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
Powered by FlippingBook