LONDON Vodafone said on Wednesday it had agreed a long-term, exclusive national roaming partnership deal to provide 5G mobile coverage to 1&1's customers in Germany, in a deal which it said would be cashflow accretive from its 2026 financial year.

Vodafone's new Chief Executive Margherita Della Valle is leading a turnaround of the group, and as part of that is seeking to improve performance in its largest market, Germany, where it has lost customers.

Shares in British company Vodafone rose 3% in London and 1&1 soared 15%, set for its biggest one-day gain since 2008. 1&1, the mobile phone operation of German internet provider United Internet, is building a fourth mobile network.

The deal knocked shares in Telefonica Deutschland, as 1&1 teamed up with its competitor Vodafone. Shares in Telefonica Deutschland's parent company Telefonica also slumped more than 7% in Madrid.

Vodafone said in its statement on Wednesday that the commercial agreement with 1&1 was for 18 years, and would start to deliver the 5G coverage to 1&1 customers from the second half of 2024.

It added that wholesale costs would be indexed to Vodafone's mobile network cost to reflect the impact of inflation and technological developments.

(Reporting by Sarah Young; Danilo Masoni and Hakan Ersen)