Vodafone Group grew more slowly than expected in Germany, its largest market, bucking expectations of stronger growth after bringing on 1&1 AG as a wholesale customer.
Organic service revenue in Germany rose 0.7 per cent for its fiscal third quarter to €2.7 billion, the telecommunications operator said in a statement on Thursday. Analysts expected an improvement of 1.02 per cent, according to estimates compiled by Bloomberg. Vodafone’s shares fell as much as 6.8 per cent, the most in a year, when trading opened on Thursday in London.
Vodafone returned to growth in Germany last quarter after bringing on smaller operator 1&1, boosting wholesale revenue. Some of that growth was offset this quarter by the one-off impact of payment timings to Vodafone’s service providers, a spokesperson said.
Chief executive Margherita Della Valle is more than two years into an ambitious turnaround plan for the operator, with a focus on simplifying operations and selling off assets. She has divested businesses in Italy and Spain. Vodafone also merged with CK Hutchison Holdings’s Three in its home market of the UK.
Della Valle has won praise from analysts for re-focusing the company on fewer key markets. In Germany, competition and a regulatory change that cost millions of customers have been a drag on revenues. The impact of the legal change, which saw Germany bar housing associations from bundling TV packages with rent, is largely over.
Overall adjusted earnings before interest, taxes, depreciation and amortisation after leases fell to €2.8 billion in the quarter. Analysts had expected €2.98 billion, according to a Bloomberg survey. Service revenue rose to €8.5 billion.
Meanwhile, BT Group shed fewer broadband customers than analysts expected as the telecommunications company’s price cuts and network investment paid off.
Openreach, BT’s fixed network, lost about 210,000 customers in the third quarter of fiscal 2026, less than the 239,000 analysts had expected, according to data compiled by Bloomberg. The company expects full-year line losses to come in at about 850,000, less than its previous estimate of 900,000.
Adjusted earnings before interest, taxes, depreciation and amortisation were £2.1 billion (€2.4 billion) for the third quarter of fiscal 2026, according to a statement on Thursday. That was in line with the average of analyst estimates compiled by Bloomberg.
Openreach operates the UK’s biggest broadband network and sells access to other providers. BT has invested heavily in expanding the network to more homes in the UK, especially in rural areas where coverage has traditionally been poor. Chief executive Allison Kirkby is more than a year into an ambitious turnaround plan that involves cutting costs and spinning off BT’s international business to focus on the UK.
The plan is broadly working. Shares have risen about 88 per cent since Kirkby took over in 2024 and, after years of fibre buildout, capital spending is set to ease. BT has pledged to increase free cash flow to £3 billion by 2030.
While the company is losing broadband customers overall, it saw record sign-ups for its higher value fibre offering, with 571,000 new customers in the quarter, up 21 per cent year-on-year.
Still, the company faces significant challenges in its home market, with increased competition in both its fixed and mobile markets. - Bloomberg
