Following the sale of its Italian and Spanish operations in 2024 and 2025, and the earlier disposal of its joint venture with Liberty Global in the Netherlands, Vodafone is now refocusing on its domestic market.
Last week, the operator strengthened its position in the UK by acquiring the 49% stake held by CK Hutchison in Three, the entity with which Vodafone merged last year. Further economies of scale are expected from the move.
When CEO Margherita Della Valle took the helm in April 2023, Vodafone, to borrow an apt phrase from our colleagues at the Financial Times, gave the impression of being present everywhere but dominant nowhere.
As early as 2023, our analysts welcomed the end of this fragmented strategy and the group's pivot toward its core assets. In this respect, see Vodafone Group Plc: A Step in the Right Direction, which we published at the time.
The British operator's market valuation has doubled over the period, even as it continues to restructure its operations in Germany. This other strategic market was hit by regulatory changes affecting pay-TV subscriptions last year.
Despite stagnant organic revenue growth, Vodafone has successfully stabilized its free cash flow at approximately €5.3bn for 2024 and 2025. At the end of last year, this performance enabled the company to announce its first dividend increase in seven years.
The group still contends with substantial leverage, although it has already reduced its net debt by approximately €11bn in two years, primarily through the aforementioned asset disposals.
While deleveraging remains the priority, investors now anticipate progressive dividend increases as solvency improves toward a target average of 2.5x EBITDA.
The market has broadly cheered these developments; Vodafone is now trading at an operating profit multiple near its historical ceiling, while its dividend yield has reached a historical floor.
