By Najat Kantouar

Vodafone Group plans about $2.3 billion in share buybacks and forecast a return to top-line growth in Germany, as the company works to dial up its performance in its biggest market.

The U.K.-based telecommunications group has been grappling with revenue declines in Germany--which accounts for roughly a third of its total revenue--over the past year and said Tuesday that its turnaround efforts there are starting to pay off.

Vodafone has sought to streamline its portfolio and reduce debt by offloading assets, including some of its biggest units. It sold its businesses in Spain and Italy and is in the process of merging its U.K. arm with rival Three.

This allowed the company to pay down debt and hand billions of dollars back to shareholders. Vodafone said it is launching a new 2 billion-euro ($2.25 billion) buyback, starting with an initial phase of 500 million euros, having just completed another 2 billion-euro program. The company had signaled last year that it would return 4 billion euros to shareholders following the sales of the businesses.

However, the moves left Vodafone more exposed to challenges in the German market, where competition and regulatory changes have weighed on its top line. The group has been absorbing the impact from a regulatory change in the country that prevents landlords from bundling TV services with rental agreements, as well as lower broadband customer base. Vodafone said its German turnaround continues, but that it had stabilized its customer base.

"However, as we stand we have one more quarter of the TV law change impact and the market remains competitive," Vodafone Chief Executive Margherita Della Valle said in a call with analysts.

The company forecast its German operations would deliver top-line growth again in the fiscal year ending March 2026, but cautioned that the business would still need time to return to growth at the underlying earnings level as measured by its preferred metric--adjusted earnings before interest, taxes, depreciation and amortization and after lease expenses.

For the group as a whole, Vodafone expects adjusted Ebitda after leases to be between 11 billion and 11.3 billion euros and adjusted free cash flow to be between 2.6 billion and 2.8 billion euros for fiscal 2026.

The company reported a decline in adjusted earnings to 10.93 billion euros for fiscal 2025 from 11.02 billion euros the year prior, reflecting a fall in Germany. This compared with company-compiled consensus estimates of 10.985 billion euros. On an organic basis, adjusted earnings increased 2.5%, it said.

Vodafone reported a pretax loss of 1.48 billion euros compared with a profit of 1.62 billion euros a year before, as it booked noncash impairment charges for Germany and Romania of 4.5 billion euros.

Revenue rose to 37.45 billion euros from 36.72 billion euros as strong service revenue growth was partially offset by adverse foreign-exchange movements. A company-compiled consensus had forecast 37.71 billion euros.

Service revenue--a closely watched metric in the telecom sector--rose 2.3% in the fourth quarter to end the year up 2.8%, as the company offset the decline in Germany with growth in the rest of the world.

Shares in midmorning European trading were up 1.6% at 73.64 pence. Year to date, shares have risen 7.8%.

Write to Najat Kantouar at najat.kantouar@wsj.com

(END) Dow Jones Newswires

May 20, 2025 08:21 ET (12:21 GMT)

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