Stock investors fleeing Donald Trump’s whiplashing of global markets this year – from January’s Greenland fixation to his unleashing of war in Iran with Israel – have found few places to hide.
However, an unlikely refuge has emerged: Europe’s long-struggling telecoms sector. And at its heart is Vodafone, one of the sector’s biggest underperformers of the past decade.
The revival goes beyond telecoms merely being a safe haven during geopolitical turmoil.
The sector is also seen as being “largely immune” to disruption from artificial intelligence, according to JP Morgan analysts in a recent report. It may even benefit from problems in recent months in private credit markets, they added.
They see insolvencies picking up in 2026 across fibre network upstarts that have been financed by private credit funds, rather than mainstream banks. This should play into the hands of incumbents.
The European telecoms sector has risen by 40 per cent over the past 12 months. Vodafone has soared more than 80 per cent from a near 30-year low last April to about £1.18 (€1.35).
Vodafone and the wider sector have advanced about 20 per cent so far this year. That’s six times the pace of the wider European stock market.
The fresh market interest in European telecoms comes despite the fact the industry has seen average revenue per user (ARPU) fall over the past 15 years, as it lost ground to over-the-top services such as WhatsApp and Microsoft Teams. All the while, they have been required to invest heavily – often by taking on debt – in the 4G and 5G spectrum as well as fibre networks to retain customers. Economies of scale for players like Vodafone doing business in multiple countries have been limited by the way spectrum and regulation is organised at national level.
European mobile ARPU was less than €14 a month as of 2024, according to Connect Europe, an industry lobby group. This compared to the equivalent of €26 in the US and about €21 in South Korea and Japan, it said in a report in March. Sector earnings have been driven over the period by cost cutting amid low revenue growth.
[ Vodafone growth slows, BT stems customer lossesOpens in new window ]
In the current environment, however, slow and steady is more than enough for many investors. Vodafone’s share price surge has been fuelled by one of the biggest turnaround stories in recent times on the FTSE 100.
The fact that it’s been delivered by a company lifer, Margherita Della Valle, making the kind of tough calls usually associated with an outside chief executive, makes it even more impressive.
The company’s two most recent CEOs, Vittorio Colao and Nick Read, were focused on streamlining and reducing the complexity of the sprawling global group created during Christopher Gent’s leadership at the turn of the century. That earlier period was marked by a series of debt-fuelled major acquisitions, including the €190 billion hostile takeover of Germany’s Mannesmann, the $58 billion purchase of US-based AirTouch, which was later combined with a rival to form Verizon Wireless, and smaller deals such as the €4.5 billion acquisition of Eircell in Ireland.
Some 500,000 Irish investors received shares in Vodafone in 2001 when it bought Eircell from Eircom (now Eir). To this day, it remains the most widely-held stock in the Republic, estimated to be comfortably still in the hundreds of thousands.
Colao and Read oversaw sales of stakes in phone companies from Japan and China to the US and the writing down of the value of Vodafone’s minority-held troubled Indian operations to zero.
Della Valle, an Italian native who joined Vodafone in 2000 as Omitel Pronto Italia (later Vodafone Italy) and came with the Mannesmann deal, has defied critics since her appointment three years ago by exiting the fiercely competitive Italian and Spanish markets, which each have four big operators.
“The [Italian unit] decision, on a personal basis, was extremely difficult,” Della Valle said of the €8 billion Italian sale to Swisscom in an interview published last weekend by The Sunday Times. “On a business basis, unfortunately, it was the right decision. In that sense, I had no doubts. We explored all the alternatives, but we could not change the market.”
[ Eir cash cow continues for shareholdersOpens in new window ]
She pushed through a £15 billion (€17.2 billion) merger of Vodafone UK with Three UK last year to create the country’s largest mobile operator. Still, UK competition regulators extracted a major concession in allowing the market to shrink from four to three major operators. The Vodafone-controlled joint venture must spend £11 billion upgrading its combined network over eight years and commit to retaining certain mobile tariffs and data plans for at least three years.
It remains to be seen whether Vodafone-Three can deliver on planned £700 million of annual cost and investment synergies targeted by mid-2029.
In February, Vodafone agreed to sell its 50 per cent stake in a Dutch joint venture to partner Liberty Global for €1 billion. Della Valle has insisted that the group’s 65 per cent stake in pan-African operator Vodacom, whose Johannesburg-listed shares have far outperformed its parent over the past five years, remains core to the business.
The CEO cheered long-suffering shareholders last November by signalling they will be rewarded with the group’s first dividend increase in eight years when results for the financial year to March are published in May – thanks, in part, to a return to growth in Germany, its largest market.
But the German rebound has since stalled. Vodafone revealed in February that broadband revenues dropped 1.1 per cent during the quarter to December, while a 2.8 per cent increase in mobile service revenues had been driven by a deal for phone company 1&1 to use its 5G network.
[ Revenue at Three Ireland rises in 2025Opens in new window ]
There have been reports that Telefonica, which used to have the 1&1 wholesale contract, is keen to buy that business.
Might Della Valle make a defensive bid for 1&1, the fourth-largest German mobile operator? With top-line growth forecast by analysts to remain modest across Europe over the medium term, she may have little choice but to seize opportunities to drive consolidation in remaining markets – where regulators allow.
Vodafone’s rally, meanwhile, may have got ahead of itself. The average price target of analysts covering the stock standing at £1.07 – about 9 per cent below where it’s currently changing hands.
