- Vodafone’s latest quarterly update showed modest service revenue growth in Germany but fell short of market expectations, sending its share price lower.
- Strong contributions from other regions, including Africa and Turkey, underpinned overall revenue growth, yet investors remain cautious about the pace of transformation.
What happened: Growth in Germany remains tepid
At its third-quarter trading update for the financial year ending March 2026, UK-based telecoms giant Vodafone Group PLC reported mixed results that disappointed investors despite positive signs in its key European market.
Service revenue in Germany – the company’s largest single market by revenue accounting for roughly a third of group service income – rose by 0.7% year-on-year to about €2.7 billion in the quarter. This modest increase was driven in part by wholesale revenues from rival 1&1’s migrated customers and an uptick in mobile service demand, but it fell short of analysts’ expectations and offered limited comfort to investors.
Overall, Vodafone Group reported group service revenue growth of around 5.4%, supported by stronger performances in Turkey and Africa, as well as a consolidation benefit from the merger of Vodafone UK with Three UK. Despite these positives, the market reaction was negative: shares fell more than 5% as traders digested the headline figures that failed to blunt lingering concerns about underlying momentum in core markets.
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Why it’s important
Vodafone’s third-quarter figures underscore the difficulty of transforming a global telecoms business in the face of entrenched competition, regulatory pressures and structural shifts in demand. Germany’s revenue growth, while better than recent declines, remained below forecasts and highlighted the slow pace of turnaround in a market where pricing pressure and regulatory changes have weighed on returns.
From a financial perspective, modest top-line expansion in core markets can limit cash flow generation and, by extension, investment capacity – a notable point for an industry that requires heavy ongoing infrastructure spending on networks and services. Strategic efforts such as the UK merger and network modernisation in emerging markets can help diversify earnings, but near-term investor sentiment often hinges on visible improvements in revenue and profitability where scale is greatest.
