Vodafone Group PLC (VOD.L) — New UK targets are encouraging but long-dated, ahead of briefing this afternoon

Ahead of its briefing on its UK operation VodafoneThree this afternoon, Vodafone has issued a release giving financial guidance out to FY32 for the UK operations and increasing its previously synergy targets. While long-dated, we believe the EBITDAaL and OpFCFaL targets will be seen as encouraging, albeit an increase to synergies was somewhat expected. VodafoneThree targets mid-to-high single digit CAGR adj. EBITDAaL between FY25-32 (vs a base of £1.6bn in FY25), implying c£2.5-2.6bn in FY32, and expects OpFCFaL to increase by 'over 3x' by FY32 vs FY25, implying >£1.5bn (vs a base of £0.5bn). VodafoneThree expects ROCE to exceed cost of capital by FY32, and to be materially above by FY34. Vodafone has increased its synergy target for FY30 to £0.8bn pa (from £0.7bn pa) and introduced a new synergy target of £1.0bn pa by FY32. VodafoneThree accounts for 21% of Vodafone's consolidated group service revenue and 16% of EBITDAaL (2026/27E), with a c35% share of the UK postpaid market and c7%