Breaking Down Vodafone Group Public Limited Company (VOD) Financial Health: Key Insights for Investors

You're looking at Vodafone Group Public Limited Company (VOD) and seeing a company in the middle of a serious, multi-year transformation, so you need to know if the turnaround is defintely working and what the near-term risks are. The raw numbers from the 2025 fiscal year show a complex picture: total revenue hit €37.4 billion, with a respectable organic service revenue growth of +5.1%, which is a solid sign that the core business is stabilizing in many markets. But still, the adjusted EBITDAaL (earnings before interest, tax, depreciation, and amortization after leases) came in at €10.9 billion, and while Adjusted Free Cash Flow was €2.5 billion, the underlying story is about the reshaped footprint and the drag from markets like Germany due to regulatory changes. This isn't a simple growth stock; it's a value play hinging on executing a massive simplification plan and integrating the UK merger, which means we need to look past the headline numbers to see where the cash is really coming from.

Revenue Analysis

You want a clear picture of where Vodafone Group Public Limited Company (VOD) actually makes its money, and the takeaway is simple: it's a service-driven business with a shifting geographic focus. For the fiscal year ending March 31, 2025 (FY25), Vodafone's total revenue increased by a reported 2.0%, reaching €37.4 billion, up from €36.7 billion in FY24.

This growth was almost entirely fueled by service revenue (the money from monthly contracts, airtime, and data), which grew by 2.8% on a reported basis to €30.8 billion. Service revenue is the core; it represents about 82.35% of the Group's total revenue, so that's where you need to focus your analysis.

Here's the quick math on how the key segments contributed to the overall €37.4 billion total revenue in FY25, highlighting the geographic risks and opportunities:

The biggest revenue source, Germany, is also the biggest near-term risk. Its revenue declined by 6.0% to €12.180 billion in FY25, largely because of the regulatory change to the Multi-Dwelling Unit (MDU) TV law, which prevents landlords from bundling TV services. That's a structural headwind, but the company is working to retain those customers.

On the flip side, the growth engines are clear. Africa continues to be a bastion of organic growth, with service revenue increasing organically by a robust 9.7% in the first half of FY25, driven by demand for data and financial services. Plus, the Vodafone Business segment, which focuses on enterprises, saw its organic service revenue grow by 4.0% in FY25, supported by strong demand for digital services like cloud and security. Digital services, in total, now make up roughly 10% of Group service revenue.

The strategic shift is evident in the numbers: Vodafone is moving away from its traditional fixed-line and legacy businesses, focusing instead on high-growth areas like Business and Africa, while also reshaping its European footprint through disposals like Spain and Italy. For more on the strategic direction, you should look at the Mission Statement, Vision, & Core Values of Vodafone Group Public Limited Company (VOD).

• Service revenue is the core, at €30.8 billion in FY25.
• Germany's revenue drop is a regulatory problem, not defintely a demand one.
• Africa and the Business segment are the clearest growth opportunities.

What this estimate hides is the impact of foreign exchange movements, which partially offset the strong organic service revenue growth of 5.1% for the Group in FY25, so reported growth is always lower than the underlying performance.

Profitability Metrics

You're looking at Vodafone Group Public Limited Company (VOD) and seeing a lot of restructuring news, so let's cut to the core: profitability. The headline is that a massive non-cash charge masked decent underlying operational performance in the 2025 fiscal year (FY25), but the bottom line still shows a significant loss. You need to look past the statutory net loss to see the true operating efficiency.

For the year ended March 31, 2025, Vodafone Group Public Limited Company reported total revenue of €37,448 million. Here's the quick math on the key margins, which tell a story of high fixed costs and a major one-time hit:

• Gross Profit Margin: 33.43%
• Operating Profit Margin: -1.10% (a loss)
• Net Profit Margin: -10.00% (a loss)

Gross, Operating, and Net Margins in Focus

The gross profit margin-which shows how effectively Vodafone Group Public Limited Company manages its cost of sales-stood at 33.43% in FY25, based on a gross profit of €12,519 million. This level is competitive but trails some peers; for instance, a broader Communication Services sector benchmark often sits higher, around 53.1%. This difference highlights the capital-intensive nature of a full-service telecom operator like Vodafone Group Public Limited Company, which carries significant network costs.

The operating margin is where the noise is. Vodafone Group Public Limited Company posted an operating loss of €411 million, resulting in a -1.10% operating margin. This loss was not from core operations struggling to cover daily expenses, but rather from a substantial €4.5 billion non-cash goodwill impairment charge, primarily in Germany and Romania. Strip out that non-cash write-down, and the operational picture looks much healthier. That's a crucial distinction for your analysis.

The final net profit margin of -10.00% (a net loss of €3,746 million for continuing operations) reflects the full impact of the impairment, plus financing costs and taxes. It's a bad number, but it's mostly an accounting clean-up, not a sign of a failing business model. You defintely need to see the Exploring Vodafone Group Public Limited Company (VOD) Investor Profile: Who's Buying and Why? for context on this restructuring.

Operational Efficiency and Trend Analysis

The real measure of operational efficiency in telecom is often the Adjusted EBITDAaL (Earnings Before Interest, Taxes, Depreciation, Amortization, and Leases) margin, which strips out capital structure and large non-cash items. Vodafone Group Public Limited Company's Group Adjusted EBITDAaL margin for FY25 was 29.2%. This is below the global telecom industry's average EBITDA margin, which has stabilized around 34% over the past three years.

The trend shows a mixed picture. While the reported operating profit reversed to a loss, the underlying business is showing growth in key areas. Organic service revenue-a measure of true top-line growth excluding currency and acquisitions-increased by 5.1% in FY25. This growth, coupled with a 2.5% organic increase in Adjusted EBITDAaL, suggests management is effectively controlling costs and growing revenue in its core markets, offsetting a decline in Germany due to regulatory changes. The operational efficiency is improving, but the legacy asset value issues (the impairment) are still hitting the statutory numbers.

Debt vs. Equity Structure

The core takeaway for investors is that Vodafone Group Public Limited Company (VOD) has defintely reset its capital structure, significantly reducing its reliance on debt financing in the near term. The company's Debt-to-Equity (D/E) ratio, a measure of financial leverage, stood at approximately 0.97 as of September 2025. This means that for every dollar of shareholder equity, the company uses 97 cents of debt to finance its assets. That's a healthy position.

For a capital-intensive business like telecommunications, this ratio is quite conservative. When you look at the industry, the average D/E ratio for Integrated Telecommunication Services is around 1.076, and for Wireless Telecommunication Services, it climbs to about 1.289. Vodafone Group Public Limited Company is operating below the industry average, which signals lower financial risk and a more stable balance sheet for you as an investor.

Here's the quick math on their debt composition from the September 2025 quarter:

• Long-Term Debt & Capital Lease Obligation: $51.853 billion
• Short-Term Debt & Capital Lease Obligation: $8.540 billion

The bulk of the company's financing is long-term, which is typical for a telecom giant and helps manage refinancing risk. Plus, the weighted average life of their existing debt structure is comfortably long at 12 years, with a fixed weighted average cost below 3%.

The company has actively balanced its debt and equity funding through major strategic moves in the 2025 fiscal year (FY25). They successfully reduced net debt to just €22.4 billion by the end of FY25, a substantial drop from €33.2 billion at the end of FY24. This significant reduction was primarily fueled by proceeds from the sales of Vodafone Spain and Vodafone Italy, plus the incremental sell-down of their Vantage Towers stake.

On the equity side, they've been returning capital to shareholders, which is a key part of the balance. Vodafone Group Public Limited Company completed a €2.0 billion share buyback program and immediately launched a new €2.0 billion program in May 2025. This shows a clear strategy of using asset sale proceeds to both deleverage the balance sheet and reward shareholders, instead of just hoarding cash or relying too heavily on new debt.

The board has adopted a new leverage policy targeting Net Debt to Adjusted EBITDAaL in the range of 2.25x to 2.75x, with the ambition to operate in the bottom half of that range. This commitment is explicitly designed to maintain a solid investment grade credit rating. This focus on a lower leverage target post-asset sales is a strong signal of financial discipline, moving away from a more aggressive debt profile. For a deeper look at the operational impact of these changes, check out the full post: Breaking Down Vodafone Group Public Limited Company (VOD) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Vodafone Group Public Limited Company (VOD) has enough quick cash to cover its near-term bills, and the answer, based on the 2025 fiscal year, is a qualified yes. The company's liquidity position is defintely solid for the short-term, largely due to strategic asset sales, but its working capital structure shows a telecom-typical reliance on long-term funding.

The key liquidity ratios for the year ended March 31, 2025, paint a clear picture. Vodafone Group Public Limited Company's Current Ratio was 1.26. This means for every €1.00 of current liabilities (bills due within a year), the company had €1.26 in current assets to cover it. That's a good sign, especially since the industry median is around 1.03.

The Quick Ratio (or Acid-Test Ratio), which is a stricter measure that strips out less-liquid inventory, was nearly identical at 1.23. This is strong. It shows that even without selling off equipment or handsets, the company has enough highly liquid assets-like cash and receivables-to meet its immediate obligations. This is a significant strength for short-term financial health.

Here's the quick math on their current liquidity position:

• Current Ratio (FY25): 1.26
• Quick Ratio (FY25): 1.23
• Total Current Liquidity (Cash and short-term investments as of March 31, 2025): €16.3 billion

When we look at working capital trends, the story is a bit more nuanced. Working capital (current assets minus current liabilities) in the telecom sector is often negative or small because companies finance long-term assets (like network infrastructure) with short-term debt and payables. However, the current liabilities did increase by €0.4 billion to €22.8 billion in FY25, mainly driven by a rise in trade and other payables. This isn't a red flag, but it's a trend to watch, as it means the company is using more short-term credit to finance operations.

The cash flow statement overview for the 2025 fiscal year shows a strategic shift. The cash inflow from operating activities was a robust €15,373 million, which is the core engine of the business, but it was a decrease from the prior year, partly due to lower inflows from discontinued operations.

The real action was in the other two sections:

• Investing Cash Flow: A significant net inflow of €4,759 million. This massive positive swing was primarily driven by the disposals of Vodafone Spain and Vodafone Italy, which generated substantial cash proceeds.
• Financing Cash Flow: A net outflow of €15,278 million. This outflow was used for debt repayment, dividends, and share buybacks, including the completion of a €2.0 billion buyback program.

The strategic asset sales have been a clear liquidity strength, boosting the cash pile to €16.3 billion and funding the capital structure reset. The Adjusted Free Cash Flow (FCF) for FY25 was €2.5 billion, which is the cash left over after capital expenditures, a key figure for dividend sustainability and debt reduction. The main risk is that the cash from asset sales is a one-time event, so future FCF generation from the smaller, core business will be crucial for maintaining this liquidity and servicing the net debt of €22.4 billion. You can dive deeper into the implications of these moves by reading Exploring Vodafone Group Public Limited Company (VOD) Investor Profile: Who's Buying and Why?

To be fair, the current ratios are strong, so the immediate liquidity concerns are minimal. The company has the cash to manage its short-term obligations and is actively reducing its debt load and returning capital to shareholders.

Valuation Analysis

You want to know if Vodafone Group Public Limited Company (VOD) is a bargain or a trap. Honestly, the valuation picture is mixed, suggesting the stock is currently priced near a fair value, aligning with a 'Hold' consensus, but with significant underlying risk.

The core takeaway is that while the stock price has seen a strong recovery, the negative earnings mean traditional metrics like the Price-to-Earnings (P/E) ratio are flashing a warning sign. You need to look past P/E to Enterprise Value-to-EBITDA (EV/EBITDA) for a clearer picture of the operational business.

Is Vodafone Group Public Limited Company Overvalued or Undervalued?

The market is pricing Vodafone Group Public Limited Company as a turnaround story, not a high-growth one. As of late November 2025, the stock trades around GBX 93.04, which is right in the middle of the analyst consensus target range. The valuation metrics tell a story of a heavily asset-based, capital-intensive business that is not currently generating net profit.

• The Price-to-Earnings (P/E) ratio is negative, sitting around -5.65 for the trailing twelve months (TTM), indicating the company is not profitable on a net income basis. This is a critical factor you cannot ignore.
• The Price-to-Book (P/B) ratio is very low at just 0.42. This suggests the stock is trading at a substantial discount to its net asset value, which often signals undervaluation, or, in this case, a market skepticism about the value of those assets.
• The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is more relevant here, as it strips out the effects of high debt and depreciation. It is currently around 7.88, which is relatively low for the telecommunications sector, where a median EV/EBITDA is often higher. A competitor benchmark shows a range from 5.2x to 11.0x, so Vodafone Group Public Limited Company is on the lower end, suggesting it's potentially undervalued on an operational basis.

Stock Performance and Analyst Outlook

The near-term momentum is strong, but the long-term trend remains challenging. Over the last 12 months leading up to November 2025, the stock has posted a significant return, increasing by approximately 29.82%. That's a solid rally, but it's largely a recovery from previous lows, not a break-out to new highs. The 52-week price range has been between a low of GBX 62.40 and a high of GBX 96.34.

Here's the quick math: The current price of GBX 93.04 is close to the 52-week high, meaning much of the short-term upside may already be priced in.

The analyst community reflects this cautious optimism. The consensus rating is a 'Hold' or 'Neutral'. The average 12-month price target is approximately GBX 88.85, which is actually a slight downside from the current trading price. The ratings breakdown is split, with 3 Buy, 8 Hold, and 6 Sell ratings from a pool of 16 analysts, which screams 'wait and see'.

Dividend Sustainability Check

The dividend yield is what attracts many investors, but you must check the sustainability. Vodafone Group Public Limited Company's annual dividend of $0.46 per share offers a compelling yield of 3.83% as of late 2025. However, the payout ratio is a major red flag.

The TTM dividend payout ratio is reported at 100%. What this estimate hides is that a 100% payout ratio means the company is paying out all of its net income as dividends. Given the negative P/E, some calculations show the company is paying out more than it earns, which is defintely not sustainable long-term without significant debt or asset sales. The average 5-year dividend yield is significantly higher at 8.87%, showing a clear reduction in the dividend's size and highlighting the risk of future cuts.

If you want to dive deeper into the operational health and strategic moves behind these numbers, you can read more here: Breaking Down Vodafone Group Public Limited Company (VOD) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Vodafone Group Public Limited Company (VOD) and seeing a business in the middle of a major strategic reset, which means the risks are both significant and tied directly to execution. The biggest near-term concern is the financial strain from underperforming core markets, specifically Germany, plus the ever-present threat of high debt, even with recent divestitures.

The company reported an operating loss of €0.4 billion for the 2025 fiscal year, driven largely by a massive €4.5 billion non-cash goodwill impairment charge in its German and Romanian operations. That's a huge number that tells you the value of their assets in those key markets is being written down, and it flags a critical operational risk: the sluggish growth in their largest market, Germany, which is being hit by new TV regulation and stiff competition. Mission Statement, Vision, & Core Values of Vodafone Group Public Limited Company (VOD).

External and Market Pressures

The external environment is not making things easy. The Board has explicitly flagged that the risk from 'Adverse changes in macroeconomic conditions' has increased due to geopolitical events, which can quickly destabilize markets and supply chains. Plus, the core business faces relentless 'Adverse market competition,' especially in some European markets, leading to price wars that crush margins.

• Geopolitical Volatility: Unpredictable events increase the cost and complexity of operations.
• Regulatory Headwinds: A new 'Adverse regulatory and policy environment' risk has been added, reflecting the increasing scrutiny and potential for costly new rules from bodies like the EU.
• Sluggish Core Market: Growth in Germany, their top market, remains a major challenge, impacting overall Group organic service revenue growth, which was +5.1% in FY25, a slowdown from the previous year.

Operational and Financial Risks

For a telecom giant, operational resilience is everything. The failure of IT systems or an uncompetitive network infrastructure-what they call 'IT resilience and transformation' and 'Network resilience and infrastructure competitiveness'-could lead to service disruptions, customer churn, and a hit to their reputation. Honesty, if the network goes down, customers leave. The other big one is 'Data management and Privacy,' where a breach could lead to massive fines under new European data regulations like the AI Act and Cyber Act.

On the financial side, while management has made great strides in deleveraging, debt is still a factor. Here's the quick math on their capital structure post-divestitures of Spain and Italy:

Strategic Risks and Mitigation

The company's strategy hinges on two major actions: divestitures and the merger of Vodafone UK with Three UK. The UK merger, which completed in May 2025, is a strategic risk in itself; it may require costly regulatory remedies and a long integration period. The company is betting on simplification and growth in digital services, which now make up about 10% of Group service revenue.

Their mitigation strategies are clear and action-oriented:

• Competition: Increased investment in brand and customer experience, plus launching innovative products with flexible contract terms to fight churn.
• Network: Expanding the Fiber-to-the-Home (FTTH) footprint and upgrading cable networks to boost competitiveness.
• Disintermediation: Deepening partnerships with Big Tech companies to defend against losing customer ownership, plus bundling digital services to enhance loyalty.

What this estimate hides is the execution risk of these massive transformation programs. If onboarding new technologies or integrating the UK merger takes 14+ days longer than planned, churn risk rises, and the projected €2.5 billion in Adjusted free cash flow for FY25 could be pressured.

Action: Portfolio Manager: Model a 10% revenue decline in Germany over the next 12 months to stress-test the current valuation and debt service capacity.

Growth Opportunities

You're looking at Vodafone Group Public Limited Company (VOD) right now and wondering if the recent strategic overhaul translates into real growth. The short answer is yes, but it's a focused, deliberate kind of growth, not a broad-based surge. The company has spent FY25 shedding non-core assets and focusing on its strongest markets, positioning itself for multi-year growth driven by its business-to-business (B2B) segment and its massive African footprint.

The core strategy is simple: simplify the European footprint and accelerate digital services. This is why the company completed the sale of its Spanish and Italian businesses and is executing a significant €4.0 billion share buyback program, which helps to reset the capital structure and focus capital where it can generate the best return.

Strategic Reshaping and Synergies

The most significant near-term driver is the merger of Vodafone UK with Three UK, which is expected to close in the first half of 2025. This deal is projected to deliver substantial annual cost synergies of approximately £700 million. That's a huge operational tailwind that will directly flow to the bottom line, making the combined entity a much stronger competitor in a key market.

The company is also seeing a recovery in its largest market, Germany, which is expected to return to top-line growth during the current year. This is critical, as Germany's service revenue declined by 5.0% in the full year 2025 due to regulatory changes. A turnaround there changes the entire narrative.

• Sell off the slow parts, double down on the fast ones.

Financial Projections: A Shift to Profitability

Analysts are forecasting a modest but important revenue increase for the next fiscal year, but the real story is the expected jump in earnings per share (EPS). For the full year 2025, Vodafone Group Public Limited Company reported total revenue of €37.4 billion. Management has also upgraded its full-year forecast for adjusted core earnings (Adjusted EBITDAaL) to the upper end of the €11.3 billion to €11.6 billion range.

Here's the quick math on the expected near-term financial trajectory:

Digital Services and Competitive Edge

The company's competitive advantage is shifting from pure mobile connectivity to a blend of connectivity and digital services. The Vodafone Business segment saw organic service revenue growth of 4.0% in FY25, and B2B digital services have grown by 26.1% over the last two years. Digital services now represent about 10% of the Group's total service revenue.

Product innovations are focused on high-growth areas:

• Cloud & IoT: The acquisition of Skaylink for €175 million is a clear move to broaden its cloud services portfolio. The Internet of Things (IoT) platform is a key focus, and its mobile money platform, M-PESA, is a powerhouse in Africa, serving 88 million financial services customers.
• Satellite Connectivity: Vodafone Group Public Limited Company completed the world's first video call through a satellite to a normal mobile phone in January 2025. This partnership with AST SpaceMobile aims to expand broadband connectivity to remote areas, widening its addressable market significantly.

This focus on B2B, cloud, and African growth offsets the low-growth nature of the traditional European consumer market, providing a clear path to generating more predictable, higher-margin revenue. To understand the full picture, check out our full analysis at Breaking Down Vodafone Group Public Limited Company (VOD) Financial Health: Key Insights for Investors.