Vodafone revenue grows as Three UK merger completion expected early in 2025

Vodafone has reported a rise in service revenue for the first half of the year, with the telecoms heavyweight expressing optimism about finalising its merger with Three by early 2025.

Despite a downturn in Germany due to legislative changes, the London-listed firm saw a 1.7% increase in service revenue to €15.1bn (£12.5bn). The company is eagerly awaiting the competition regulator's definitive verdict on December 7 regarding its anticipated union with Three UK, which could forge the UK's largest mobile operator.

"We will continue to constructively engage with the CMA and remain confident that we can work with them to secure approval," Vodafone commented on Tuesday. This merger is a key element of CEO Margherita Della Valle's strategy to rejuvenate the company, which also involves divesting assets in Italy, Spain, and elsewhere.

For the half-year ending in September, Vodafone boasted an operating profit surge of 28.3% year-on-year to €2.4bn (£2bn), largely thanks to profits from selling a stake in 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.

Ms Della Valle expressed optimism about the company's future, highlighting that "good progress" is being made on the turnaround plan, pointing out nearing completions in the form of Three merger approvals and the sale of the Italian segment: "These will complete our programme to reshape the group for growth."

On results across markets, she said: "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 from Hargreaves Lansdown provided his take on Vodafone's situation, noting that there's still some way to go: "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."