FY26 Q&A Transcript

Vodafone Group Plc FY26 Q&A Transcript

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BNP Paribas Exane

Bank of America Merrill Lynch

New Street Research

Goldman Sachs

Morgan Stanley

Citigroup

UBS

JP Morgan

Berenberg

Joshua Mills BNP Paribas Exane

Hi guys. Thank you for taking the question. As you've called out in the presentation, there's been some noticeable improvements in German net promoter scores customer satisfaction levels. The financials would suggest that's come at the cost of a lot of additional investment, which you said doesn't need to increase further next year. Should we take from that message that Vodafone's comfortable to see this level of continued subscriber losses as long as you can continue to execute on the price actions you mentioned? Does your guidance assume that the subscriber losses will improve a bit throughout the year? If I could just squeeze one small one in on the Germany EBITDAaL outlook, a very clear answer for next year on EBITDAaL declining. In previous years you've talked about the ambition to stabilise Germany EBITDAaL growth in the medium term. Does your new multi-year free cash flow guidance still assume that Germany EBITDAaL will stabilise in the next, say, two to three years? Thanks. Maybe I start from the end, which is the prospects for Germany, and then I go back to your point around net adds and volumes in Germany. If I look at, if I look beyond FY27, let's position it this way, and step back, what do we see when we look at Germany? We see the largest telco market in Europe, a market in which we have a powerful brand and scaled operations across both fixed and mobile. If you think about our P&L drivers, our TV headwind obviously will not last forever. If you think about mobile, which is the other area of pressure that we see today, if you look backwards, the German market has a history of positive ARPU development in mobile, and this is because every single operator in Germany has large customer bases. If I look ahead, I also consider that we have some additional growth drivers. Digital services, we have talked about how this is going to support B2B. It has brought it back to growth in this quarter. We continue to grow it in the coming year, and also productivity opportunities as we have all across the Group. If I think about beyond the near term, I see us in Germany in a strong position in the largest market in Europe. We are making operational progress, and we are well-placed to stabilise and grow. Now, if I move from the future back to the current position on the net adds front, I think it's very, very clear that what's happening in broadband is we are suffering from an impact on the gross adds component of the volume equation because we have increased prices. We are seeing better net promoter score, the quality of our services keep being rated at the top of all the independent tests and we have taken the opportunity to do a number of price increases. We are now with a front book which is ahead of the back book in Germany. If you look at Q4 specifically, we have had for the first time the full impact of the price increases of calendar 2025. Additionally, we have had the last price increases we did in January within the quarter. It's fair to say that also during the quarter we saw more promotional activity actually at the low end of the market in the DSL offers from the incumbent. As a result of all this, as I said, lower gross adds, but actually still happy, very happy with our churn levels. Yeah, we talked about this in previous calls. Again, highest ever level of customer satisfaction in our cable network are translating into good levels of loyalty in line with the rest of Europe, actually better than where we are in the UK. The overall value equation is working well, and this is what we care about. We have talked about the fact that today fixed line has been stabilised overall in Germany despite the drag of TV, and this is because it includes an improvement in the trends of Consumer broadband, which is driven by inflow ARPU, growing by 30% year on year. Bit of an impassionate speech to say to your question around customer losses, these are only a part of the equation. What we target ultimately is revenue growth and revenue growth, standing back, from our 10 million customer base. I hope this helps. Yes, thank you very much for taking the questions, guys. Margherita, I think if I was to reread the transcript so far, you've mentioned on multiple times how critical scale is. What I wanted to understand was the market where you are most exposed, and I talk purely on numbers today, is Germany, and we have reports of Telefónica interest in 1&1. I think, you know, what I would like to know is how critical is that 12 million customer base to your scale, in Germany. I think Luka in the past suggested that if there was any interest from Telefónica, you guys would not counterbid. How critical is that asset to you in Germany? Thank you.

Margherita Della Valle Vodafone

David Wright Bank of America Merrill Lynch