Vodafone swings to £346m loss as Three UK merger nears completion

Importance Score: 72 / 100 🔴

Vodafone Group has reported a significant operating loss of £346 million for the fiscal year ending March 2025, driven by impairment costs in its German and Romanian operations. This financial downturn highlights the challenges the telecoms giant faces, even as it progresses towards a major merger with Three UK. The following sections detail the factors contributing to this loss and the company’s strategic response.

Vodafone Posts Operating Loss Amid Business Restructuring

Vodafone Group experienced a noteworthy plunge into the red, largely attributed to substantial impairment charges levied against its German and Romanian divisions.

Financial Highlights

  • Operating Loss: €411 million (£346 million) for the year ending March 2025.
  • Previous Year: €3.7 billion (£3.1 billion) profit.
  • Write-downs: €4.35 billion on its German segment and €165 million (£139 million) on its Romanian segment.

Decline in Germany

The communications firm’s turnover in Germany diminished by 5%, chiefly due to regulatory changes that empower tenants in apartment complexes to select their preferred television and broadband providers.

Additionally, revenues in the crucial German market were affected by heightened competition in the mobile sector and a decrease in the fixed-line customer base.

Growth in Other Markets

Despite setbacks in Germany and Romania, Vodafone’s total sales edged up by 2% to €37.4 billion. This boost stemmed from growth across its African, Turkish, and UK markets.

UK Performance and Future Expectations

The UK market showed promise, with revenue climbing 3.4% to €7.1 billion, buoyed by a stronger pound sterling and increasing mobile subscriptions.

Adjusted Earnings

While adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) saw a slight dip of 0.8% to €10.9 billion (£9.2 billion), the company anticipates an increase to between €11 billion and €11.3 billion in the current fiscal year.

Strategic Restructuring and Asset Sales

Under the leadership of CEO Margherita Della Valle, Vodafone has undertaken a comprehensive restructuring plan since January 2023.

Asset Divestments

  • Sold its Spanish and Italian business units for a combined €12 billion.
  • Divested stakes in Indus Towers and Oak Holdings, the predominant owner of Vantage Towers.

CEO’s Perspective

Della Valle commented, stating that Vodafone has transformed over the past two years, reshaping its European presence and driving customer satisfaction, particularly in the UK and Germany, while also delivering strong operational improvements. She acknowledged that more work remains but asserted that the transition has repositioned Vodafone for sustained growth.

Merger with Three UK

Vodafone anticipates finalizing a £16.5 billion merger of its British operations with Three UK in the first half of 2025, following approval from competition authorities in December.

Market Impact

The merger is poised to establish the UK’s largest mobile operator, consolidating approximately 27 million customers, surpassing BT-owned EE and Virgin Media O2.

Analyst Commentary

Mark Crouch, market analyst for eToro, noted that rejuvenating Vodafone requires more than just cost reductions and consolidation. He emphasized the significance of the proposed merger with Three UK but cautioned that it carries inherent complexities and integration risks, potentially exacerbating Vodafone’s broader strategic challenges.

Market Reaction

Vodafone Group shares experienced a rise of 2.15%, trading at 74p on Tuesday morning, positioning them among the top performers on the FTSE 100 index.


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