Vodafone Stock: Red Ink Meets Investor Optimism

Despite posting a substantial €3.7 billion net loss for the fiscal year 2024/25, Vodafone's stock showed surprising resilience, even gaining slightly after the announcement. This dramatic shift from the previous year's €1.5 billion profit primarily stems from hefty write-downs totaling €4.5 billion, largely concentrated in Germany and Romania. The German market has become particularly problematic following the elimination of the "Nebenkostenprivileg" for cable TV contracts in July 2024, which granted tenants freedom to choose their providers. This regulatory change triggered significant customer exodus, with 81,000 TV customers departing in the fourth quarter alone, reducing the total to approximately 8.8 million. The German segment hemorrhaged 2.2 million TV customers in the summer quarter of 2024, representing a substantial blow to the telecom giant's subscriber base.

Growth Areas Offsetting European Challenges

Despite these setbacks, Vodafone managed to increase overall revenue by 2 percent to €37.4 billion. Service revenues notably climbed by 5.4 percent in the final quarter, exceeding analyst expectations. Strong performance in Turkey, the United Kingdom, and Africa helped partially offset the German market's difficulties. Looking forward, CEO Margherita Della Valle projects cautious optimism with an operational profit (EBITDA AL) target between €11 and €11.3 billion for the upcoming fiscal year. While the company halved its dividend to 4.5 cents per share, it launched a €2 billion share buyback program following divestments in Spain and Italy – a move that appears to have maintained investor confidence despite the challenging financial landscape.

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Source StockWorld