Vodafone Spain operating profit hits €1.86B as Telefónica merger talks intensify
Vodafone Spain reported a 10% increase in operating profit to €1.86 billion and returned to revenue growth for the first time since 2022, bolstering its position in ongoing merger talks with Telefónica. The company attributes this turnaround to a transformation strategy focusing on a leaner organization, stronger commercial approach, and tighter financial discipline, which also led to positive customer growth in broadband and expanded TV services through its Lowi brand.
Key Takeaways
- Operating profit reached €1.86 billion, supported by a 2% revenue increase in the final fiscal quarter.
- Net financial debt fell 13% year-over-year to €3.21 billion through tighter financial discipline.
- Broadband net additions reached 29,000, marking the sixth consecutive quarter of customer growth.
- Commercial expansion focused on the Lowi value brand, which recently integrated new television service bundles.
Why It Matters
The improved balance sheet significantly strengthens Zegona’s leverage in ongoing merger negotiations with Telefónica, particularly regarding business valuation. As the Spanish market consolidates around fewer, larger players, Vodafone Spain’s return to profitability proves that a high-efficiency regional model can thrive despite intense price competition. This performance sets a benchmark for private equity-led turnarounds in the European telco space, suggesting that streamlining operations and doubling down on low-cost converged video offerings can reverse multi-year stagnation. Watch for the official valuation gap to narrow as Telefónica faces pressure to conclude its home-market consolidation strategy.
Additional Context
The Spanish telecommunications landscape has undergone rapid consolidation following the 2024 merger of Orange Spain and MásMóvil to form MasOrange. Per Total Telecom (June 2026), Orange recently acquired full 100% ownership of MasOrange for €4.25 billion, cementing its position as the market leader with 26 million mobile and 7.1 million broadband customers. This scale has forced incumbents like Telefónica to reconsider domestic acquisitions to maintain competitive parity. While Telefónica has been divesting non-core assets in Latin America, including units in Chile and Argentina, its CEO Marc Murtra has identified European consolidation as a primary strategic pillar. Simultaneously, the entry of low-cost brands into the video segment has shifted consumer expectations. Vodafone’s value brand, Lowi, launched its own IPTV platform in August 2025 in collaboration with technology partner AgileTV. Per Broadband TV News (August 2025), the service includes over 100 channels and 4K Android TV hardware for €5 per month. This move mirrors aggressive moves by rivals like Digi, which has continued to gain market share through aggressive pricing and the build-out of its own fiber infrastructure. Zegona’s management of Vodafone Spain, led by CEO José Miguel García, has focused on these low-cost converged bundles to combat churn, having previously executed similar high-return strategies at Jazztel and Euskaltel.
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