Vodafone H1 FY25 Results Presentation
Q3 FY26 Results Q&A Webcast Transcript
1
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Highlights Good morning, everyone, and thank you for joining us today. Alongside me, I am pleased to be joined by Pilar, our new Group CFO. Welcome, Pilar. Overall, we continued to perform well and have maintained our good top line momentum, having grown Group service revenue by 5.4% this quarter. This was supported by growth across both Europe and Africa, with continued growth in Germany, and strong contributions from both Africa and Türkiye. Moving to profitability, Group EBITDAaL grew by 2.3% in Q3 and 5.3% year-to-date, which is fully in line with our expectations, and our trajectory to deliver the upper end of our FY26 guidance. Beyond these results, we continued to make good progress against our strategic priorities. In Germany, we continue to improve our customer experience. In mobile, our network test results have continued to improve despite having completed the migration of 12 million 1&1 customers, one of the largest in European telcos. We now have more mobile customers using our network than any other operator in the country. And in fixed, our NPS continues to grow quarter after quarter, and we have just increased upload speeds nationwide across our cable network. This has been supportive of our value strategy. Whilst our price actions have impacted gross additions in the quarter, the improvement of our inflow revenue, with new customer ARPUs now 21% higher year-on-year, has stabilised Consumer broadband revenues. However, we still have more to do in what remains a competitive market environment. Moving to the UK. Following an exceptionally fast start, our integration and network investment plan is now well underway. Our initial network upgrades have been delivered ahead of schedule, and are already enabling customers to benefit from greater mobile coverage and faster data speeds. The progress that we have made in only seven months is already visible in independent network tests and has been noted by the UK regulator. However, this is just the start of our 10-year plan to invest £11 billion to build UK’s leading 5G network. And stepping back, I remain very excited about the potential of this merger. Vodafone has more mobile assets than any other operator, is the fastest growing fixed broadband provider, and we have clear line of sight on £700 million of annual costs and CAPEX synergies, plus opportunities to realise revenue synergies on top.
05 FEBRUARY 2026 /10:00am Vodafone Q3 FY26 Q&A VODAFONE PARTICIPANTS Margherita Della Valle Vodafone Group Chief Executive Pilar López Vodafone Group Chief Financial Officer Robert Grindle Deutsche Numis Emmet Kelly Morgan Stanley Polo Tang UBS James Ratzer New Street Research Andrew Lee Goldman Sachs Joshua Mills BNP Paribas Exane David Wright Bank of America Merrill Lynch Paul Sidney Berenberg Carl Murdock-Smith Citigroup ANALYST PARTICIPANTS Maurice Patrick Barclays Akhil Dattani JP Morgan
2
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Turning to Africa. In December, we announced that we would be acquiring a controlling stake in Safaricom, one of the strongest telcos on the continent. This transaction will strengthen our position in Africa even further, as it simplifies Vodacom and reinforces its leadership position. We have structural growth opportunities with: • A rapidly expanding population; • Increasing data usage; and • Accelerating demand for digital services. We are in a unique position with our • Scaled networks; • Digital platforms, and • Admired brand. Vodacom is already delivering a strong performance today, and it provides some of the most exciting opportunities across the Group. Finally, turning to Business. We have now completed the acquisition of Skaylink, which will support our growth in digital services, across key areas, such as cloud and security. In summary, as we enter the final quarter of the year, our performance has been good. Across the Group, we are seeing net promoter scores increasing, complexity reducing and we are accelerating our opportunities in digital and financial services. These are solid foundations for our multi-year growth trajectory. To summarise we are trading in line with our expectations, and we are on track to deliver the upper end of our FY26 guidance. With that, Pilar and I look forward to answering your questions. — Margherita Della Valle, CEO Vodafone Group
3
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Maurice Patrick Barclays
Maybe just diving straight to Germany, if that is okay. If I look at slide four in the presentation, you show stabilisation of service revenues. That is obviously helped by 1&1. You have got weaker net adds on the broadband side, but a stronger front book ARPU, and you have talked about that value the volume. But investors asked a lot about the trajectory of EBITDA in Germany, specifically around this year and next. I think you were down 4% in the first half. Could you give us a sense of where you see the EBITDA landing for the second half of this year and then thoughts into the stabilisation, if that is the case next year.
Margherita Della Valle Vodafone
Sure. I will maybe let Pilar lead on the trends this year and then give you a sense of how I see Germany evolving.
Pilar López Vodafone
Yes. You have seen our numbers. If we look into the second half of the year, the most important thing is it will be in line with the reiteration of the EBITDAaL and free cash flow guidance for the Group and the Europe guidance that we have reiterated today. We expect the second half of the year in terms of EBITDAaL performance to be better than half one. We do not expect EBITDAaL to return to positive this year in half two. You have seen continued ARPU pressure in mobile, TV headwinds, the acquisition and retention year-over-year based on prior year activities. There are also tailwinds into half two. That is why the better performance than in half one, the lapping of the MDU, the wholesale 1&1 completion, full run rate in Q4 and the lapping of the MVNO. That is what you should expect for the second half of the year in Germany in terms of EBITDAaL. A better second half. Then, obviously, your question is, where are we going from here? Obviously, we will tell you more in May. Today is not the time in the quarterly results announcement to give a single market guide, but I think it is important to share what we see about the market, and as always, the moving parts. I will start to cover what we have really good visibility on for next year in Germany and then what is still open for debate. On the areas where we have good visibility, I would call out four areas. The first one, as Pilar mentioned, in the near-term, you should expect the TV headwind to continue. What you should expect also to continue into next year is the support to EBITDAaL from wholesale, obviously, to a lower level than this year but still positive. Then I would add B2B. The team is doing a great job in building a strong pipeline. You know how fast we are growing in digital services, but also beyond that. So, expect B2B to significantly improve as we move into next year. Then the fourth element is costs, as we probably have discussed before. Next year is the year for a variety of reasons where you should expect to see all the simplification actions that we have done on our cost base to show through the P&L. On these four areas, I would say, we have good visibility. Where there is still a degree of uncertainty, inevitably, is the consumer market and what is happening in the market more broadly, which, of course, is not entirely into our control. I would call out two different trends from what we see today. You mentioned it. We see an improvement in fixed broadband. We see an improvement in our numbers. And it is fair to say that from what we see, the general market environment is also more supportive. So moving in the right direction.
Margherita Della Valle Vodafone
4
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Mobile, which is in itself a key swing factor, of course, for the results. I would say, so far, no changes. So what we continue to see is just the price moves, which were done roughly a year ago or more that are washing through our base. This aspect around pricing still leave a degree of uncertainty on next year, as you can imagine. But what I can say is that even if nothing changes, you should expect our results to gradually benefit from all the actions you have seen us taking, focused on customer experience, focused on value. So expect continued improvement in this direction from our actions. The market, I think we will tell you more in May. Margherita, maybe I could follow-up on the prior question and just dig a little bit deeper into the German broadband message that you are giving us around value versus volume. I would love to understand a bit better the conviction you have around that journey. I guess, specifically, if you could talk us through the actions you have taken, you have mentioned in your slides another price up in January. Then how we should think about the way that impacts broadband losses going forward? I guess it is hard for us to know are there particular losses this quarter that washed through going forward? Maybe you could give us a bit of a journey from that. I guess within answering it, could you help us understand the extent to which competitors are replicating that directional trend? Any important variables that you might be seeing in the altnet market? Sure. So big picture what is going on in broadband. As you know, the market penetration has plateaued. The only operators that today are seeing any meaningful growth are the altnets in the rural areas. In that context for us, just reiterating what you have heard before, it makes sense to focus on value. Now there is one element of volume, which is very important, which is churn, from our perspective. On churn, I need to say, we are very pleased with our performance. Our fixed broadband churn in Germany, I may have mentioned it before, is now below the majority of all European market. It is below the UK. We keep quarter-after-quarter seeing our net promoter score on our cable network just beating another record. That is moving all in the right direction, and as you know, on the back of the investments we have done in our network and in our processes. What you have seen this quarter is the impact on gross additions from the price moves we have accumulated over now a series of months. Actually, to your question on what is going to happen next, what I can say is that, for Q4, given we have taken another price action just a week ago, you should expect from what we see similar trends on the gross adds side. What have we done on pricing? There is a slide in our presentation that summarise it because it is been really a step-by-step movement, and we may have commented in the past about the beginning of that movement. Since March, we have increased effective pricing on DSL. We have reduced the promo durations across the board. We have taken out starting credits. We have increased equipment cost, all the things you are familiar with. For Q3, this has led to an inflow ARPU level that is the best we have seen in at least three years, and is year-on-year up 21%, which obviously is material. Now I said we have moved again last week, and this is important because last week, we have really done a more-for-more move across our whole cable portfolio in Germany. This was coming with higher speeds, particularly higher uplink speeds nationwide, which have enabled us to do another step on pricing in a more-for-more fashion. Now what we see then is that the value equation is working today. You see it also in our fixed line trends in the P&L. Essentially, the drag on TV is still in there. But as you can see, slightly being now eroded because we have seen fixed broadband in consumer improving and is now stable. Now you asked about what is happening around us? Based on what we see, clearly the market will always be dynamic. But based on what we see today, we see also the market environment improving as we do our actions.
Akhil Dattani JP Morgan
Margherita Della Valle Vodafone
5
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
In terms of more broadly, as I said, it is a dynamic market. From my perspective, what you should always expect Vodafone to be doing is really maximise for overall service revenue trajectory, and that remains the absolute principle. Perhaps taking a more Group-wide holistic than a single country view. In Q3, we saw OSR growth firmly positive in Europe for a second quarter despite the tough comp in the UK and well into double-digit EM growth continuing. What can you say, if anything, and we are already a chunk through Q4, on your overall prospects for full year 2027 and beyond? Are you feeling more or less optimistic based on the nine months to-date? Thank you, Robert. Once more it is going to be about moving parts, because, of course, this is a quarterly update. But Pilar will tell you the direction of travel on these moving parts. To your question, what you will find is that it is all very consistent with our multi-year growth trajectory that we have been discussing since May. Maybe Pilar, you can take those? Yes, Robert, thanks for the question. Yes, as Margherita was saying, early days to provide exact detail. We will come back in May. But at a high level, we remain very confident on the multi-year outlook for adjusted free cash flow growth for 2027. Several components there that we need to take into account. From an EBITDAaL perspective, we expect continued good growth for the Group overall. Margherita spoke in detail about the German trends. We also expect in UK the first meaningful cost synergies to be delivered in 2027, which is a very relevant fact. From an EBITDAaL perspective, emerging markets, typically with lower inflation is likely to slow down. That is something again that you need to take into account in terms of EBITDAaL. But as I said, continued good growth for the Group overall into fiscal 2027. Then in adjusted free cash flow, you obviously have CAPEX. On that one, I'm happy to say that we remain very confident with the level of capital intensity that we have at the moment. In fiscal 2027, there will be a step up in the UK in line with that year being the peak of the investment programme in the UK. But again, all EBITDAaL and CAPEX consistent with the multiyear growth trajectory that we have been sharing with you. Then you also need to take into account below adjusted free cash flow. There are a number of moving parts. The main ones for me to flag right now have to do again with the UK in terms of integration costs. Fiscal 2027 will be a full year of integration, and we guided before on the size of the integration and restructuring costs in the UK overall and the fact that it was going to be front-loaded. So you have to take that into account into fiscal 2027. Then in terms of the spectrum, it is worth reminding everyone there will be the second instalment of the Turkey spectrum. Potentially, there could be some more spectrum in Egypt
Robert Grindle Deutsche Numis
Margherita Della Valle Vodafone
Pilar López Vodafone
where we have ongoing conversations. Beyond that, early to provide exact levels. We will come back in May. If you need any more in terms of the mechanics, Investor Relations can provide you more details if you need to.
Margherita Della Valle Vodafone
Thank you, Robert.
6
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Emmet Kelly Morgan Stanley
I had a question again on the Group. You are moving to a majority of Safaricom via Vodacom, and that obviously brings you control in Kenya, brings you M-PESA and also a growth business in Ethiopia. It looks like Vodafone and Orange have now emerged as the big leaders in African telcos. Can you maybe just give a few thoughts on what you think this move brings to you in terms of the portfolio, in terms of the growth outlook for the Group technology? And given where your balance sheet is post the sales of Spain and Italy, whether Africa is an area where you could look at further portfolio expansion going forward? Thank you, Emmet. In terms of opportunities in Africa, I think you have heard it in my introduction. We think we are in a really good position for making the most of the exciting growth opportunities in the continent. We have very healthy growth on population, data, demand for financial services and in B2B, actually strong demand now for digital services. Vodacom, I would like to say is what I would call the resident technology company in Africa, good and scaled network but also good and scaled platforms for the continent. The reason why it was a natural step for us to move to a controlling position in Safaricom was that this further simplifies the Vodacom estate and also strengthens it. In particular, we see big opportunities to continue across the continent to leverage our best practices, leverage our scale platforms. I was actually just two weeks ago in Egypt, for example. You might remember us having similar discussions when we merged Egypt into Vodacom a few years ago. We were in Egypt, and one of the outstanding element of our performance there is Vodafone Cash, which, again, comes from cross-fertilising idea and leveraging platforms across the continent. I am very happy with Africa, as you can imagine. You are right, it is taking a bigger role. It has a strong performance today, double-digit guidance upgraded now probably a year ago, everything double-digit and some of the most exciting growth opportunities. Now, you mentioned M&A, and it is important, however, to contextualise that. From our perspective, M&A now is more about what I would call bolt-on acquisition in the B2B space, where we are increasing, expanding our capabilities, and that is sometimes is faster done with B2B acquisition like you have seen with Skaylink. So I think there could be more moves like this also in Africa. Just have one question on the UK broadband market, because there has been lots of reports about potential consolidation with owners of VMO2 looking to acquire Netomnia and also TalkTalk starting an M&A process. If there is consolidation, how you think that this will impact both Vodafone and also the broader UK broadband market? For example, do you think pricing could improve? Or do you expect there to be more competition? Any thoughts much appreciated. The general thought is that a degree of consolidation, obviously, in the current environment makes sense in that space. What I can tell you is that we are looking at it from a Vodafone perspective. From our perspective, we are really pleased with our position in the UK, which is essentially a multi-partner play wholesaling from a range of partners. Actually, this is a play in the UK, but you can see it in different ways. We have the same objective ultimately in every market in which we operate, delivered in slightly different ways, but we are always keen to give our customers access to the largest gigabit footprint available in the country. The best way for doing this in the UK is to wholesale from multiple partners: OpenReach, CityFibre, Community Fibre. Who knows there could be more in the future. With 22 million households, this is one of our key drivers for growth. So we expect to continue to manage the markets in exactly the same way. It is working for us. It will continue to work through a degree of consolidation.
Margherita Della Valle Vodafone
Polo Tang UBS
Margherita Della Valle Vodafone
7
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
The general principle is maximum access to our customers to the gigabit footprint. You see it in Germany. Three out of four of German households have it through us. You now also see it in Türkiye. It is our general approach to the market. The question I wanted to ask today is really about FWA, please. Firstly, in the UK, just to understand some of your near-term delivery and longer-term aspirations. It looks like in the quarter, your FWA adds fell to 11,000 from 21,000 the prior quarter. What has driven that? Do you see the scope for that to reaccelerate in the next few quarters and thoughts longer term? Also in Germany, do you see an opportunity to deploy more FWA in the rural areas there? Thank you, James. Starting with the UK. The short answer is yes, we expect FWA to continue to grow. Two things happened in Q3. It is a combination actually of seasonality. The quarter with December in it is never a strong quarter for FWA, and also price competition around the Black Friday week, particularly around the lower end of the market in terms of speeds. Both factors affected 11,000 versus a higher number before. But equally, it will continue to grow. Now this being said, just as I may have done already last time when we had this discussion, certainly, we need to contextualise what we see in terms of FWA opportunity, which is, for us, essentially the most important point is using FWA for our customers on the way to fibre as we can be there now and then when fibre gets there, connect them seamlessly. But the key big numbers are always going to come from the fibre side of fixed broadband, but more growth ahead for sure and an opportunity for us in the UK for sure. Is it an opportunity also in Germany? This is a really good question. We have had actually an FWA product on the market in Germany for many years. It is there. Yes, you might remember, GigaCube. I would say it is a less lively market than the UK is. Two reasons probably that I can think of. On one hand, the depth also historically of our gigabit penetration with our cable network, I was saying just earlier to Polo that we cover with the full footprint, including the five million of fibre wholesale, three out of four of German households. So Germany, from that perspective, was their first. Then maybe customer behaviours are also impacting. This also depends on trade-offs that they make between different products. But it is a good question still, and it makes sense to just reflect. All markets will have a degree of FWA, then it depends on the level of coverage, mostly how far developed it goes.
James Ratzer New Street Research Margherita Della Valle Vodafone
James Ratzer New Street Research Margherita Della Valle Vodafone
Why do you see that as a migration to fibre? Because don’t you make a higher gross margin on FWA than wholesale fibre?
It is, because ultimately there will always be layers of services with different level of efficiency and effectiveness. Therefore, it is quite likely that for the majority of people, that fibre arrives into your city or your village and there is a natural step towards that. There will always be areas that either will have fibre very late or never, and therefore, that will remain permanent. But I do not think it is logical to think of it as a permanent feature. Again, we could discuss for long. There is also a type of customers, students, people who move a lot, may find it very convenient, obviously. But if you are in a residential area, in the end, that is the frame we are looking at it with.
8
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Andrew Lee Goldman Sachs
I had a question on towers and your thoughts on Vantage. Over the last year or so and particularly a few months, we have seen towers derate a lot with concerns on contract renegotiation risk, consolidation risk, satellite risk. Do you share those concerns, both as an owner of Vantage and as Vodafone customer of towers? Do you think now is a good time to buy the rest of INWIT, given it is the cheapest it has been for a very long time? Starting maybe from the end. I would say we are happy with our position from an INWIT perspective, specifically, of course. There will be different trends as always in the market. More broadly on the tower space. First of all, we are happy to have achieved our initial position that we were targeting with the full 50:50 in Vantage. We are happy with how the Vantage growth is actually developing. You can see this in its financials and it is a good contributor of dividends to the Group. So happy with all of that. You are right, the tower market is evolving, and we think that there will be further possible changes across the footprint in which we operate in Europe with potential more movements towards consolidation. So in terms of our position within Vantage, that will really depend on how we see the market more broadly evolving and whether there are other opportunities. Strategically, we would consider those as they present itself, for example, if there is an opportunity of consolidation. So we are happy with the operations as they stand today, both sides. We will keep looking at the evolution of the market and assess at every point in time in the next few years what is the appropriate position for Vodafone. Just specifically on INWIT. Obviously, I am not going to say you were able to buy it in today, but this is a stock that you have historically said you might want to buy in the minorities over time. And obviously, the multiples have come down a lot in terms of valuation. Is this an opportunity to be nimble and take advantage of that, or that is not obvious that that is the case at this point in time? As I said, pretty happy with where we are with INWIT, but of course, it is for the Vantage Board to decide as it goes along, what is the most appropriate position on all its participations. I just want to dig into the German service revenue trends in a bit more detail. I think last quarter, you gave some helpful colour on how much of a tailwind to the 1&1 revenues were in the service revenue growth. Last quarter was about €80 million of revenues, which were incremental. Expecting about €100 million this year. If you could confirm whether that is the case or not, that would be very helpful. Related to that, in the introductory comments, Margherita, you said we should expect the wholesale tailwind for 1&1 to continue. You also mentioned that the MDU headwind would have an impact. I just wanted to understand, are we now at the maximum MVNO revenues in this quarter for 1&1? Or will that continue to increase on a quarter-on-quarter basis just as we get into Q4? Then secondly, are there any MDU revenues to fall out still? Because looking at the chart on the bottom left of slide four, it looks like there was no real impact this quarter or last quarter, and I had thought all of those MDU headwinds were out of the business.
Margherita Della Valle Vodafone
Andrew Lee Goldman Sachs
Margherita Della Valle Vodafone Joshua Mills BNP Paribas Exane
9
Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Margherita Della Valle Vodafone
Thank you, Joshua. It is actually a simple answer because on MDUs, obviously, we have completed the transformation. Therefore, the new law impact is fully behind us. Then on 1&1, we are hitting a run rate now, transfer completed in December. So the €0.1 billion of quarterly revenue run rate is achieved for now onwards. Now this being said, obviously, as we go into a full year of revenues, obviously, this plus the fact that we have entirely lapped another wholesale element, which was the loss of Lyca, will be supportive to our trends next year. But maybe IR can help you with the full equation in more detail. My question is on Germany again, but a little more strategically, we can see the value now and support that the 1&1 deal has given, and it is a very margin-rich wholesale revenue stream. There is obviously a lot of debate in the market around Telefónica’s M&A ambitions and one obvious route for them would be to try and regain control of the asset. I know in the past, you have pushed back a little on your need to compete in such a scenario. But could you just talk to us about how you would consider the value of 1&1 to Vodafone as opposed to the value of market repair. Obviously, you do have a lot of balance sheet headroom right now. You have giving €2 billion back to shareholders in buyback, and this is obviously a critical asset for you guys. I am just interested in how you think about that trade-off if we saw the headline offer from TEF today? Thank you, David. As you know, generally speaking, we do not particularly like to speculate on hypotheticals. Certainly, you raised the point on if consolidation was happening in this direction, how would you see it? To that, I would respond that, first of all, I think it is important to keep in mind a little bit the history of the national roaming agreement. Just to reframe the timelines, we agreed to move the national roaming agreements from Telefónica to us in the summer of 2023. It then took a good 12 months, as you might remember, to transform this agreement into a full-blown contract. After that, we completed the migration effectively in December. So it took 2.5 years from decision to full migration. What if consolidation was happening in a direction that would bring the national roaming agreement outside of our perimeter? The way to think about it from our perspective is on a mid-term, again, timing is relevant. From a mid-term perspective, there would be, of course, a risk on those revenues. By the way, keep in mind, those revenues would not anyway remain exactly at the same level as today, as 1&1 progresses its network build. But there would be a risk to those networks. The risk, as you mentioned, should be seen in conjunction with the conditions of the consolidation. Again, it is incredibly difficult to speculate today. But in any consolidation play, there are some changes. Those changes affect market dynamics. There is always a range of puts and takes that we would have to consider if that hypothetical in the mid-term was playing out. That is as far as I can speculate with you today.
David Wright Bank of America Merrill Lynch
Margherita Della Valle Vodafone
David Wright Bank of America Merrill Lynch
I appreciate that answer, Margherita.
10 Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Margherita Della Valle Vodafone
Thank you.
Paul Sindey Berenberg
It is really on the value over volume strategy that you flagged in Germany, which I was personally very pleased to hear. We have seen a number of operators over the past 12 months giving strong indications of wanting to play that value game to investors and competitors: DT and yourselves in Germany, KPN in the Netherlands, Swisscom in Switzerland, the list goes on. Do you think this is now the way forward and the approach we should take in all of your markets for both mobile and broadband? I appreciate emerging markets might be a little bit different. But certainly for Europe, is this the approach the industry should take in your view to try and get the whole market up in value and not obsess about volumes? Obviously, a very open question, Paul. I cannot speak for the market. But what I would love to see and I can’t speak for the market, but what I would love to see and encourage, and you have heard me in November making the same speech is, I would love to see telcos performance judged on overall value, service revenue trends, and move beyond the headline of net adds. Now as you heard me say before, this is particularly true for mobile because in mobile, the range of quality of what is behind scene numbers is just so huge that it is truly and entirely distracting. Considering the full equation of value is also very important, as we discussed earlier, in broadband, because ultimately, volumes are only half of the revenue equation. As operators, our job is to always, in dynamic markets, manage that equation for the best overall trajectory. It would be fantastic if we moved from an analysis and reading perspective to a balanced view that mixes all the KPIs together. Certainly, that is what we do and that is what makes sense in our markets, not just look at one side of the equation. I would love to hear your comments on the recent EU Digital Networks Act and also the Cybersecurity Act, in particular, your thoughts on the potential for spectrum period elongation and also on the usage of high-risk vendors. What kind of impact could the proposals make in the medium and longer term? It is worth saying that this year is probably an important moment because after 10 years in which we did not see much change, this year we would have the opportunity in the EU to see reform for telcos, which, as you know, is very much needed. I would say we are judging all the proposals that are coming through, and it is important to say we are just at the beginning of the processes. As you know, it may take quite some time to get to a conclusion and to know exactly the direction we are taking. But to tell you about our reaction to what is going on. We judge, if you want, the direction of travel in three areas: consolidation and competition, investment, and innovation. On consolidation, as you know very well, no news at this stage. We have to wait for the merger guidelines review. It looks like we will not see any real-world impact from any changes until at least 2027. On investments, the news are mixed, and you called out the important parts. On one end, we look very positively at the idea of perpetual spectrum licenses with automatic renewals that would create a much better environment in terms of certainty for investment. On the other hand, the draft Cybersecurity Act is actually injecting a degree of uncertainty.
Margherita Della Valle Vodafone
Carl Murdock-Smith Citigroup Margherita Della Valle Vodafone
11 Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Now we are only at the beginning of a very long conversation because that is in the space of security, so firmly in the remit of the Member States, but we could expect long discussion between the Commission, the Parliament, the Member States. What we will be engaged on is to make sure that actually we bring clarity, because it is really important for us to manage any change in the context of our long-term investment cycle. Then the third point, which is innovation. I would say some positive news there, less maybe in the spotlight, but of course, much more to do. Again, we will be vocal in this direction. The positive news are around single market steps because we have a proposal for passporting, which is really useful for us for our digital platforms like IoT, which work across countries. Then also satellite, again, very important for our strategy, single satellites authorisation across the EU that really simplifies our world. But I said that is really not enough. The one area which is something I keep pushing for is net neutrality in Europe, still, even in the current draft, one-size-fits-all approach, which then creates obstacles to driving innovation in B2B, in particular, through slicing and other services. Now I will go back to where I started. All of this is still very much in draft. As you know, with European processes, it will take some time until we actually know where we land. Thank you all for joining us today, as usual. In summary, as you have seen, we are performing in line with our expectation, and we will close the year at the upper end of our guidance range. Our operational progress is consistent with our multi-year growth trajectory. We look forward to see you all for our full year results in May. Thank you.
Margherita Della Valle Vodafone
[END OF TRANSCRIPT]
12 Vodafone Group Plc
Deutsche Numis
Morgan Stanley
New Street Research
Goldman Sachs
BNP Paribas Exane
Bank of America Merrill Lynch
Barclays
JP Morgan
UBS
Berenberg
Citigroup
Page i Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12Powered by FlippingBook