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Vodafone Group Plc
Morgan Stanley
BNP Paribas Exane
Bank of America Merrill Lynch
New Street Research
Deutsche Numis
Forward-looking statements
Barclays
JP Morgan
Citigroup
UBS
Berenberg
If I could ask a little bit about the EBITDAaL run-rate for the second half and also next year. You have delivered 6.8% organic year-on-year growth, you tightened the guidance towards the upper end of the range. I think if I look at the full year guidance, it implies 4%-5% growth for the full year. So your guidance, even at the high end, seems to imply a slowdown versus the first half, despite Germany probably having easier comps as you exit the MDU drag. Maybe you could help us understand some of the EBITDAaL levers in second half. I know you called out higher SAC in the UK, for example. It is probably a bit early to talk about FY27, but if you could give us some indications of some of those building blocks, that would be very helpful. Thank you.
Maurice Patrick Barclays
Margherita Della Valle Vodafone
Sure. Luka, all over to you.
Luka Mucic Vodafone
Excellent. Well, first of all, of course, we are very, very pleased with our performance in H1 on the EBITDAaL front. This was really a combination of very strong emerging markets growth, the UK doing very well, and then Germany improving as well over the last year, given that the MDU impact is now dissipating and we had the benefit of wholesale. If you look forward to the second half, yes, our outlook at the high end of the range implies a slowdown. There are three factors that I would call out for that. On the positive front, we absolutely expect Germany to continue to improve in H2 because then we have zero MDU impact, and we will reach the full run rate of our wholesale migration of 1&1 this quarter. So from Q4, we will then be at full run rate, just standing at around 11 million. So we are almost done with the migration there. So this will help, of course. But on the flip side, first of all, we continue to expect that our emerging markets growth contribution will trend down given that inflation moderates. You have seen some of that already in the first half year. I think that trend can be expected to continue. And also the UK, which had a very good first half, will see a slowdown in EBITDAaL growth, first, because - I know I have talked about that already on the last earnings - but there should be a slowdown in top line growth, in particular, in Q3, as we are facing very tough compares, in particular in our B2B business, where we had a positive one-off last year, which should then sequentially increase and improve going into Q4 and beyond into FY27, but it will dampen the performance. We also had some phasing impacts in the strong performance in the first half year, in the sense that the marketing expenses that are planned for this fiscal year in the UK are more back-end loaded to the second half year. If you pair that up with the emerging market slowdown, that is driving the expectations. Now FY27 is, in particular for me, very far out. Obviously, I am sure Margherita and Pilar will be back to give you a precise outlook going into FY27. From my perspective, perhaps just some high-level puts and takes. First of all, we would expect the UK to be a very positive contributor and have a strong EBITDAaL performance based on the fact that we expect, for the first time, more sizable synergies from the merger coming together. For this year that was really basically no contribution from synergies, but it will start to step up in the next year. In Germany, we will face puts and takes. Obviously, in the first half, the benefit from the MDUs being fully out of the numbers, and in Q1, still a ramp-up effect from the wholesale migrations. But then for the remainder of the year, they will be out of the numbers in terms of year-over-year help. So then we will have to see what the market conditions do to see what that means for the German performance.
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