Vodafone is set to raise its dividend for the first time in eight years, following an upgraded earnings outlook and a return to growth in Germany, the European broadband and mobile operator announced today. Shares in the British company rose 5% in early trading, reaching 94 pence, their highest level in two-and-a-half years.
The company had cut its dividend by 40% in May 2019, after the cost of purchasing 5G spectrum across Europe caused its debt to surge. Now, with improved performance across key markets, Vodafone plans to introduce a progressive dividend policy, with a projected 2.5% increase for the current financial year.
Chief Executive Margherita Della Valle cited strong results in multiple regions, including the UK, Turkey, and Africa, as well as a return to top-line growth in Germany. The German market had previously weighed on Vodafone’s performance due to changes in TV subscription regulations.
Della Valle highlighted the successful integration of the Vodafone and Three networks in the UK as a significant contributor to the company’s improved results. Vodafone completed its merger with Hutchison’s Three in May, creating the largest mobile operator in the country.
“In the second quarter, we saw service revenue accelerating, with good performances in the UK, Turkey, and Africa, and a return to top-line growth in Germany,” Della Valle said.
The company now expects to deliver at the upper end of its guidance ranges, with adjusted core earnings projected between £11.3 billion and £11.6 billion and group adjusted free cash flow forecast at £2.4 billion to £2.6 billion for the full year.
Analysts said the dividend increase and strong earnings were a clear signal of Vodafone’s recovery following years of pressure from high spectrum costs and debt management. The new progressive dividend policy also signals the company’s intention to balance shareholder returns with continued investment in network expansion and technology upgrades.
Investors responded positively to the announcement, with Vodafone shares hitting early trading highs not seen since mid-2023. The move comes as telecom operators across Europe face heightened competition and regulatory scrutiny, making Vodafone’s growth in multiple markets particularly notable.
Della Valle said the company will continue to focus on integrating its networks, improving operational efficiency, and expanding its service offerings, while maintaining a disciplined approach to capital allocation. The combination of strategic mergers, strong regional performance, and disciplined financial management appears to have positioned Vodafone for a more stable growth trajectory.
The announcement marks a turning point for Vodafone shareholders, who have not seen a dividend increase since before the pandemic and the rollout of costly 5G networks. The planned rise in payouts reflects confidence in the company’s ability to generate consistent cash flow while navigating Europe’s competitive telecom landscape.
