Vodafone's share price remained under pressure on Tuesday following the release of its half-year financial results, which showed continued growth but failed to reassure investors. The stock has slipped more than 13% from its 2023 high, officially moving into a technical correction. Technical indicators suggest the near-term bias remains to the downside.
Strong results, but shares fall
The telecom giant reported a 11.4% increase in service revenue for the first half, reaching €21.9 billion, driven by recent acquisitions including Safaricom, Three, and Telekom Romania. In Germany, its largest market, organic service revenue grew only 0.4%, while the customer base contracted by 75,000. The UK saw organic revenue growth of 0.9%, and Africa posted a robust 13.4% increase.
Adjusted EBITDAaL jumped 12.6% to €6.5 billion, but the company recorded a net loss of €3.6 billion, largely due to non-cash impairments. Management cited an impairment in Germany driven by adverse interest rate changes and a write-down of deferred tax assets in the UK following the buyout of CK Hutchison Group Telecom Holding Limited from VodafoneThree.
Guidance raised, but challenges loom
Despite the loss, Vodafone upgraded its full-year guidance. It now expects adjusted EBITDAaL between €13.2 billion and €13.4 billion, up from the previous €13 billion to €13.3 billion. Adjusted free cash flow is projected at €2.8 billion to €3 billion. The company also reiterated plans to achieve €2 billion in gross savings in Europe by 2030, with ongoing cost-cutting measures, including job reductions in Germany.
However, Vodafone faces significant headwinds. The potential disruption from SpaceX, which recently acquired low-band spectrum in the US, poses a threat if the satellite-based service expands internationally. Additionally, Vodafone continues to lose market share in several regions. Its UK mobile contract base declined by 62,000 in the first half, and it lost 65,000 customers across six markets, including Romania and Portugal.
Technical outlook: bearish pattern
The daily chart shows Vodafone's stock has fallen from a September high of 132.20p to around 115p. It has dropped below the 50-day moving average and formed a head-and-shoulders pattern, a classic bearish reversal signal. The stock is also hovering near the Strong, Pivot, reverse level of the Murrey Math Lines tool and has slipped below the Supertrend indicator.
Given these technical signals, the most likely scenario is a further decline toward the Ultimate Support level at 100p. Conversely, a move above the key resistance at 125p would invalidate the bearish outlook and could signal a recovery.
This article is for informational purposes only and does not constitute financial advice.
