Vodafone Raises Guidance as Free Cash Flow Growth Tops 20%

Vodafone raised its full-year profit and cash flow guidance, with the midpoint of the revised outlook implying more than 20% growth in adjusted free cash flow (cash left after capital spending). The company didn't publish the new guidance ranges, but the trajectory is unambiguous: acceleration, not stabilization.

Group service revenue growth hit 6.4% in the second quarter of fiscal 2027, supporting 6.4% growth in adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the first half. Service revenue grew in every segment.

Chief Financial Officer Pilar López put the numbers in context: "Our performance in the first half demonstrates the benefits of our diversified portfolio and growth opportunities." She also credited productivity improvements for part of the earnings growth.

Simply put: every part of the group grew, and the CFO says that breadth is the engine.

What is driving the growth?

Africa remains the standout. The continent maintained double-digit organic service revenue growth in the first half, with growth in every market and an 18% increase in adjusted EBITDA. Egypt delivered the headline number: service revenue rose 36%, supported by customer growth, data demand and financial services.

Vodafone Cash, the Egyptian mobile-money arm, grew revenue more than 74% and now serves 17 million customers. Vodafone also increased its stake in Safaricom during the half, deepening its exposure to the operator and the M-PESA financial services platform.

Vodafone Business posted its highest-ever service revenue growth of 6.6% in the second quarter, with its digital services portfolio growing more than 20% year over year. The unit launched an AI Concierge service for small and medium-sized businesses and expanded cybersecurity services through security operation centers in Germany, Portugal, Ireland and Romania. It also added cloud capabilities to help customers manage and migrate workloads.

The takeaway: Africa's compounding and a record quarter in business services are doing the heavy lifting.

Why does Germany still lag?

Vodafone described its German financial performance over recent years as disappointing, even as consumer broadband and business-to-business services grow consistently there. The response is operational: further simplification and continued investment in customer experience.

Germany was the first Vodafone market to deploy AI-enabled agent-assist tools for customer service. Group-wide, the TOBi chatbot handles more than 1 million customer interactions a day with an 85% resolution rate. Vodafone holds leading customer satisfaction positions in 12 markets.

In the U.K., September brought the launch of Vodafone SuperMobile, offering access to the 5G standalone network and guaranteed minimum speeds. The majority of new iPhone customers are choosing the offering, the company said.

In short: Germany is a fix-in-progress, and AI tooling is central to that fix.

How much do the cost programs add?

Vodafone targets more than €2 billion in annual gross operating expense savings across Europe and shared operations by fiscal 2030, translating into more than €1 billion in annual net savings. Initiatives delivered in the first six months of the four-year program were worth more than €200 million in gross savings in Europe. The levers: simpler processes, greater automation, expanded AI use and scaled shared platforms, plus a 30% reduction in addressable spend.

The U.K. is compounding the effect. During the first half, Vodafone took full ownership of VodafoneThree and raised its annual synergy target to £800 million by fiscal 2030, up from £700 million. It now expects operating free cash flow at that business to more than triple by fiscal 2032.

The revised outlook, Vodafone said, marks progress toward its medium-term ambition of double-digit organic growth in adjusted free cash flow.

The bottom line: a guidance raise built on broad-based growth, record business momentum and a cost program already paying out.