Vodafone Group has delivered a strong first-quarter performance for its 2027 fiscal year (ending June 30, 2026), posting total revenues of €10.3 billion, driven by robust service revenue growth across all operating regions and the consolidation of its UK operations. For investors and business watchers in Italy, the results signal a turning point for the telecoms giant under CEO Margherita Della Valle, who took the helm in April 2023 and has staked the company's future on multi-year sustainable growth rather than short-term gains.
Why This Matters
• Africa is the growth engine: Organic service revenue in Africa surged 12.6%, fueled by mobile money platforms like M-Pesa in Kenya and Ethiopia.
• Safaricom bet pays off: The €1.8 billion acquisition of majority control in Safaricom now contributes to consolidated earnings, lifting full-year guidance.
• UK market dominance: The merged VodafoneThree entity is now Britain's largest mobile operator by subscribers, with 28 million customers.
• Context for Italian readers: While Vodafone Group thrives globally, Vodafone Italia was sold to Swisscom in 2024. Former Vodafone Italia customers are now served by Swisscom, though they may benefit indirectly from Vodafone Group's network advancements and technology innovations.
• Competitive context: Vodafone outpaced rivals like TIM and Telefonica in organic service revenue growth, though Swisscom saw stronger cash flow gains.
The Numbers Behind the Quarter
Vodafone's total revenues climbed 9.7% year-over-year to €10.3 billion for the three months ending June 30, 2026. The headline figure was boosted by the consolidation of Three UK, following the completion of the VodafoneThree merger in May 2025, though foreign exchange headwinds partially offset gains.
Service revenues, the core measure of operational health excluding hardware sales, rose 9.8% to €8.6 billion. On an organic basis, stripping out acquisitions and currency effects, service revenue advanced 5.2%, with growth registered across every geographic segment. This marks a notable acceleration compared to the sluggish performance of recent years, when Vodafone struggled with legacy infrastructure costs and fierce competition in mature European markets.
Adjusted EBITDAaL, the company's preferred profitability metric after lease costs, increased 6.7% to €2.9 billion, or 6.2% on an organic basis. The margin improved 0.6 percentage points organically to 28.5%, reflecting better operational leverage as service revenue growth outpaced cost increases.
Operating profit surged to €3.9 billion, largely due to a one-time gain from the Safaricom transaction, in which Vodacom Group—Vodafone's African subsidiary—acquired an additional 20% stake in Kenya's dominant telecom operator for $2.1 billion, bringing its total holding to 55% and securing majority control.
Geographic Breakdown: Africa Leads, Europe Stabilizes
Africa was the standout performer, with organic service revenue growth of 12.6% in the quarter. The gains were driven by strong uptake of financial services, particularly M-Pesa, Safaricom's mobile money platform, which processes 100 million daily transactions for roughly 38 million customers in Kenya. M-Pesa alone accounts for 44% of fintech revenue in Kenya and is now being rolled out in Ethiopia, where Safaricom launched the service in August 2023.
Safaricom's Ethiopian operation, which began 4G services in October 2022 after securing the country's first private telecom license for $850 million, is nearing breakeven and expects to see losses narrow further in 2027. The venture is projected to require $8 billion in investment over the next decade to build out nationwide infrastructure. For Vodafone, the Safaricom deal represents a strategic bet on high-growth African markets with low telecoms penetration and rising demand for digital payments.
In Germany, Vodafone's largest European market, organic service revenue edged up 1.2%, a modest but stable performance amid ongoing price competition and regulatory pressures. The UK market showed organic growth of 0.6%, buoyed by the VodafoneThree integration, which has progressed faster than anticipated. The merged entity has already deployed additional spectrum across 15,000 cell sites, boosting 4G speeds by 20% and increasing 5G download speeds by 38%, according to reports from the integration team published during mid-2026.
Rest of Europe and Turkey posted organic service revenue growth of 1%, with Turkey specifically surging 30.2% on a reported basis due to strong demand and favorable currency dynamics. The European markets remain a stabilization story, with management focusing on extracting efficiency from existing infrastructure rather than chasing aggressive market share gains.
What This Means for Telecom Investors and Observers
Vodafone's revised full-year guidance now incorporates the Safaricom consolidation, with adjusted EBITDAaL projected between €13.0 billion and €13.3 billion and adjusted free cash flow between €2.6 billion and €2.9 billion. The company expects to hit the upper end of both ranges, reflecting confidence in sustained momentum.
For those tracking telecoms sector dynamics from Italy, Vodafone's results offer a useful benchmark. TIM, the Italian incumbent, reported €3.32 billion in organic revenue for Q1 2026, up 1.4%, with adjusted EBITDAaL of €794 million, down 2.7%. TIM's net loss widened to €292 million, and the company flagged a temporary dip in MVNO revenue in its domestic market. Swisscom, which acquired Vodafone Italia in 2024 and now serves former Vodafone Italia customers, saw group revenue dip 4.1% to CHF 3.61 billion but raised operating profit 0.8% to CHF 1.29 billion, with management confirming the Italian integration is on track for targeted synergies.
Telefonica, active in Spain, Germany, and Latin America, posted €8.1 billion in revenue, up 0.8% on a constant-currency basis, with adjusted EBITDA rising 1.8% to €2.84 billion. Net debt fell 6.3% year-on-year to €25.3 billion, and 5G coverage in core markets reached 81% of the population. Compared to these peers, Vodafone's 5.2% organic service revenue growth stands out, particularly given the company's size and geographic diversity.
The UK Wild Card: VodafoneThree Delivers Early Wins
The VodafoneThree merger, cleared by the UK Competition and Markets Authority in December 2024 with strict investment and consumer protection conditions, has emerged as a key driver. Vodafone initially held 51% of the joint venture, with CK Hutchison owning 49%. In May 2026, Vodafone agreed to buy out CK Hutchison's stake for £4.3 billion, with the transaction expected to complete by late 2026 pending regulatory approval.
The combined entity controls 28 million subscribers, making it the UK's largest mobile operator by customer count, ahead of O2 and EE. A £11 billion, 10-year investment program is underway to build one of Europe's most advanced 5G networks and eliminate coverage blackspots. Network integration has proceeded ahead of schedule, with measurable improvements in speed, latency, and reliability reported within the first year.
Management expects annual synergies of £700 million by 2030, with integration costs peaking at around €0.4 billion in fiscal 2027. The company is maintaining a multi-brand strategy, continuing to operate Voxi, Smarty, and Talkmobile to serve different customer segments. However, a broader European restructuring has resulted in roughly 1,200 job cuts across shared operations.
A New Chapter for Vodafone
CEO Margherita Della Valle, who took the helm in April 2023, has repeatedly emphasized that Vodafone is entering a new phase focused on disciplined growth and operational efficiency. The first-quarter results appear to validate that strategy, with organic growth accelerating and profitability metrics improving.
The Safaricom consolidation is central to this narrative. By gaining majority control, Vodafone can now fully integrate East Africa's leading telecom and fintech platform into its global operations, applying lessons from M-Pesa's success to other markets. Vodacom, the African subsidiary, has raised its Vision 2030 revenue target from ZAR 200 billion to over ZAR 300 billion on the strength of the Safaricom acquisition.
In Europe, the focus is on network quality and cost management rather than aggressive customer acquisition. The UK merger demonstrates this approach: rather than competing head-to-head with two subscale networks, Vodafone and Three are pooling resources to deliver a superior network experience while extracting significant cost savings.
For analysts and investors, the key question is whether Vodafone can sustain this momentum. The company has historically struggled with high debt, legacy infrastructure costs, and intense competition in saturated European markets. The African growth story offers a partial hedge, but the business remains heavily exposed to European regulatory risk and currency volatility.
Della Valle's comments suggest confidence. "We have started this financial year well, with widespread growth across all our segments," she said. "Following the completion of the Safaricom transaction, we are updating our forecast range to reflect the contribution from Kenya and Ethiopia. After our good start to the year, we expect to reach the upper end of the new Group forecast ranges."
Whether that optimism holds through the remainder of 2026—and beyond—will depend on execution in the UK, continued momentum in Africa, and the ability to stabilize European markets without sacrificing profitability. For now, the numbers tell a story of a company in transition, with early signs pointing in the right direction.
