Those buying £5,000 of Vodafone (LSE:VOD) shares in April 2021 have lost — on paper, at least — £700 of their original investment. Instead, a FTSE 100 tracker would have grown to £7,750.
But as disappointing as Vodafone’s performance might be, the telecoms giant’s a very different business today (6 April) to what it was five years ago. Let’s explore this further.
Then and now
During the year ended 31 March 2021 (FY21), Vodafone reported revenue of €43.8bn and adjusted EBITDAaL (earnings after interest, tax, depreciation, and amortisation, after leases), its preferred measure of profit, of €14.4bn. For FY26, analysts are expecting these to be €40.5bn and €11.5bn respectively.
Some of this downsizing has been deliberate. Under the leadership of Margherita Della Valle, the group’s been aiming to increase its return on capital employed (ROCE). The sector’s notorious for requiring huge amounts of investment – telecoms infrastructure doesn’t come cheap – yet falling behind others when it comes to earnings, largely due to fierce competition.
To combat this, the group’s been selling off some of its non-core assets and exiting countries, most notably Spain and Italy, where returns are lower. And this strategy appears to be working. In FY21, the group reported a pre-tax ROCE 5.5%. For the first six months of FY26, it was 7.2%.
On the turn?
But some of the drop in revenue and earnings hasn’t been planned. A new law in Germany stopped the bundling of TV contracts with tenancies in multi-dwelling properties. It gave those renting the opportunity to shop around rather than having their service provider chosen by the landlord.
However, after a long period in the doldrums, revenue in the country started to grow again during the second quarter of FY26.
Vodafone’s FY21 dividend was nine euro cents a share. However, a 50% cut was announced in March 2024. But 20 months later, the group announced that it planned to increase its FY26 payout by 2.5%.
With all this positive news, Vodafone’s share price has been steadily increasing. It’s now 80% higher than in April 2025, just after President Trump caused a stir with his tariff announcements.
But the group still faces some significant challenges. Competition remains intense and concerns have been raised about its high level of borrowings. As a result of events in the Middle East, interest rates now look as though they are going to stay higher for longer. This could increase the cost of servicing Vodafone’s debt.
Final thoughts
Despite these threats, the group’s growing again. It’s doing particularly well in Africa. Here, the continent’s young rapidly-increasing population makes it the perfect market for a telecoms provider. And across the group, its offer to business customers is proving popular.
In terms of valuation, the stock’s currently trading below its five-year average earnings multiple. And it has a price-to-book ratio of less than one. Although, some of this probably reflects the large amount of goodwill and other intangible assets that sit on its balance sheet following a series of acquisitions. These types of assets can be difficult to value accurately.
Overall, I think Vodafone’s new strategy is starting to bear fruit. We will know more when the group announces its full-year results in May. However, I’ve seen enough to make me think that Vodafone’s shares could be considered now.
