Principal risks and uncertainties continued 62 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Risk factors
Why the risk is important
Key risk drivers
IT resilience and transformation Failures or disruptions of IT systems and infrastructure or the inability to modernise and manage the IT environment could negatively impact operations, services, customer experience, or financial performance. Risk trend: No change Risk owner: Chief Technology Officer Legal and Regulatory risk The risk of not complying with applicable regulation may lead to penalties, financial loss, criminal, and/or civil action, and reputational damage. Risk trend: New Risk owner: General Counsel and Company Secretary/Chief External and Corporate Affairs Officer Network resilience Major network outages could lead to dissatisfied customers and/or impact revenue. Risk trend: No change Scope decreased (Infrastructure competitiveness has been incorporated into the Adverse
A major outage in a data centre or a cloud provider hosting key IT systems could severely disrupt our operations. Delays in resolving incidents due to unavailability of end-of-service-life components can exacerbate the situation. Legacy IT systems that are unable to adapt and provide the features our customers require can hinder our ability to meet their expectations and maintain a competitive edge. We are exposed to ever-increasing regulatory requirements across our footprint. The complex regulations in the telco and technology sectors, coupled with fragmented application, deployment and enforcement, significantly increase compliance costs. Additionally, the continued introduction of new regulation heightens the risk of non-compliance, exposing Vodafone to fines, as well as the loss of customer and market trust. A major network outage could lead to dissatisfied customers and impact revenue, while failure to meet customer expectations could adversely affect market share, revenue, and customer trust.
Any major outages of global IT services could have wide-ranging impacts. Extreme weather events can disrupt operations and IT systems, while deliberate attacks on critical national infrastructure, including power grids and communication networks, may increase the risk of outages.
The regulatory landscape is becoming more complex due to expanding security, resilience, digital, data privacy, consumer protection, and ESG laws and regulations. Regulation impacts our operations globally, with accelerated introduction of regulation, heightened scrutiny and enforcement, and greater transparency obligations, each increasing our risk exposure. Geopolitical instability, extreme weather conditions, deliberate attacks, and recent global events increase the likelihood of major service disruptions. A widespread power failure across the Iberian Peninsula demonstrated the susceptibility of interconnected energy and network systems, prompting targeted mitigations to strengthen service continuity. Likewise, the deliberate attack on the Berlin power grid underscored the need for robust power‑resilience measures across our footprint. These incidents reinforce that, while our network remains resilient, external shocks can significantly affect service availability, customer experience, and operational performance. Managing multiple large transformation programmes requires careful coordination. In Germany, transformation focuses on efficiency and adapting to the changing competitive environment. Whilst the VodafoneThree integration addresses several market challenges, it also carries the risk of disruption and further operational complexity if not managed correctly. Our broader transformation programmes aim to deliver cost transparency and opportunities to drive efficiency, while also supporting more informed and effective business decision-making as well as the operating model that centres around the creation of effective commercial capabilities, replatforming, and AI-driven services transformation. Changes in the political landscape outside Vodafone’s control may significantly impact our progress on digital transformation. For example, US and China tensions resulting in a ban of high-risk vendors, the European Commission’s proposed Cybersecurity Act, recent tensions in the Middle East, a potential conflict between China and Taiwan, the inflation in the cost of servers and related hardware due to the AI infrastructure expansion, and additional US tariffs could impact product availability and prices.
market competition principal risk) Risk owner: Chief Network Officer
Strategic transformation execution Failure to effectively transform Vodafone to adapt to future challenges and demands that could increase operational complexity, as well as impact growth and competitiveness. Risk trend: New Risk owner: Executive Chairman Vodafone Germany and CEO European Markets
A significant transformation programme failure, including large scale integration or modernisation initiatives designed to accelerate growth and respond to challenging market conditions, could reduce revenue, or require changes to the business model.
Supply chain disruption The risk of disruption in the supply chain and over-reliance on key suppliers may result in the inability to execute strategic plans, increase costs, limit supplier options, and adversely impact network quality. Risk trend: Increasing Risk owner: Chief Financial Officer
Political decisions and regulatory requirements affecting our ability to use equipment from specific vendors could cause trade and supply chain disruptions. This can reduce our service delivery resilience, customer satisfaction, and the Company’s competitive position. Additionally, ongoing geopolitical tensions have created uncertainties in the availability of key materials and components, meaning that any disruption in the supply chain can significantly affect the industry’s ability to deliver reliable and uninterrupted services.
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