By Najat Kantouar

Vodafone Group shares fell after the group reported a sharp revenue decline in Germany, its biggest market, reflecting the impact from a TV law change in the country and a more competitive environment.

In early trading in Europe, London-listed shares were down 5.4% at 66.14 pence. Year to date, shares have fallen 3.7%.

The telecommunications company said revenue in Germany fell 7.6% on a reported basis to 3.09 billion euros ($3.20 billion). Service revenue--a closely watched metric in the telecom sector--in the country represents 34% of group service revenue and fell 6.4% to 2.89 billion euros for the quarter ended Dec. 31. This was partly due to the expected impact from German regulatory changes, which prevent landlords from bundling TV services with rental agreements, as well as lower broadband customer base.

Germany's turnaround will take time as the group is still absorbing the impact of the law change and face a highly competitive market environment, Chief Executive Margherita Della Valle said on Tuesday.

Meanwhile, U.K. service revenue climbed 3.3% on organic basis to 1.51 billion euros, boosted by significant investments in customer experience. On a group level, service revenue rose to 7.93 billion euros from 7.505 billion euros.

Adjusted earnings before interest, taxes, depreciation and amortization and after lease expenses increased 2.2% on an organic basis to 2.83 billion euros. This was driven by service revenue growth in most markets and lower energy costs in Europe that offset the law impact in Germany. Revenue rose to 9.81 billion euros from 9.35 million euros.

This represents the first set of earnings following the group's exit from Italy. Vodafone sale of the Italian business to Swisscom was approved by Italy's competition regulator in the quarter, marking the final step for getting full clearance. The proceeds, 8 billion euros in cash, have been used to reduce the group's net debt.

Vodafone expects to complete the merger of its U.K. business with its rival operator Three during the first half of 2025, putting an end to group's reshaping plan for growth, Della Valle said.

Separately, the group launched a share buyback of up to 480 million euros to reduce its share capital.

Vodafone reiterated its fiscal 2025 guidance, which includes adjusted EbitdaaL of around 11.0 billion euros and adjusted free cash flow to be at least 2.4 billion euros.

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

(END) Dow Jones Newswires

February 04, 2025 04:38 ET (09:38 GMT)

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