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Rigorous Fearless Independent

Vodafone: Steady(ish)

10 February 2026

Service revenue trends and themes were broadly consistent with those of last quarter, with management commentary suggesting German EBITDA decline of 8%+ this year.

Strong growth from VodafoneThree, better underlying trends in Germany, and fortuitous currency moves are all likely to be required to hit analyst estimates for next year, and there are reasons to be optimistic about prospects for at least some of them.

VodafoneThree’s mobile strategy seems to be quite defensive for now, save for a foray into the family market, and its approach to FWA looks likely to be quite cautious too.

BT had a solid Q3 in financial terms, with various oneoffs hitting headline growth rates but underlying trends very much robust.

The highlight was reduced broadband line losses for Openreach, both in the quarter and in prospect, with retail altnets slowing faster than CityFibre improves.

Recent developments put the pace of altnet consolidation in doubt, but we expect reduced pressure on BT Consumer and Openreach in 2026 regardless.
 

And with RTL Group’s acquisition of Sky Deutschland on track to receive regulatory approval this year, ProSieben’s new owners MFE-MediaForEurope are seeking partnerships that can bring scale to the German broadcaster’s offering – though that scale may be limited by the slow customer growth of MagentaTV, argues François Godard, Media and Telecoms Analyst at Enders Analysis.

“This was overdue,” comments Godard. “The new MFE management is rightly moving to make the ProSieben content available on more platforms and MagentaTV is an obvious place to start as it poses no strategic threat. However, note that Magenta has low penetration with only 4.7 million subscribers (barely about 11 percent of German homes) and is growing very slowly, with only 135,000 subscribers added in the past four quarters.”

The line loss numbers from Openreach were “very encouraging” in spite of “aggressive promotions from alt nets,” said Karen Egan, head of telecoms at Enders Analysis. “There has been a lot of shorting of BT in light of the alt net pressure but they seem to be doing very well in the face of that and their all-important free cash flow recovery story remains very much in tact.”

 

Display advertising is forecast to grow c.7% in 2026 despite lacklustre consumer confidence, out of sync with the gradual economic recovery.

Online advertising has doubled its share of online consumer spend since 2015. Major ad platforms account for over 40% of all UK display advertising spend.

Mature media’s prospects more closely align with the UK economy, with real term growth unlikely this year.

Jamie MacEwan, senior media analyst at Enders Analysis, said that agencies were facing “sentiment volatility that will be tough for ad agencies to shake”.

He added: “Like it or not, their customers continue to spend big on Google and Meta. This leaves agencies increasingly dependent on a handful of platforms where they are outspent by SMEs and exposed to AI tools. That doesn't mean there isn't a lot for agencies to offer their clients in a complex media world, but clearly real-terms growth on a sector level will continue to be a struggle. That is why even Publicis' years of outperformance have not been significantly rewarded.”

Project Gigabit has made reasonable progress in allocating subsidy contracts covering 1.1 million premises, and the contract holders look on track to complete their build-outs well before the 2032 deadline.

However, this leaves c.1.5 million premises still without the prospect of gigabit broadband, no firm steer as to when contracts covering these might be awarded, and a reduced per-home budget available to cover them.

Openreach looks likely to win most or all of these, and to take over earlier contracts should altnets pull back or fail (an increasingly likely occurrence), increasing its share of subsidised coverage from the current c.30% to around 70% or above.