Vodafone revenue grows as merger with Three UK nears completion

Vodafone saw growing service revenue in the first half, as the telecoms giant said it hopes to wrap up its merger with mobile network Three by early 2025.

The London-listed company said service revenue rose 1.7% year-on-year to 15.1 billion euros (£12.5 billion) despite a slump in Germany, its biggest market, because of a change in the law.

Vodafone said it expects to complete its tie up with Three UK early next year, as it waits for a final decision on the deal from the competition regulator on December 7.

The Competition and Markets Authority is investigating the deal, which would create the largest mobile operator in the UK, but has indicated it is likely to get the green light.

“We will continue to constructively engage with the CMA and remain confident that we can work with them to secure approval,” Vodafone said on Tuesday.

The merger forms a part of chief executive Margherita Della Valle’s turnaround plan at the company, which also includes selling businesses in Italy, Spain and other countries.

Vodafone said it reported an operating profit of 2.4 billion euros (£2 billion) in the half ending September, up 28.3% year-on-year, mainly driven by the profit from setting an 18% stake in the Indian telecoms firm Indus Towers.

However, service revenue gains were offset by falling income from its key German business, after the government stopped housing associations from tying TV and rent together earlier this year.

Vodafone said service revenue in Germany fall 6.2% last quarter.

Ms Della Valle said the company is making “good progress” on the turnaround plan, with approvals for the Three merger and the disposal of its Italian business “nearing conclusion”.

“These will complete our programme to reshape the group for growth.”

She added: “We delivered good performances across our markets, with the exception of Germany, where we have been impacted as expected by the TV law change.

“I am confident that the actions we are taking will deliver growth for Vodafone this year and a further acceleration into FY26.”

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the group “continues to face several challenges before it can hope to call this turnaround complete, from major portfolio actions to persistently weak performance in the key German market”.

“The portfolio clean-up is well under way, with the Spanish unit out of the picture and Italian soon to follow, but investors will need to settle for a lower dividend level moving forward.”