REG - Vodafone Group Plc - Vodafone Q3 FY25 Trading Update
04/02/2025 07:15
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RNS Number : 7450V Vodafone Group Plc 04 February 2025
Vodafone Group Plc
Q3 FY25 Trading Update
4 February 2025
Good Group performance, with portfolio transformation completing
"Group service revenue growth accelerated to 5.2% in the third quarter. This
was driven by a step-up in the UK and strong performance in Türkiye and
Africa, whilst Germany is impacted by the TV law change. We are continuing to
invest in the turnaround of our German business and we are starting to see
improving customer trends, although conditions have become more challenging in
the mobile market.
During the quarter, we completed the sale of Italy for €8 billion and
received regulatory approval for Vodafone's merger with Three in the UK. When
the UK merger completes in the next few months, we will have fully executed
Vodafone's reshaping for growth. We are on track to grow in line with our full
year guidance for this year, which we reiterate today, and are looking forward
to a stronger Vodafone in the years ahead."
Margherita Della Valle
Group Chief Executive
UK merger approval €8 billion cash proceeds €1.5 billion Reiterated
Completion in the next few months Vodafone Italy disposal Share buybacks to-date FY25 financial guidance
- Group total revenue: Increased by 5.0% to €9.8 billion in Q3 with
good organic service revenue growth partially offset by adverse foreign
exchange movements.
- Group service revenue: Grew by 5.6% in Q3 to €7.9 billion and on an
organic basis increased 5.2% (Q2: 4.2%), driven by broad-based growth,
excluding Germany. The acceleration in quarterly trends was driven by the UK
and Africa.
- Germany: Declined by 6.4% in Q3 (Q2: -6.2%), primarily due to the
impact of the TV law change. Excluding this impact, service revenue declined
by 2.6% in Q3 (Q2: -2.4%), largely due to lower broadband service revenue.
- UK: Organic service revenue growth accelerated to 3.3% in Q3 (Q2:
1.2%), as the significant investments we have made to our customer experience
are driving growth in Consumer.
- Other Europe & Türkiye: In Q3, organic service revenue growth
in Other Europe remained stable at 2.6% and service revenue growth in Türkiye
remained strong, increasing by 53.1% in euro terms, excluding the
hyperinflationary adjustment.
- Africa: Organic service revenue growth improved to 11.6% in Q3
(Q2: 9.7%), supported by an acceleration in South Africa and above-inflation
growth in Egypt, driven by demand for data and price actions.
- Business: Our growth momentum continued, with organic service
revenue growth of 4.3% in Q3 (Q2: 4.0%) driven by double-digit growth in
digital services, including cloud & security.
- Group Adjusted EBITDAaL: Increased by 2.2% on an organic basis to
€2.8 billion, as service revenue growth in most markets and lower energy
costs in Europe more than offset the impact of the TV law change in Germany.
The Adjusted EBITDAaL margin of 28.8% was 0.5 percentage points lower
year-on-year on an organic basis. On a year-to-date basis, Adjusted EBITDAaL
increased by 3.2% on an organic basis to €8.2 billion. Operating profit
decreased by 18.4% to €1.0 billion (see basis of preparation on page 7).
- Share buybacks: Third €0.5 billion tranche completed 22 January
2025, with 1.8 billion shares repurchased for €1.5 billion since May 2024.
Final €0.5 billion tranche from the initial €2 billion buyback programme
commencing today.
- Group FY25 guidance reiterated: On track to deliver Group Adjusted
EBITDAaL of c.€11 billion and Group Adjusted free cash flow of at least
€2.4 billion.
- UK merger: In December 2024, the UK's Competition and Markets
Authority approved the combination of Vodafone and Three in the UK. We expect
the merger to formally complete in the next few months.
- Vodafone Italy disposal: The sale of Vodafone Italy to Swisscom AG for
€8 billion in cash completed on 31 December 2024. Proceeds have been used to
reduce net debt and the Board will target to return up to €2.0 billion via
share buybacks once the current programme has completed.
For more information, please contact:
Investor Relations: investors.vodafone.com (https://investors.vodafone.com/) ir@vodafone.co.uk Media Relations: Vodafone.com/media/contact GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14
2FN, England. Registered in England No. 1833679
Awebcast Q&A session will be held at 10:00 GMT on 4 February 2025. The
webcast and supporting information can be accessed at investors.vodafone.com
(https://investors.vodafone.com/)
Segment performance
In the financial year ended 31 March 2024, in accordance with International
Financial Reporting Standards ('IFRS'), we updated our financial reporting to
recognise that Vodafone Spain and Vodafone Italy are discontinued operations.
The results of discontinued operations are excluded from the Group's segment
reporting. The Q3 FY24 comparatives in the tables below have been re-presented
to reflect that Vodafone Spain and Vodafone Italy were classified as
discontinued operations in that period and should be used as the basis of
comparison to our Q3 FY25 results. The disposals of Vodafone Spain and
Vodafone Italy completed on 31 May 2024 and 31 December 2024, respectively.
Geographic performance summary
Service revenue Other revenue Total revenue
Re-presented(1) Re-presented(1) Re-presented(1)
Q3 FY25 Q3 FY24 Q3 FY25 Q3 FY24 Q3 FY25 Q3 FY24
€m €m €m €m €m €m
Germany 2,706 2,892 384 451 3,090 3,343
UK 1,507 1,400 358 340 1,865 1,740
Other Europe 1,201 1,175 235 236 1,436 1,411
Türkiye 776 393 187 139 963 532
Africa 1,607 1,543 465 389 2,072 1,932
Common Functions 165 137 268 306 433 443
Eliminations (33) (35) (15) (20) (48) (55)
Group 7,929 7,505 1,882 1,841 9,811 9,346
Note:
1. The results for the quarter ended 31 December 2023 have been
re-presented to reflect that the results of Vodafone Spain and Vodafone Italy
are now reported as discontinued operations. See note above.
Service revenue growth FY24 FY25
Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1 Q3
% % % % % % % % % % %
Germany (1.3) 1.0 (0.1) 0.3 0.6 0.5 0.2 (1.5) (6.2) (3.9) (6.4)
UK 3.0 5.1 4.1 5.5 6.8 6.2 5.1 2.0 2.9 2.4 7.6
Other Europe (7.4) (7.2) (7.3) (7.8) 0.3 (4.0) (5.7) 1.6 2.1 1.9 2.2
Türkiye (8.5) 21.6 7.4 6.8 15.6 11.7 9.6 54.7 18.8 33.2 97.5
Africa (14.3) (14.8) (14.6) (7.5) 1.2 (3.4) (9.2) 1.6 0.3 0.9 4.1
Group (4.7) (1.9) (3.3) (1.5) 2.9 0.7 (1.3) 3.2 0.2 1.7 5.6
Organic service revenue growth(1) FY24 FY25
Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1 Q3
% % % % % % % % % % %
Germany (1.3) 1.1 (0.1) 0.3 0.6 0.5 0.2 (1.5) (6.2) (3.9) (6.4)
UK 5.7 5.5 5.6 5.2 3.6 4.4 5.0 - 1.2 0.6 3.3
Other Europe 4.1 3.8 3.9 3.6 5.5 4.6 4.2 2.3 2.6 2.5 2.6
Türkiye 74.1 85.0 79.3 90.4 105.6 97.8 88.5 91.9 89.1 90.3 83.4
Africa 9.0 9.0 9.0 8.8 10.0 9.4 9.2 10.0 9.7 9.9 11.6
Group 5.4 6.6 6.0 6.3 7.1 6.7 6.3 5.4 4.2 4.8 5.2
Group profitability FY24 FY25
Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1 Q3
Operating profit (€m)(2) 1,081 776 1,857 1,252 556 1,808 3,665 1,545 837 2,382 1,022
Adjusted EBITDAaL (€m)(1) 2,626 2,801 5,427 2,795 2,797 5,592 11,019 2,681 2,730 5,411 2,828
Adjusted EBITDAaL margin %(1) 29.9 30.5 30.2 29.9 29.8 29.8 30.0 29.7 29.5 29.6 28.8
Organic Adjusted EBITDAaL growth %(1) 3.3 1.2 2.2 5.1 2.5 3.8 2.2
Note:
1. Non-GAAP measure. See page 8 for more information.
2. See page 7 for more information on the basis of preparation.
Germany ⫶ Customer trends improving, despite challenging market conditions
34% of Group service revenue Q3 FY25 Q3 FY24 Reported Organic
€m €m change % change %(1)
Total revenue 3,090 3,343 (7.6)
- Service revenue 2,706 2,892 (6.4) (6.4)
- Other revenue 384 451
Note:
1. Non-GAAP measure. See page 8 for more information.
Growth
Total revenue decreased by 7.6% to €3.1 billion as a result of lower service
and equipment revenue. As anticipated, the service revenue reduction in Q3
remained broadly consistent with Q2, declining by 6.4% (Q2: -6.2%). The
decline was primarily due to a
-3.8 percentage point impact (Q2: -3.8 percentage points) from the end to bulk
TV contracting in Multi Dwelling Units ('MDU'), which came into full effect
from July 2024, as well as a lower broadband customer base and lower mobile
ARPU. Other contributing factors included fully lapping broadband price
increases in the prior year and a slowdown in Business mobile, which were
partially offset by an easier prior year comparative in Q3 versus Q2 in
mobile.
Fixed service revenue decreased by 10.7% in Q3 (Q2: -9.7%) due to the
cumulative impact of TV and broadband customer losses. The MDU transition had
a -6.8 percentage point impact (Q2: -6.9 percentage points) on fixed service
revenue growth in Q3. Performance in the quarter was also impacted by the
lapping of the final phase of price increases implemented last year, and the
cumulative impact of customer losses.
Mobile service revenue decreased by 1.0% in Q3 (Q2: -1.8%) as ARPU pressure,
due to higher competitive intensity in the market which we highlighted in
November, and lower mobile termination rates, were only partially offset by a
higher contract customer base. During Q3, 1&1 began migrating their
customers onto our network as part of our long-term national roaming
agreement, however this has been slower than expected. We expect the migration
to ramp-up in the following quarters and reach full run-rate during H2 FY26.
Vodafone Business service revenue declined by 3.0% in Q3 (Q2: -1.7%), as lower
mobile ARPU, in particular from large corporate contract renewals, was
partially offset by digital services demand. The quarterly slowdown was due to
project revenue and IoT usage phasing.
Customers
We are pleased to see positive momentum in the development of our customer
base, with a further sequential improvement. Our broadband customer base
declined by 7,000 during the quarter (Q2: -33,000), and our
gigabit-capable customer base increased by 1,000 (Q2: -9,000). We are the
largest provider of fixed line gigabit connectivity in Germany, supported by
our wholesale agreements with Deutsche Telekom & Deutsche Glasfaser, and
we can now market gigabit speeds to almost 5 million households beyond our own
cable footprint of 25 million households.
We have now largely completed the migration of our MDU TV customer base
following the change in TV law that came into force in July 2024. By the end
of December 2024, we had retained 4.1 million households (49% of affected
customers), which is in line with our 50% expectation. We will continue to
engage with the remaining households affected by the law change. Our total TV
customer base declined by 66,000 during the quarter, primarily due to the MDU
transition.
Despite higher competitive intensity in the mobile market, our Consumer mobile
contract customer base increased by 23,000 in the quarter (Q2: 39,000), as our
increased focus on higher value branded and direct sales channels was offset
by the continued loss of low-margin customers through resellers' channels. In
addition, we saw 5,000 net losses (Q2: -5,000) from Business accounts, partly
driven by some large contract tenders in the prior year.
Investing in the turnaround
The continued investment in the turnaround, together with more challenging
mobile market conditions and one-off items will result in Germany Adjusted
EBITDAaL being lower in the second half of FY25 compared to the first half of
FY25.
Our new management team is now in place, with new directors for Business,
Consumer, IT and HR. We are also making good progress with the simplification
of our German operations, being halfway through the implementation of our
3,100 role reduction plan. In Q3, we stabilised our gigabit broadband customer
base and completed the operational execution of the MDU transition in line
with our initial expectations. We continue to invest in the customer
experience, our brand and B2B. These investments are already leading to
year-on-year improvements in customer satisfaction & non-user
consideration.
UK ⫶ Market-leading customer experience supporting growth
19% of Group service revenue Q3 FY25 Q3 FY24 Reported Organic
€m €m change % change %(1)
Total revenue 1,865 1,740 7.2
- Service revenue 1,507 1,400 7.6 3.3
- Other revenue 358 340
Note:
1. Non-GAAP measure. See page 8 for more information.
Growth
Total revenue increased by 7.2% to €1.9 billion due to service revenue
growth and the appreciation of the pound sterling versus the euro.
Service revenue increased by 7.6% (Q2: 2.9%), with organic growth in service
revenue of 3.3% (Q2: 1.2%). Organic growth was driven by Consumer and
wholesale revenue, and partially offset by a decline in Business. Growth was
also supported by positive foreign exchange movements.
Mobile service revenue grew by 6.0% (Q2: 0.6%), and organic growth in mobile
service revenue was 1.8% (Q2: -1.1%). The return to organic growth in the
quarter was supported by customer base growth in Consumer and the delivery of
project milestones in Business.
Fixed service revenue grew by 12.3% (Q2: 9.6%) and organic growth in fixed
service revenue was 7.6% (Q2: 8.0%) due to continued growth in the customer
base, supported by successful seasonal campaigns, and higher Consumer ARPU.
Vodafone Business service revenue grew by 3.7% (Q2: 0.2%) but on an organic
basis, service revenue declined by 0.4%
(Q2: -1.7%). The appreciation of the pound sterling versus the euro and growth
in fixed from project work was offset by a decline in mobile, primarily driven
by ARPU pressure and a lower customer base. The improvement in quarterly
organic trends was supported by the phasing of project revenue.
Customers
In mobile, our Consumer contract customer base increased by 37,000 in the
quarter, supported by our customer experience improvements. This was offset by
contract disconnections in Business and a reclassification of part of the
mobile customer base to IoT, meaning our total contract customer base
increased by 1,000 in Q3.
In fixed, we continue to be one of the fastest growing broadband providers in
the UK. Our broadband net additions grew by a record 72,000 in Q3, in part
supported by the launch of the 'One Touch Switching' in September 2024. Our
fibre coverage has reached 18.4 million households and we offer faster speeds
of up to 2.2Gbps in more locations than any other provider.
In Q3, we achieved another strong brand Net Promoter Score, with all of our
services scoring the highest in the market. We also reduced the level of
Consumer 'detractors' to a record low. These achievements reflect the
significant investments we have made to our customer experience.
Merger of Vodafone UK and Three UK
In June 2023, we announced a binding agreement to combine our UK business with
Three UK to create a sustainable and competitive third scaled network operator
in the UK. In December 2024, the UK's Competition and Markets Authority
('CMA') approved the combination of Vodafone and Three in the UK. Following
the merger, which we expect to formally complete in the next few months,
Vodafone and CK Hutchison will own 51% and 49% of the combined business,
respectively. This combination will provide customers with greater choice and
more value, drive greater competition, and enable increased investment with a
clear £11 billion plan to create one of Europe's most advanced 5G networks.
Full details of the transaction can be found here:
investors.vodafone.com/merger-of-vodafone-uk-and-three-uk
(https://investors.vodafone.com/sites/vodafone-ir/files/2023-06/merger-of-vodafone-uk-and-three-uk-13-june-2023-vodafone.pdf)
.
Other Europe(1) ⫶ Growth momentum sustained
15% of Group service revenue Q3 FY25 Q3 FY24 Reported Organic
€m €m change % change %(2)
Total revenue 1,436 1,411 1.8
- Service revenue 1,201 1,175 2.2 2.6
- Other revenue 235 236
Notes:
1. Other Europe markets comprise Portugal, Ireland, Greece, Romania, Czech
Republic and Albania.
2. Non-GAAP measure. See page 8 for more information.
Growth
Total revenue grew by 1.8% to €1.4 billion with higher service revenue being
partially offset by the depreciation of local currencies versus the euro.
Service revenue increased by 2.2% (Q2: 2.1%) as organic growth in service
revenue of 2.6% (Q2: 2.6%) was partially offset by adverse foreign exchange
movements. Organic growth was supported by price actions in most markets and
public sector project work, partly offset by lower mobile termination rates.
In Portugal, our Consumer and Business segments continued to perform well in
Q3. In response to a new entrant, we launched our new second brand, Amigo. In
Ireland, service revenue returned to growth in Q3, supported by Business
demand for fixed connectivity. In Greece, service revenue increased, driven by
continued growth in the public sector and a higher Consumer mobile contract
customer base.
Vodafone Business service revenue increased by 5.3% (Q2: 6.6%) as organic
growth in Vodafone Business service revenue of 5.8% in Q3 (Q2: 7.5%) was
partly offset by adverse foreign exchange movements. Organic growth was mainly
driven by demand for digital services and fixed connectivity, as well as
public sector project work in Greece and Romania.
Customers
We added 153,000 mobile contract customers and 4,000 fixed customers across
our six markets in Q3.
Portfolio
In November 2024, we announced that, along with Digi Romania, we have signed a
memorandum of understanding with Hellenic Telecommunications in relation to a
potential acquisition of separate parts of its subsidiary Telekom Romania. The
discussions are at an advanced stage with the regulatory approval process also
underway.
Türkiye ⫶ Continued growth in euro terms
10% of Group service revenue Q3 FY25 Q3 FY24 Reported Organic
€m €m change % change %(1,2)
Total revenue 963 532 81.0
- Service revenue 776 393 97.5 83.4
- Other revenue 187 139
Notes:
1. Non-GAAP measure. See page 8 for more information.
2. Türkiye was designated as a hyperinflationary economy on 1 April 2022
in line with IAS 29 'Financial Reporting in Hyperinflationary Economies'.
Organic growth metrics exclude the impacts of the hyperinflation adjustment
and foreign exchange translation.
Growth
Total revenue increased by 81.0% to €1.0 billion, with service revenue
growth partly offset by the depreciation of the local currency versus the euro
in prior quarters. Service revenue increased in euro terms by 97.5% (Q2:
18.8%) as reported under IAS 29, with organic growth in service revenue of
83.4% (Q2: 89.1%). Excluding the impact of the hyperinflationary adjustment,
service revenue increased by 53.1% (Q2: 49.5%) in euro terms. Growth was
primarily driven by ongoing repricing actions and value accretive base
management activities and only partially offset by adverse foreign exchange
movements in prior periods.
Vodafone Business service revenue increased in euro terms by 117.0% (Q2:
32.8%) as reported under IAS 29 and organic growth of service revenue was
102.8% (Q2: 109.9%) during the quarter, primarily supported by Business demand
for our digital services and fixed line connectivity, as well as mobile
repricing actions.
Customers
We added 341,000 mobile contract customers during the quarter, including
migrations of prepaid customers.
Africa ⫶ Growth accelerating
20% of Group service revenue Q3 FY25 Q3 FY24 Reported Organic
€m €m change % change %(1)
Total revenue 2,072 1,932 7.2
- Service revenue 1,607 1,543 4.1 11.6
- Other revenue 465 389
Note:
1. Non-GAAP measure. See page 8 for more information.
Growth
Total revenue increased by 7.2% to €2.1 billion as higher service and
equipment revenue and an appreciation of the South African rand versus the
euro were partly offset by the depreciation of the Egyptian pound versus the
euro in March 2024. Service revenue increased by 4.1% (Q2: 0.3%) and organic
growth in service revenue was 11.6% (Q2: 9.7%), with growth in South Africa,
Egypt and all of Vodacom's international markets, apart from Mozambique.
In South Africa, service revenue growth accelerated, supported by the Consumer
mobile prepaid segment, which benefited from seasonal campaigns and an
improved consumer environment in the quarter, as well as Business demand for
fixed connectivity.
Service revenue in Egypt continued to grow above inflation during the quarter
due to sustained customer base growth, price actions, and demand for data. In
December, we implemented a further price increase across mobile and fixed
services following the introduction of new regulatory price floors. Our
financial services product, 'Vodafone Cash' continued to grow with revenue
increasing to €30.4 million, and now represents 8.4% of Egypt's service
revenue.
In Vodacom's international markets, service revenue growth was supported by a
higher customer base and continued M-Pesa demand. M-Pesa revenue grew by 9.7%
to €103.5 million, and now represents 27.8% of service revenue.
Vodacom Business service revenue grew by 6.6% (Q2: 3.0%) and organic growth in
Vodacom Business service revenue was 10.8% (Q2: 9.2%), with growth in South
Africa accelerating due to Business demand for fixed connectivity, including
cloud services.
Customers
In South Africa, we added 61,000 mobile contract customers in the quarter, and
now have a mobile contract base of 7.0 million. Across our active customer
base, 78.2% of our mobile customers now use data services. Our 'VodaPay'
super-app continued to gain traction with 10.1 million registered users.
In Egypt, we added 167,000 contract customers and 669,000 prepaid mobile
customers during the quarter, and we now have 50.7 million mobile customers.
'Vodafone Cash' reached 10.5 million active users with 0.9 million users added
during the quarter.
In Vodacom's international markets, we added 2.3 million mobile customers in
Q3, and our mobile customer base is now 58.4 million, with 68.4% of active
customers using our data services. Our M-Pesa customer base now totals 24.7
million active users with 0.9 million users added during the quarter.
Investor Briefing
Vodacom Group is hosting an investor briefing on 19 February 2025, which will
encompass a series of presentations and showcases covering the Vodacom Group's
medium-term strategy and the key growth opportunities across its markets and
products.
Further information on our operations in Africa can be accessed here:
vodacom.com. (https://www.vodacom.com/)
Notes to the Q3 FY25 Trading update
Basis of preparation
Adjusted EBITDAaL and Operating profit has been extracted from the Group's
unaudited consolidated financial statements for the nine months ended 31
December 2024.
These financial statements, insofar as they are applicable to the calculation
of Adjusted EBITDAaL and Operating profit, include all adjustments necessary
for a fair statement of Adjusted EBITDAaL and Operating profit for the periods
presented and apply the same accounting policies, presentation and methods of
calculation as those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 March 2024, which were prepared in
accordance with UK-adopted International Accounting Standards ('IAS'), with
International Financial Reporting Standards ('IFRS') as issued by the IASB and
with the requirements of the UK Companies Act 2006, except no goodwill
impairment assessment in accordance with IAS 36 "Impairment of Assets" has
been conducted at 31 December 2024.
The preparation of the unaudited consolidated financial statements requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the end of the reporting period, and the reported amounts of
revenue and expenses during the period. Actual results could vary from these
estimates. These estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revisions affect only that period or
in the period of the revision and future periods if the revision affects both
current and future periods.
Critical accounting judgements and estimates
The Group's critical accounting judgements and estimates are disclosed in the
Group's Annual Report for the year ended 31 March 2024.
Judgements relating to goodwill impairment testing
Updated expectations of the future financial performance of Vodafone Germany
will be reflected in the Group's impairment testing as well as considering the
valuation implications of changes in other factors such as discount rates and
the assessment of long-term growth rates, the results of which will be
reported as part of our FY25 financial results in May. Given the limited
headroom between the recoverable amount and the carrying value of Vodafone
Germany as at 30 September 2024, the financial performance discussed on page 3
increases the likelihood of an impairment charge.
Non-GAAP measures
In the discussion of the Group's reported operating results, non-GAAP measures
are presented to provide readers with additional financial information that is
regularly reviewed by management. This additional information presented is not
uniformly defined by all companies including those in the Group's industry.
Accordingly, it may not be comparable with similarly titled measures and
disclosures by other companies. Additionally, certain information presented is
derived from amounts calculated in accordance with IFRS but is not itself a
measure defined under GAAP. Such measures should not be viewed in isolation or
as an alternative to the equivalent GAAP measure. The non-GAAP measures
discussed in this document are listed below.
Non-GAAP measure Defined on page Closest equivalent GAAP measure Reconciled on page
Performance metrics
Organic revenue growth Page 8 Revenue Pages 9 and 10
Organic service revenue growth Page 8 Service revenue Pages 9 and 10
Organic mobile service revenue growth Page 8 Service revenue Pages 9 and 10
Organic fixed service revenue growth Page 8 Service revenue Pages 9 and 10
Organic Vodafone Business service revenue growth Page 8 Service revenue Pages 9 and 10
Service revenue growth in Türkiye excluding the impact of the Page 8 Service revenue Pages 9 and 10
hyperinflationary adjustment
Group Adjusted EBITDAaL Page 11 Operating profit(1) Page 11
Organic Group Adjusted EBITDAaL growth Pages 8 and 11 Operating profit(1) Page 11
Group Adjusted EBITDAaL margin Page 11 Operating profit(1) Page 11
Organic percentage point change in Group Adjusted EBITDAaL margin Pages 8 and 11 Operating profit(1) Page 11
Note:
1. See page 7 for more information on the basis of
preparation.
Performance metrics
Organic growth
Organic growth presents performance on a comparable basis, excluding the
impact of foreign exchange rates, mergers and acquisitions, the hyperinflation
adjustment in Türkiye and other adjustments to improve the comparability of
results between periods.
Organic growth is calculated for revenue and profitability metrics, as
follows:
- Revenue;
- Service revenue;
- Mobile service revenue;
- Fixed service revenue;
- Vodafone Business service revenue;
- Group Adjusted EBITDAaL; and
- Group Adjusted EBITDAaL margin
Whilst organic growth is not intended to be a substitute for reported growth,
nor is it superior to reported growth, we believe that the measure provides
useful and necessary information to investors and other interested parties for
the following reasons:
- It provides additional information on underlying growth of the
business without the effect of certain factors unrelated to its operating
performance;
- It is used for internal performance analysis; and
- It facilitates comparability of underlying growth with other
companies (although the term 'organic' is not a defined term under GAAP and
may not, therefore, be comparable with similarly-titled measures reported by
other companies).
We have not provided a comparative in respect of organic growth rates as the
current rates describe the change between the beginning and end of the current
period, with such changes being explained by the commentary in this document.
If comparatives were provided, significant sections of the commentary for
prior periods would also need to be included, reducing the usefulness and
transparency of this document.
Service revenue growth in Türkiye excluding the impact of the
hyperinflationary adjustment
This growth metric presents performance in Türkiye excluding
hyperinflationary adjustment recorded in the Group's consolidated financial
statements in accordance with IAS 29 'Financial Reporting in Hyperinflationary
Economies'.
Non-GAAP measures
Quarter ended 31 December 2024
Re-presented(1) Reported growth M&A and Other Foreign exchange Organic growth
Q3 FY25 Q3 FY24
€m €m % pps pps %
Service revenue
Germany 2,706 2,892 (6.4) - - (6.4)
Mobile service revenue 1,259 1,272 (1.0) - - (1.0)
Fixed service revenue 1,447 1,620 (10.7) - - (10.7)
UK 1,507 1,400 7.6 - (4.3) 3.3
Mobile service revenue 1,096 1,034 6.0 - (4.2) 1.8
Fixed service revenue 411 366 12.3 - (4.7) 7.6
Other Europe 1,201 1,175 2.2 - 0.4 2.6
Türkiye(2) 776 393 97.5 13.7 (27.8) 83.4
Africa 1,607 1,543 4.1 - 7.5 11.6
Common Functions 165 137
Eliminations (33) (35)
Total service revenue 7,929 7,505 5.6 (0.2) (0.2) 5.2
Other revenue 1,882 1,841
Revenue 9,811 9,346 5.0 (0.1) (0.8) 4.1
Other growth metrics
Vodafone Business - Service revenue 2,051 1,943 5.6 (0.2) (1.1) 4.3
Germany - Vodafone Business service revenue 594 612 (3.0) - - (3.0)
UK - Vodafone Business service revenue 560 540 3.7 - (4.1) (0.4)
Other Europe - Vodafone Business service revenue 395 375 5.3 - 0.5 5.8
Türkiye - Vodafone Business service revenue 115 53 117.0 15.4 (29.6) 102.8
Africa - Vodacom Business service revenue 289 271 6.6 - 4.2 10.8
Notes:
1. The results for the quarter ended 31 December 2023 have been
re-presented to reflect that the results of Vodafone Spain and Vodafone Italy
are reported as discontinued operations. The disposals of Vodafone Spain and
Vodafone Italy completed on 31 May 2024 and 31 December 2024,
respectively.
2. Reported service revenue growth in Türkiye of 97.5% includes 44.4pps
in relation to the application of IAS 29 'Financial Reporting in
Hyperinflationary Economies'. Growth in Türkiye excluding the impact of
these hyperinflationary adjustment was 53.1%.
Non-GAAP measures
Quarter ended 30 September 2024
Reported growth M&A and Other Foreign exchange Organic growth
Q2 FY25 Q2 FY24
€m €m % pps pps %
Service revenue
Germany 2,722 2,903 (6.2) - - (6.2)
Mobile service revenue 1,266 1,290 (1.8) - - (1.8)
Fixed service revenue 1,456 1,613 (9.7) - - (9.7)
UK 1,462 1,421 2.9 - (1.7) 1.2
Mobile service revenue 1,063 1,057 0.6 - (1.7) (1.1)
Fixed service revenue 399 364 9.6 - (1.6) 8.0
Other Europe 1,230 1,205 2.1 - 0.5 2.6
Türkiye(1) 588 495 18.8 37.4 32.9 89.1
Africa 1,502 1,498 0.3 - 9.4 9.7
Common Functions 176 151
Eliminations (36) (47)
Total service revenue 7,644 7,626 0.2 1.0 3.0 4.2
Other revenue 1,596 1,564
Revenue 9,240 9,190 0.5 1.3 2.8 4.6
Other growth metrics
Vodafone Business - Service revenue 1,979 1,935 2.3 0.5 1.2 4.0
Germany - Vodafone Business service revenue 598 609 (1.7) - - (1.7)
UK - Vodafone Business service revenue 532 531 0.2 - (1.9) (1.7)
Other Europe - Vodafone Business service revenue 389 365 6.6 - 0.9 7.5
Türkiye - Vodafone Business service revenue 85 64 32.8 42.0 35.1 109.9
Africa - Vodacom Business service revenue 276 268 3.0 - 6.2 9.2
Note:
1. Reported service revenue growth in Türkiye of 18.8% includes 30.7pps
in relation to the application of IAS 29 'Financial Reporting in
Hyperinflationary Economies'. Growth in Türkiye excluding the impact of
these hyperinflationary adjustment was 49.5%.
Non-GAAP measures
Non-GAAP measure Purpose Definition
Group Adjusted EBITDAaL Adjusted EBITDAaL is used in conjunction with financial measures such as Adjusted EBITDAaL is operating profit after depreciation on lease-related
operating profit to assess our operating performance and profitability. right of use assets and interest on lease liabilities but excluding
depreciation, amortisation and gains/losses on disposal of owned assets and
It is a key external metric used by the investor community to assess excluding share of results of equity accounted associates and joint ventures,
performance of our operations. impairment losses/reversals, restructuring costs arising from discrete
restructuring plans, other income and expense and significant items that are
It is our segment performance measure in accordance with IFRS 8 (Operating not considered by management to be reflective of the underlying performance of
Segments). the Group.
Group Adjusted EBITDAaL margin Group Adjusted EBITDAaL margin is Group Adjusted EBITDAaL divided by Revenue.
The tables below provide the reconciliations of: (i) Group Adjusted EBITDAaL
to Group Operating profit which is the closest equivalent GAAP measure; (ii)
Reported growth in Group Adjusted EBITDAaL to organic growth in Group Adjusted
EBITDAaL; and (iii) Reported growth in the Group Adjusted EBITDAaL margin and
the organic growth in the Group Adjusted EBITDAaL margin.
Reported growth M&A and Other Foreign exchange Organic growth
Q3 FY25 Q3 FY24
€m €m % pps pps %
Group Adjusted EBITDAaL 2,828 2,795 1.2 (1.2) 2.2 2.2
Restructuring costs (40) (9)
Interest on lease liabilities 127 113
(Loss)/profit on disposal of property, plant and equipment and intangible (4) 6
assets
Depreciation and amortisation of owned assets (2,018) (1,851)
Share of results of equity accounted associates and joint ventures (26) (70)
Other income 155 268
Group Operating profit(1) 1,022 1,252
Percentage point change in Adjusted EBITDAaL margin 28.8 29.9 (1.1) 0.2 0.4 (0.5)
Reported growth M&A and Other Foreign exchange Organic growth
YTD FY25 YTD FY24
€m €m % pps pps %
Group Adjusted EBITDAaL 8,239 8,222 0.2 0.8 2.2 3.2
Restructuring costs (98) (111)
Interest on lease liabilities 347 330
Loss on disposal of property, plant and equipment and intangible assets (16) (12)
Depreciation and amortisation of owned assets (5,690) (5,464)
Share of results of equity accounted associates and joint ventures (66) (121)
Impairment reversal - 64
Other income 688 201
Group Operating profit(1) 3,404 3,109
Percentage point change in Adjusted EBITDAaL margin 29.3 30.1 (0.8) 0.3 0.2 (0.3)
Note:
1. See page 7 for more information on the basis of preparation.
Definitions
Key terms are defined below. See page 8 for the location of definitions for
non-GAAP measures.
Term Definition
Africa Comprises the Vodacom Group.
ARPU Average revenue per user, defined as customer revenue and incoming revenue
divided by average customers.
Common Functions Comprises central teams and business functions.
Depreciation and amortisation The accounting charge that allocates the cost of tangible or intangible
assets, whether owned or leased, to the income statement over its useful life.
The measure includes the profit or loss on disposal of property, plant and
equipment, software and leased assets.
Eliminations Refers to the removal of intercompany transactions to derive the consolidated
financial statements.
Europe Comprises the Group's European businesses and the UK.
Fixed service revenue Service revenue (see below) relating to the provision of fixed line and
carrier services.
GAAP Generally Accepted Accounting Principles.
IFRS International Financial Reporting Standards.
Incoming revenue Comprises revenue from termination rates for voice and messaging to Vodafone
customers.
Internet of Things ('IoT') The network of physical objects embedded with electronics, software, sensors,
and network connectivity, including built-in mobile SIM cards, that enable
these objects to collect data and exchange communications with one another or
a database.
MDU Multi Dwelling Units.
Mobile service revenue Service revenue (see below) relating to the provision of mobile services.
NPS Net Promoter Score.
Other Europe Other Europe markets comprise Portugal, Ireland, Greece, Romania, Czech
Republic and Albania.
Other revenue Other revenue principally includes equipment revenue, interest income, income
from partner market arrangements and lease revenue, including in respect of
the lease out of passive tower infrastructure.
Reported growth Reported growth is based on amounts reported in euros and determined under
IFRS.
Revenue The total of Service revenue (see below) and Other revenue (see above).
Roaming Roaming allows customers to make calls, send and receive texts and data on our
and other operators' mobile networks, usually while travelling abroad.
Service revenue Service revenue is all revenue related to the provision of ongoing services to
the Group's consumer and enterprise customers, together with roaming revenue,
revenue from incoming and outgoing network usage by non-Vodafone customers and
interconnect charges for incoming calls.
Vodafone Business Vodafone Business supports organisations in a digital world. With Vodafone's
expertise in connectivity, our leading IoT platform and our global scale, we
deliver the results that organisations need to progress and thrive. We support
businesses of all sizes and sectors.
Notes
1. References to Vodafone are to Vodafone Group Plc and references to
Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise
stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and
everyone.connected are trademarks owned by Vodafone. Other product and company
names mentioned herein may be the trademarks of their respective owners.
2. All growth rates reflect a comparison to the quarter ended 31 December
2023 unless otherwise stated.
3. References to "Q1", "Q2", "Q3" and "Q4" are to the three months ended
30 June, 30 September, 31 December and 31 March. References to the "year",
"financial year" or "FY25" are to the financial year ending 31 March 2025.
References to "last year", "last financial year" or "FY24" are to the
financial year ended 31 March 2024. References to "YTD" are to the nine months
ended 31 December.
4. Vodacom refers to the Group's interest in Vodacom Group Limited
('Vodacom') as well as its operations, including subsidiaries in South Africa,
Egypt, DRC, Tanzania, Mozambique and Lesotho.
5. This document contains references to our and our affiliates' websites.
Information on any website is not incorporated into this update and should not
be considered part of this update.
Forward-looking statements and other matters
This document contains 'forward-looking statements' within the meaning of the
US Private Securities Litigation Reform Act of 1995 with respect to the
Group's financial condition, results of operations and businesses and certain
of the Group's plans and objectives. In particular, such forward-looking
statements include, but are not limited to, statements with respect to: the
Group's portfolio transformation plan; expectations regarding the Group's
financial condition or results of operations and the guidance for Adjusted
EBITDAaL and Adjusted free cash flow for the financial year ending 31 March
2025; completion of the merger of Vodafone UK and Three UK; the mobile network
sharing agreement with Virgin Media O2; the announced potential acquisition of
Telekom Romania; changes to German TV laws and the migration of users to
individual TV customer contracts; expectations for the Group's future
performance generally; the Group's share buyback programme; expectations
regarding the operating environment and market conditions and trends,
including customer usage, competitive position and macroeconomic pressures,
price trends and opportunities in specific geographic markets; intentions and
expectations regarding the development, launch and expansion of products,
services and technologies, either introduced by Vodafone or by Vodafone in
conjunction with third parties or by third parties independently; expectations
regarding the integration or performance of current and future investments,
associates, joint ventures, non-controlled interests and newly acquired
businesses; the impact of regulatory and legal proceedings involving the Group
and of scheduled or potential regulatory changes; certain of the Group's plans
and objectives, including the Group's strategy.
Forward-looking statements are sometimes but not always identified by their
use of a date in the future or such words as 'will', 'may', 'expects',
'believes', 'continue', 'plans', 'further', 'ongoing', 'progress', 'targets'
or 'could'. By their nature, forward-looking statements are inherently
predictive, speculative and involve risk and uncertainty because they relate
to events and depend on circumstances that will occur in the future. There are
a number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to the following:
general economic and political conditions in the jurisdictions in which the
Group operates and changes to the associated legal, regulatory and tax
environments; increased competition; levels of investment in network capacity
and the Group's ability to deploy new technologies, products and services,
including artificial intelligence; the Group's ability to optimise its
portfolio in line with its business transformation plan; evolving cyber
threats to the Group's services and confidential data; rapid changes to
existing products and services and the inability of new products and services
to perform in accordance with expectations; the ability of the Group to
integrate new technologies, products and services with existing networks,
technologies, products and services; the Group's ability to generate and grow
revenue; slower than expected impact of new or existing products, services or
technologies on the Group's future revenue, cost structure and capital
expenditure outlays; slower than expected customer growth, reduced customer
retention, reductions or changes in customer spending and increased pricing
pressure; the Group's ability to extend and expand its spectrum resources, to
support ongoing growth in customer demand for mobile data services; the
Group's ability to secure the timely delivery of high-quality products from
suppliers; loss of suppliers, disruption of supply chains, shortages and
greater than anticipated prices of new mobile handsets; changes in the costs
to the Group of, or the rates the Group may charge for, terminations and
roaming minutes; the impact of a failure or significant interruption to the
Group's telecommunications, data centres, networks, IT systems or data
protection systems; the Group's ability to realise expected benefits from
acquisitions, partnerships, joint ventures, associates, franchises, brand
licences, platform sharing or other arrangements with third parties, including
the combination of Vodafone's UK business with Three UK, the mobile network
sharing agreement with Virgin Media O2 and the Group's strategic partnership
with Microsoft; acquisitions and divestments of Group businesses and assets
and the pursuit of new, unexpected strategic opportunities; the Group's
ability to integrate acquired business or assets; the extent of any future
write-downs or impairment charges on the Group's assets, or restructuring
charges incurred as a result of an acquisition or disposition; developments in
the Group's financial condition, earnings and distributable funds and other
factors that the Board takes into account in determining the level of
dividends; the Group's ability to satisfy working capital requirements;
changes in foreign exchange rates; changes in the regulatory framework in
which the Group operates; the impact of legal or other proceedings against the
Group or other companies in the communications industry; and changes in
statutory tax rates and profit mix.
A review of the reasons why actual results and developments may differ
materially from the expectations disclosed or implied within forward-looking
statements can be found in the summary of our principal risks in the Group's
Annual Report for the year ended 31 March 2024 and under "Risk factors" and
"Forward-looking statements and other matters" in the Vodafone Group Plc H1
Results for the six months ended 30 September 2024. The Annual Report can be
found on the Vodafone Group's website (investors.vodafone.com/results
(http://investors.vodafone.com/results) ). All subsequent written or oral
forward-looking statements attributable to Vodafone or any member of the
Vodafone Group or any persons acting on their behalf are expressly qualified
in their entirety by the factors referred to above. No assurances can be given
that the forward-looking statements in this document will be realised. Subject
to compliance with applicable law and regulations, Vodafone does not intend to
update these forward-looking statements and does not undertake any obligation
to do so.
Copyright © Vodafone Group 2025
-End-
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