Vodafone’s turnover is growing as its merger with Three UK nears completion

Vodafone saw service revenue rise in the first half as the telecoms giant said it hopes to complete its merger with mobile network Three in early 2025.

The London-listed company said services revenue rose 1.7% year-on-year to 15.1 billion euros (£12.5 billion), despite a slump in Germany, its biggest market, due to a change in law.

Vodafone said it expects to complete its partnership with Three UK early next year, pending a final decision on the deal from the competition regulator on December 7.

The merger is expected to close in 2025 (PA)

“We will continue to work constructively with the CMA and remain confident that we can work with them to obtain approval,” Vodafone said on Tuesday.

The merger is part of CEO Margherita Della Valle’s turnaround plan at the company, which also includes the sale of businesses in Italy, Spain and other countries.

Vodafone said it reported operating profit of 2.4 billion euros (£2 billion) in the six months ended September, up 28.3% year-on-year, driven mainly by gains from taking an 18% stake in the Indian telecom company Indus Towers.

However, increases in service revenues were offset by falling revenues from key German operations after the government prevented housing associations from linking TV and rent earlier this year.

Vodafone said service revenue in Germany fell 6.2% last quarter.

Ms Della Valle said the company is making “good progress” on its turnaround plan, with approvals for the Three merger and the sale of the Italian operations “nearly completed”.

“These will complete our program to reshape the group for growth.”

She added: “We have performed well in our markets, with the exception of Germany where, as expected, we have been affected by the change in the TV law.

“I am confident that the actions we are taking will deliver growth for Vodafone this year and further acceleration in FY26.”

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the group “still faces several challenges before it can hope to call this turnaround complete, from major portfolio moves to continued weak performance in the key German market”.

“The portfolio clean-up is in full swing, with the Spanish part out of the picture and the Italian part to follow soon, but investors will have to settle for a lower dividend level in the future.”