Vodafone has upgraded its annual cost-savings target for VodafoneThree to £1bn by FY32 from £700m by FY30, as it outlined plans to accelerate growth and cash generation from its UK joint venture.

The group is targeting mid-to-high single-digit annual digit adjusted earnings growth between FY25 and FY32, while operating free cash flow is expected to more than triple over the same period.

Vodafone, which agreed to buy out CK Hutchison's stake in the business in May, said the higher savings target reflected progress with its execution plan, including further efficiencies as the network build is completed, network rationalisation and the benefits of full group ownership. It also expects the merger, which completed in May 2025, to generate additional revenue synergies.

CEO Margherita Della Valle said: "We are issuing new bolder financial targets and we are outlining the execution plan we have in place to deliver these.

"We created VodafoneThree because we saw the opportunity to transform the UK market. To create the scale to invest. To deliver a step change in network quality and customer experience across every region of the UK. And to build a stronger business, creating sustainable long-term value.

"After a strong start, we now have even greater confidence in the opportunity ahead. That’s why we are upgrading our cost target to £1 billion, with VodafoneThree set to become an increasingly important contributor to Vodafone’s growth ambitions.”

According to the telecoms firm, VodafoneThree had maintained strong commercial momentum since the merger, with record-low customer churn across its brands and growing average revenue per user. It is investing £11bn over ten years to build a next-generation 5G standalone network and expand its broadband, fixed wireless access and converged services.

Dan Coatsworth, head of markets at AJ Bell, said: “The integration process after a merger is notoriously fraught with challenges, so to see Vodafone upgrade its targets for its VodafoneThree combination in the UK is encouraging.

“The annual cost-savings target has been hiked by a meaningful amount, and earnings and free cash flow targets have also seen a big uplift.

“After years of going nowhere on the stock market, today’s announcement is the latest feather in the cap for chief executive Margherita Della Valle as she continues to execute on a turnaround of the group."

However, Vodafone shares fell 2.5% to 124.55p in mid-morning trading as investors appeared to focus on the near-term execution risks despite the upgraded long-term targets.

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