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Vodafone is planning a fresh push into cloud, artificial intelligence and cyber security services to help fund higher dividends, as chief executive Margherita Della Valle sets her sights on faster growth after reshaping the FTSE 100 telecoms group’s operations.
Della Valle told the Financial Times in an interview that she wanted revenues from business customers to make up roughly 50 per cent of the total across the group in the medium term, up from between 25 and 30 per cent today.
“They [B2B revenues] could be much more than that,” she said, adding that Vodafone’s UK revenues were split more evenly between businesses and consumers. “It could be like this in other markets as well,” she added.
Since taking over in January 2023 Della Valle has doubled down on Vodafone’s home market through this year’s £16.5bn merger with Three, and sold struggling operations in Europe.
The Italian executive finalised a deal to sell Vodafone Italy to Swisscom for €8bn in January and offloaded its Spanish operations to UK-listed peer Zegona for €5bn last May.
Investors have begun to warm towards Della Valle’s approach this year, helping Vodafone’s shares rally off 20-year lows. The company announced its first dividend increase in seven years this month, and guided towards the upper end of its 2026 financial forecast after a return to service-revenue growth in its largest market, Germany.
Della Valle described the asset disposals as “difficult”, particularly the sale of the Italian unit where she began her career. “Unfortunately, the Italian market . . . had been destroying value for telco players for many years and it didn’t make sense to [continue],” she said.
“What matters is where we are today: stronger, with the outlook of growth,” Della Valle added.
Vodafone provides mobile, broadband and other connectivity services in 15 countries, generating revenues of €37.4bn last year. The telecoms group’s chief said she was now happy with Vodafone’s core portfolio, which includes significant operations in Germany and Turkey.
Della Valle added, however, that changes were possible in Vodafone’s so-called investments division, which houses its 50 per cent stake in Dutch operator VodafoneZiggo and its holding in OXG, a German fibre network joint venture with Patrick Drahi’s Altice.
Liberty Global, which owns the other 50 per cent of VodafoneZiggo, has previously tried to buy Vodafone’s stake in the company.
Della Valle said the growth needed to sustain a “progressive dividend” policy would come from combining “traditional core connectivity” with “digital services,” particularly to small and medium-sized business customers.
“[These} go all the way from helping people to go and leverage the cloud, manage their website, manage their cyber security . . . all the way to leverage AI for example,” she said.
Margherita Della Valle said selling Vodafone’s Italian unit, where she started her career, was a difficult decision © Charlie Bibby/FT
Vodafone provides businesses with advice on transitioning to cloud-based software and access to third-party software providers. It also offers AI tools, such as chatbots which can answer employee questions 24/7, and cyber threat detection services.
However the plans to grow B2B revenues were met with scepticism by some analysts. James Ratzer at New Street Research said B2B growth always “seemed to be a jam tomorrow story” that had failed to deliver.
“Vodafone’s European business revenues haven’t grown for the last 18 months,” he added.
Della Valle reiterated Vodafone’s plan to double its broadband customers to more than 4.3mn in the UK by 2034. She added that the company was open to signing new deals to use other providers’ fibre networks, such as that operated by Virgin Media O2, if conditions were right.