Vodafone’s operating profit tripled last quarter
Key Points
- Vodafone's Q1 FY27 operating profit reached €3.87 billion, against €1.02 billion a year earlier
- A €3.0 billion non-cash gain on remeasuring its previous 39.9% Safaricom stake drove most of the rise
- Adjusted EBITDAaL grew 6.2% organically to €2,932 million, with the margin up 0.6 percentage points to 28.5%
- FY27 EBITDAaL guidance rose €1.1 billion to €13.0-13.3 billion on Safaricom consolidation
- Free cash flow guidance stayed at €2.6-2.9 billion, with the Safaricom impact recorded as nil
Vodafone reported operating profit of €3.87 billion for the three months to 30 June 2026, up from €1.02 billion a year earlier.
The increase traces back to the Safaricom transaction, which Vodafone completed on 30 June, the final day of the quarter.
Vodacom, the group’s 65.1% subsidiary, acquired an effective 20% of Safaricom’s issued share capital and lifted its holding to 55%, converting the Kenyan operator from an associate into a subsidiary.
At that point the group discontinued the equity method for its previously held 39.9% interest and remeasured that stake to fair value.
The move produced a €3 billion gain, which sits in Other Income within operating profit. The Other Income line rose to €2.9 billion from €115 million in the same quarter last year.
What the underlying business did
Adjusted EBITDAaL, the measure Vodafone treats as its segment performance metric, reached €2.9 billion against €2.7 billion a year earlier.
That represents reported growth of 6.7% and organic growth of 6.2%, with the margin improving 0.6 percentage points on an organic basis to 28.5%.
Total revenue climbed 9.7% to €10.29 billion and service revenue grew 9.8% to €8.63 billion, though the organic figure for service revenue came in at 5.2% once the Three UK consolidation and currency movements drop out.
Every segment contributed. Germany grew organic service revenue 1.2%, the UK 0.6%, Other Europe 1.0% and Africa 12.6%, while Türkiye added 30.2% on an organic basis.
Below the EBITDAaL line, depreciation and amortisation of owned assets took €2.1 billion out of the result, up from €1.95 billion, and restructuring costs rose to €107 million from €24 million.
Guidance also positive
Vodafone lifted its FY27 Adjusted EBITDAaL guidance to a range of €13.0 billion to €13.3 billion, up from the €11.9 billion to €12.2 billion range it set out in May.
The entire uplift comes from nine months of Safaricom consolidation, which the company puts at €1.1 billion.
Vodafone still expects Adjusted free cash flow of €2.6 billion to €2.9 billion for the year, and a footnote to the update states the Safaricom consolidation impact on Adjusted free cash flow as nil.
The group now expects to land at the upper end of both updated ranges. For Europe, it continues to guide to Adjusted EBITDAaL of €7.6 billion to €7.9 billion.
Vodacom paid €1.36 billion for the 15% it bought from the Government of Kenya and €0.45 billion for the 5% it bought from Vodafone itself. Safaricom generated €2.8 billion of service revenue and €1.4 billion of Adjusted EBITDAaL in FY26, and Vodacom and Vodafone Group consolidate its results from 1 July 2026.
Ownership now splits between Vodacom at 55%, the Kenyan government at 20% and public investors at 25%.
Group Chief Executive Margherita Della Valle framed the quarter as a good start to a new multi-year growth chapter, pointing to broad-based segment growth and the cost programme announced in May.
