British Vodafone increases dividend for the first time in eight years, shares rise by 5%

Vodafone shareholders will be rewarded with its first dividend increase in eight years after a return to growth in Germany helped the European mobile and broadband operator improve its profit prospects.Shares of the British company, trading at their highest level in two and a half years, rose 5% to 94 pence after it reported a 5.9% rise in first-half adjusted profit to 5.73 billion euros ($6.68 billion) on Tuesday.

The group cut its dividend by 40% in May 2019 after the cost of buying 5G spectrum sent its debt soaring.Chief Executive Margherita Della Valle has reshaped Vodafone since taking over in January 2023. It merged with rival Three in Britain to become market leader and exited the tough markets of Spain and Italy.

It is now the largest or one of the largest players in each of its markets and has a growth strategy that supports the medium-term prospects of increasing free cash flow.

“It has been a long time since this happened at Vodafone and we are happy to share this with our investors,” Della Valle told reporters on Tuesday. She said a new progressive dividend policy would deliver an expected 2.5% increase in the year to the end of March 2026.

BACK TO GROWTH IN GERMANY

Vodafone returned to growth in Germany in the second quarter after the impact of a change in TV subscription rules ended in 2024. The company also said it had made a fast start on bringing together the Vodafone and Three networks in Britain.

“In the second quarter we saw service revenue accelerate, with good performance in the UK, Turkey and Africa, and a return to revenue growth in Germany,” Della Valle said.

The company expects to be at the “high end” of its full-year forecasts for an adjusted core result of 11.3 to 11.6 billion euros and a group-adjusted free cash flow of 2.4 to 2.6 billion euros.

($1 = 0.8575 euros)