Vodafone Group: Q1 – German financials ahead but weaker European KPIs

研报英文原文证据摘录

Vodafone Group: Q1 – German financials ahead but weaker European KPIs

KPIs, UK broadband net adds were +34k (cons +50k after +64k in both Q3/Q4)

with postpaid net adds of -48k (cons -5k after -73k/-22k in Q3/Q4). Weaker KPIs

reflect a promotional UK environment but the unit is seasonally stronger on

broadband net adds later in the year. We see VodafoneThree as well positioned

and can benefit from merger synergies but the UK market remains highly

competitive with rising fintech MVNO competition – see our latest UK pricing note

for a discussion on competitive dynamics (link).

Vodacom saw good underlying service revenue growth partially offset by FX with

organic service revenue growth of +12.6% (after +13.5%/+10.9% in Q3/Q4)

driven by strength in Egypt and South African pre-paid performance inflecting into

positive growth. The unit raised guidance to “low-teens” EBITDA/OpFCF growth

(from “double-digit”) to reflect the consolidation of Safaricom. The flip side is the

dividend payout will be lowered to >65% from >75% of headline earnings but

DPS is still expected to grow this year.

Underlying guidance reiterated and expected to be at the upper-end of the

range

Vodafone reiterated underlying FY27 guidance for the Group (ex-Safaricom) of

EBITDAaL of €11.9-12.2bn (cons €12.1bn) and Europe EBITDAaL of €7.6bn-€7.9bn

(cons €7.8bn). Including 9 months of Safaricom, guidance would be for Group adjusted

EBITDAaL of €13.0-13.3bn (cons €13.1bn). Group adj FCF guidance is unchanged at

€2.6-€2.9bn (cons €2.7-2.8bn).

Valuation: PT based on SOTP and sector multiples

Vodafone offers a 6.2% reported EFCF yield on a calendarised basis with a 3.6%

dividend yield for 2026E. The Vodafone dividend yield has rarely traded tighter than UK

10-year gilt yields (>5.0%).