit organic and fintech engines revving
Africa’s service revenue rose 8.2% reported and 13.5% organic, with growth in every market. Financial services stepped up: in Egypt, Vodafone Cash revenue hit €47 million, up 60.0% organically and now 9.9% of service revenue. In Vodacom’s international markets, M-Pesa revenue rose 24.6% organically to €133 million, making up 30.2% of service revenue.
Customer growth remains robust: +471,000 mobile in South Africa, +1.1 million in Egypt across contract and prepaid, and +2.0 million across international markets. The Maziv fibre JV closed on 1 December 2025, and Vodacom has agreed to acquire an effective 20% stake in Safaricom (15% from the Government of Kenya for €1.36 billion and 5% from Vodafone for €0.45 billion), pending approvals. Post completion, Safaricom will be consolidated by both Vodacom and Vodafone – strategically important for control and earnings mix.
Vodafone Business: steady demand for digital services
Across the Group, Business service revenue grew 3.0% organically, driven by digital services demand and strong Türkiye and Africa performance. Germany’s Business revenue dipped 1.8% and the UK fell 5.4% organically, reflecting contract renewals and tough comparatives. Notably, the Skaylink acquisition in Germany (cloud, digital transformation and security) closed in December 2025 – useful for higher-growth service lines.
Risks, caveats and what to watch in Q4
- FX and accounting noise: Türkiye’s IAS 29 impact and currency moves blur reported growth – focus on organic trends.
- UK comparatives: the prior-year Business project revenue will continue to distort year-on-year comparisons near term.
- Germany fixed-line: intentional value-over-volume strategy is suppressing broadband net adds – ARPU trends are the key metric.
- Portfolio moves: Safaricom acquisition approvals in Kenya, South Africa and Ethiopia – timing and consolidation effects matter.
- Inwit exposure: impairment testing at the Oak Holdings 1 GmbH JV (37.6% interest in Inwit) will be reported with FY26 results.
- 1&1 wholesale uplift: Vodafone expects full run-rate contribution in Q4 FY26 – watch the Germany mobile line.
My take: constructive, with execution tailwinds into year-end
There’s a lot to like. Guidance nudged to the upper end for both Adjusted EBITDAaL and free cash flow; buybacks and a planned 2.5% DPS rise underline confidence; Africa and Türkiye (on an organic basis) are doing the heavy lifting; and Germany is inching forward with tangible ARPU improvement in fixed and wholesale-supported growth in mobile.
Less positively, the Q3 operating profit decline will draw headlines, even though it’s largely non-cash and M&A-related. The margin is lower year-on-year, and competitive pressure persists in Portugal and Romania. UK organic growth is soft for now, but the integration data points – network sharing, site upgrades and churn improvements – are exactly what you want to see at this stage.
Bottom line: Vodafone is delivering a cleaner, more focused story – stronger regions doing more of the work, integration benefits beginning to show, and capital returns active. If the UK integration and Germany’s ARPU strategy keep trending the right way, FY26 should close out on a high note.
