Vodafone Group PLC (VOD) shares surged 6.71% in pre-market trading on Tuesday, following the release of its latest earnings report that showcased a return to growth in its key German market and the announcement of its first dividend increase in seven years. The British telecom giant's robust performance and improved outlook have sparked investor optimism about the company's ongoing transformation strategy.

The company reported a strong first half for fiscal year 2026, with total revenue increasing 7.3% to €19.61 billion. Notably, Vodafone's German operations, its largest market, returned to growth with a 0.5% year-over-year increase in organic service revenue for Q2 FY2026, reaching €2.74 billion. This turnaround in Germany comes after more than 18 months of decline, primarily due to regulatory changes affecting TV subscriptions. The positive performance was further bolstered by strong results in the UK and African markets.

Investors were particularly encouraged by Vodafone's announcement of its first dividend increase in seven years, with plans to raise payouts by approximately 2.5% for fiscal year 2026. Additionally, the company upgraded its full-year outlook, expecting to achieve results at the upper end of its guidance range. This includes adjusted EBITDAaL between €11.3 billion and €11.6 billion, and adjusted free cash flow between €2.4 billion and €2.6 billion. These developments reflect the progress of CEO Margherita Della Valle's transformation strategy, which has involved simplifying operations, divesting non-core assets, and focusing on key markets.