Vodafone’s strategic merger and network investments propel upgrade to upper guidance for 2026

Vodafone is on track to hit its fiscal 2026 guidance after a strong third quarter, with key UK and growth market integration, ambitious network investments, and a capital return strategy signalling confidence in its long-term growth trajectory.

Vodafone said it is on course to reach the upper bound of its fiscal 2026 guidance after a stronger-than-expected third quarter, with management signalling confidence in both profit and cashflow targets. According to Mobile World Live, the group has completed €3.5 billion of planned buybacks and began a further €500 million tranche on 5 February, while service revenues were reported to have risen as growth in Africa and other markets offset currency headwinds. According to the company’s public statements, integration of the combined UK business is progressing following the completion of the merger with Three. (Speaking to investors, CEO Margherita Della Valle highlighted the momentum in service revenue and described the UK integration as having made a fast start.)

The underlying results reflected a geographically mixed performance. Service revenue gains were driven by Africa and Turkiye, and consolidation of the UK and Romanian operations added to group top-line growth, while performance in Germany remained subdued. The company also reported a sharp fall in operating profit, which management attributed to the accounting and M&A effects tied to recent transactions.

The completed merger that created the combined UK operator underlines Vodafone’s strategic focus on network investment. Vodafone and CK Hutchison agreed the deal in June 2023 and the UK Competition and Markets Authority approved it in December 2024; the merged business, 51% owned by Vodafone, has committed to investing £11 billion over the next decade, with an initial £1.3 billion of capital expenditure planned in its first year to accelerate 5G rollout. Vodafone has presented the tie-up as essential to building one of Europe’s most advanced 5G networks and to improving coverage and reliability for millions of customers.

Industry observers say the enlarged UK operator will increase scale and network investment but will also bring integration and regulatory risks that can depress short-term profitability. The company’s statement that the integration is “progressing well and firmly on track” has been reiterated in its corporate communications as the enlarged group moves to combine networks, commercial offers and back-office systems.

The buyback activity and guidance uplift signal a management willing to return cash to investors while continuing to fund heavy capital programmes, notably in the UK and in growth markets. Vodafone’s capital allocation choices will be watched closely by investors as the business balances immediate shareholder returns with long-term network commitments that the group says are necessary to sustain competitiveness.

Looking ahead, Vodafone’s ability to deliver the upper end of its guidance depends on sustaining service revenue momentum in Africa and Turkiye, successfully integrating the UK operations without material disruption, and managing currency and accounting effects linked to recent M&A. The company’s public materials stress the long-term benefits of the merger and the planned network investments as central to its strategy for future growth.

Source Reference Map

Inspired by headline at: ^[1]

Sources by paragraph:

Source: Noah Wire Services