Vodafone has announced its first dividend increase in eight years, following a return to revenue growth in Germany and stronger overall performance across key markets. The mobile and broadband operator will lift its dividend by 2.5%, supported by improved earnings and solid progress in its core European operations.

Shares in the British telecoms group rose 5% to 94 pence in early trading on Monday, reaching their highest level in two and a half years. The company’s dividend was previously cut by 40% in 2019 due to heavy spending on 5G spectrum licenses that increased its debt burden.

Chief Executive Margherita Della Valle said Vodafone’s growth was driven by a rebound in its German business and early benefits from its merger with Hutchison’s Three in the United Kingdom, which was completed in May. The merger created Britain’s largest mobile operator and is expected to strengthen Vodafone’s market share and profitability.

“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.

Vodafone now expects full-year adjusted core earnings to reach the upper end of its guidance range of 11.3 to 11.6 billion euros, while adjusted free cash flow is projected between 2.4 and 2.6 billion euros.

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The company’s improved outlook reflects cost efficiencies, network integration gains, and growing customer demand for bundled mobile and broadband services. Germany, its largest market, has recovered after a challenging period linked to changes in TV subscription regulations.

Della Valle said Vodafone’s stronger financial position now allows the company to adopt a “progressive dividend policy,” ensuring regular increases tied to performance and cash generation.

Analysts view the dividend rise as a positive signal to investors after years of restructuring and divestments. Vodafone’s focus on simplifying its operations, exiting weaker markets, and investing in digital infrastructure appears to be paying off.

With the company regaining growth momentum, investors are showing renewed confidence in Vodafone’s long-term strategy and leadership.

Source ~ Reuters