Vodafone H1 FY25 Results Presentation
H1 FY27 Results Q&A Webcast Transcript
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Vodafone Group Plc H1 FY27 Q&A Transcript
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10 November 2026 (10:00am) Vodafone H1 FY27 Q&A VODAFONE PARTICIPANTS Margherita Della Valle Vodafone Group Chief Executive Pilar López Vodafone Group Chief Financial Officer ANALYST PARTICIPANTS Akhil Dattani JP Morgan Carl Murdock-Smith Citigroup Andrew Lee Goldman Sachs Joshua Mills BNP Paribas Exane David Wright Bank of America Merrill Lynch James Ratzer New Street Research Robert Grindle Deutsche Numis Polo Tang UBS Emmet Kelly Morgan Stanley
H1 FY27 Highlights Good morning, everyone and thank you for joining us. Before moving to Q&A I'll provide an update on the actions we are taking as we begin our new chapter as a simpler, stronger and growing business. We made a strong start to our new growth chapter with good financial performance, growing customer satisfaction and a fast start with our cost programme that we announced in May. This underpins my confidence to upgrade our financial guidance for the year. As I mentioned simpler, it's worth highlighting that we have continued to simplify our portfolio during the first half of the year, completing two important transactions in the UK and with Safaricom in Kenya. In June we announced that we increased our stake in Safaricom, strengthening our exposure to one of Africa's leading operators and our class financial services platform M-Pesa. In July we took full ownership of VodafoneThree in the UK, giving us greater flexibility to move faster and capture 100% of the value created by the largest mobile operator and the fastest growing broadband provider in the market. As you heard from us last month at our VodafoneThree investor briefing, we've already seen the benefits of our 100% ownerships reflected in our plans. We raised our annual cost and capex synergy targets and provided a confident mid- term outlook with operating cash flow in the UK expected to more than triple by FY32. These transactions are a great example of how we are building a more focused Vodafone with even more exposure to attractive long-term growth opportunities. And that leads me on to talk about our good growth momentum and the strong start we've made in our multi-year growth outlook. I'm very happy with our overall Group performance in the first half of FY27, as we continue to see improvements across all Group's key metrics. Group service revenue growth accelerated to 6.4% in Q2, the highest in three years, with both Europe and Africa growing. We also delivered the best-ever growth in Vodafone Business at 6.6%. This was supported by a record performance from our digital services portfolio, as we continue to enhance our propositions with the smart, secure and sovereign solutions that our B2B and public sector customers need. In our emerging markets, once again, we reported double-digit organic growth in both Africa and Türkiye, which continues to translate into strong growth in Euro terms. Growth in adjusted EBITDAaL for the Group also accelerated to 6.4% in the first half, supported by strong top-line growth and margin expansion. And most importantly, we are on track to deliver very strong growth in adjusted free cash flow. And this is just the first year of our multi-year double-digit cash flow growth trajectory. Looking at our FY27 outlook, we said in our Q1 update in July that we were tracking towards the upper end of the Group guidance ranges. And this was after only three months of our financial year. I'm really pleased that with such a strong first half, I'm confident to upgrade our outlook. To translate what this means in percentage terms, the midpoint of our upgraded guidance range implies organic growth just above 20% in Adjusted free cash flow. Whilst I'm very happy with the group overall performance, I'm under no illusion that we still have much more to do in Germany. But if you look beyond the headlines, you can see that we've turned the corner in important parts of our business, with consistent growth in consumer broadband and in B2B.
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Vodafone Group Plc H1 FY27 Q&A Transcript
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We also see continued improvements in customer satisfaction across all our products. We continue to invest in our scale mobile and fixed networks and simplify our customer journeys. We're also taking action to further step up our productivity in Germany with the next phase of our headcount reduction programme. Yesterday we announced 2,300 role reductions. This means that we will have reduced the headcount in Germany by 40% since we began our transformation. Looking now to the rest of the Group, we have continued to make good progress in improving our customer experience, simplifying our business and driving sustainable growth. Starting with our number one priority, our customers. We are improving customer experience by removing friction, resolving issues faster, often with the assistance of AI, and offering new propositions such as SuperMobile in the UK. And we can see it in our results. We hold leadership positions now in customer satisfaction in 12 of our markets. Sentiment within our customer base is improving across all our segments. And most importantly, our mobile customer loyalty continues to grow. From a simplicity perspective, we have started the next phase of our cost transformation journey, building on a long track record of driving change inside Vodafone. As you will remember, in May we announced that we will deliver over €2.0 billion annual gross savings by FY30 across Europe and our shared operations. This will translate into over €1.0 billion in annual net opex savings. This is a comprehensive programme. We will remove more than 30% of our addressable costs. We have made a fast start, delivering over €200 million of gross savings in the first six months, supported by 3,000 role reductions, as well as the first €50 million synergies in the UK. We now have a clear line of sight on a net reduction in opex of over €200 million for the full year. The delivery of this programme will have a meaningful impact on our results. The net savings target is equivalent to more than 10% of our Adjusted EBITDAaL in Europe, driving margin expansion in the years ahead. And that takes me to our third strategic pillar, growth. You've heard me talk about Europe. We are taking structural actions in Germany, see unique opportunities in the UK, and we'll deliver the next wave of productivity growth and margin expansion. There are two other important growth levers within our portfolio, Africa and B2B. In Africa, the growth drivers remain attractive, growing customer base, underpinned by population growth, increasing data usage, expanding next-generation connectivity and Africa's largest fintech platform with over 100 million users and millions of merchants. And in B2B, we are one of Europe's leading platforms for businesses, with 5 million customers. We continue to gain share in growing markets as we expand our range of products and services, bringing the best of connectivity, but also Cloud, Security, AI, and other digital solutions together to help businesses and the public sector accelerate their digital transformation and adoption of AI. And with our sustained digital services growth, we now have a portfolio with revenue in excess of €2 billion, meaning we have moved firmly beyond core connectivity into non-linear growth opportunities such as Cloud, IoT, and Security. Taking this all together, through the continued execution of our strategic priorities of customer simplicity and growth, we are well positioned for the future. Our growth will be driven by our strong market positions and the full breadth of opportunities across Europe, Africa, and B2B. It is these strong foundations that underpin my confidence in our medium- term ambition to deliver double-digit organic growth in Adjusted free cash flow. This year, we have made a strong start, which enables us to upgrade our FY27 Group guidance. And just to recap, the midpoint of our new Group ranges imply that our organic growth will be accelerating to 7% for Adjusted EBITDAaL and 21% for Adjusted free cash flow. And with that, Pilar and I are looking forward to your questions. - Margherita Della Valle, Vodafone Group Chief Executive
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Vodafone Group Plc H1 FY27 Q&A Transcript
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Hi, good morning. Thanks for taking the question. I've got a question, Margherita, on the guidance upgrade that you talked us through just now. There's two quick parts to it. The first is that you were previously guiding to the upper end of your former ranges and the upper end of your former range is now the midpoint of your new ranges. So, I guess I'd love to understand what the messaging is here. Is it optimism that is the upper half of this range? And can you sort of talk us through specifically where the greater optimism is in the business as a whole? And the second piece of it is in the mix, you've left the European guidance unchanged. H1 EBITDAaL was down 1%. The implied H2 is anywhere from -2% to +6%. So, it's quite a big range implied for H2. Maybe you could help us understand what are the key swing factors for H2 that determine where you come out for Europe? Thanks a lot.
Akhil Dattani JP Morgan
Thank you, Akhil. And maybe, Pilar, you can build on where is the optimism coming from?
Margherita Della Valle Vodafone Group
Thank you, Akhil. Thank you for the question. And as you rightly said, in July, we were already expecting to deliver at the upper end of the previous ranges. And since then, we've really seen a strong momentum in our execution. We've seen it in the UK, which is performing strongly with top line delivery and the synergy delivery. We are seeing in Germany consistent growth in consumer broadband and in B2B. And this has allowed us to absorb the impact of the European Court of Justice ruling, remember, earlier in the quarter, which has had an impact of €100 million euros on our EBITDAaL. And that has allowed us to reconfirm the Europe outlook. Beyond Europe, you've seen the strong performance in Africa and Türkiye in the first half and we are expecting that good growth to continue. And you've also seen the fast start we've made to the efficiency programme overall. So, with that, we now expect that acceleration in growth, as Margherita was referring to, and at the midpoint of the guidance, of the new guidance range, we are expecting to grow organically Adjusted EBITDAaL 7% and Adjusted free cash flow over 20%. You mentioned the European guidance. We are very confident at the midpoint of the guidance, where Europe is stable. And in fact, we were able, as I mentioned, we were able to stay in the outlook, because the UK and Germany were performing better. And they allow us to, again, as I said, to reconfirm and absorb the impact of the ECJ. Maybe if I can build on that, Akhil, I think the key word for us is acceleration. In May, as a result of all the changes we have been driving and we are driving in the Group, whether it's portfolio, whether it's investment on customer and simplicity, I talked about we are opening a new growth chapter. And by that, that's what we mean. We mean acceleration of growth. And this is where we see very much the 7% and the 20%, or 21%, that we are announcing today as a good first step but the optimism is coming really from the midterm. In May, we said we were expecting to have double digit growth from now on in our organic cash flow generation. And again, this is the result of the changes. I will reiterate what I just said earlier, right. We have structural actions in Germany with progress quarter after quarter, unique opportunities in the UK.
Pilar López Vodafone Group
Margherita Della Valle Vodafone Group
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Vodafone Group Plc H1 FY27 Q&A Transcript
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We now have a cost reduction programme that is worth net to the bottom line, 13% of European EBITDAaL. So, a very nice push that makes us confident on Europe. And whether it's in Europe or beyond Europe, I think you will agree that now across our markets, we are in strong position. I talked earlier around breadth of opportunities because wherever you look, you see reasons to expect growth in Europe, growth in Africa, growth in B2B. So, pleased to have done a strong start, guidance upgrade today, but our focus is all around acceleration for the midterm.
That's really clear. Thanks so much.
Akhil Dattani JP Morgan
Thank you. Morning. I'd like to ask about Germany, please.
Carl Murdock-Smith Citigroup
You made the comment this morning that you have much more to do in Germany. You've had to make the non-cash impairment to the German business today. You're facing the impact of the recent ECJ ruling that you've mentioned, and Deutsche Telekom was making some positive comments last week about its ability to take further share in the MDU market as some access bottlenecks get resolved going forward. Can you expand a bit more on your earlier comments about what you're doing to turn the business around, but also to protect your MDU business in the face of potentially greater pressures going forward? Thank you.
Thank you, Carl. Maybe one liner from Pilar on the accounting, and then I'll talk about the business.
Margherita Della Valle Vodafone Group
Yeah. I mean, you mentioned non-cash, and as you know, we regularly review the current value of all of our assets, and now in the context of higher interest rates. The mechanics of the impairment close to three quarters of the charts have to do with higher government, German government bond yields, and that impacts the discount rate. You've seen in the release the discount rate we are applying is 8% now versus 7.5% in the last disclosure. So, really, the impairment has to do with the higher interest rates and the impact of the ECJ, as you mentioned in the introduction. On Germany more broadly. I think beyond the headlines, you will see in all the data points that we are giving that quarter after quarter, we continue to see structural progress, and in the last year, this has been exemplified by the fact that we are now consistently growing in Business and we are also consistently growing in Consumer on the broadband part of our business. These, for us, were really important shifts, and as we just mentioned, actually, if it had not been for the ECJ ruling, Germany, like the UK, were both tracking ahead, which is why we have completely reconfirmed the European guidance for the year, absorbing the €100 million impact.
Pilar López Vodafone Group
Margherita Della Valle Vodafone Group
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Vodafone Group Plc H1 FY27 Q&A Transcript
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So, we are taking the right actions for sustainable growth in what, we said this previously, is the largest market in Europe. We are operating at scaling both fixed and mobile, and we have a strong brand. Now, you mentioned I said there is more to do, and I'm under no illusion. Our financial performance in the last few years in Germany has been disappointing, but we have not been sitting still. Step by step, we have continued to look resolutely on the mid-term sustainable growth objective, which is why we have continued to invest on our long-term health of the business, and we have simplified our operations. The simplification is ongoing. You know that in March, we completed the first wave of our headcount reductions in Germany and across Europe. In Germany, specifically, that first wave reduced the headcount by 20%, and now we have just announced yesterday another 2,300 headcount reductions. But the important point is that we are simplifying, we are getting leaner, as we should, but at the same time, we have two, I would call them, significant growth drivers that we are pushing in Germany. The first one is, as everyone else, customer experience. You hear us saying, and it may be a bit boring at this point, but quarter after quarter, our NPS, which we track obsessively across all our products, continues to improve. And this is because we are simplifying our journeys, we are investing in our networks, we become better and broader every single day. And the second growth driver is, we can now say that we have developed real assets in Germany and more broadly on B2B digital services. You've heard in my introduction, I talked about Cloud, I talked about AI, I talked about cyber security, all things that our customers are really demanding from us. And it's the investments we have done, and we will continue to do in that space, that have driven, for example, in Germany, 30% digital services growth in H1. So, I stand by what I said, we are not yet where we need to be, I think this is clear but again, as I said, I think we are building a very different Vodafone Germany, which is fit for the future.
Thank you. And any comments on the point about MDU going forward and the ability to protect that?
Carl Murdock-Smith Citigroup Margherita Della Valle Vodafone Group
Sure. We actually didn't see any significant movements in MDUs but perhaps it's because the fibre penetration in MDUs, and particularly what I would call the cable MDUs, which are not all the MDUs of Germany, the fibre penetration is still very low. So, we didn't see it. The impact on our net adds that we may want to talk about later is if we have negative net adds, it's gross adds, it's not coming from churn. And also, when you look at the numbers we publish, you will find that a disproportionately high amount of these negative net adds are in the DSL areas. So, nothing to do with the cable MDUs.
That's great. Thank you very much.
Carl Murdock-Smith Citigroup
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Vodafone Group Plc H1 FY27 Q&A Transcript
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Good morning. Question on cost efficiencies for both of you. It seems you're more confident in achieving those cost efficiencies today than you were six months ago. So, I just wanted to ask, is that simply just the pace of achieving cost efficiencies? Or have you gained in confidence in the scope to maybe even raise those ambitions at a gross and net basis? That's the question. And if you can give any colour on what you're seeing that's giving you confidence, that would be helpful. Thank you. Sure. I was smiling, Andrew, when you were asking me about cost, because it reminded me of when we started working together, which was at the beginning of the first wave a few years ago of our cost transformation programmes. And now we are on wave three. I would say Pilar can give us an update of what we see in terms of action but we are just at the beginning of the wave three, and we are effectively executing on what we presented to you in May, which is what we are very simply working on. And from this half year onwards, we will keep updating you on the progress. Pilar? No, definitely. And just maybe to put in context the targets we said we committed in May, which Margherita had in her introduction, there were €2.0 billion annual cost savings. This is effectively a 30% reduction of our addressable cost base across Europe and set operations. And this will translate into over €1.0 billion of net opex savings. We like to set net targets that we can track, you can track on our EBITDAaL. And effectively, this is 13% of our Europe EBITDAaL. So, that's just to put it in context. And then in terms of the confidence, well, in the first six months, you've seen there is a fast start with €200 million euros of gross savings delivered in this first half. Where are we delivering those savings? It's a combination of the UK synergies, €50 million euros gross savings this half, simplification. And you've heard about the 3,000-role reduction in the first half after the 11,000 we reduced in the past and the announcement we made in Germany yesterday, another 2,300 over the next couple of years.There are a number of examples of how we are simplifying with our set operations across the board. And then the third lever is AI. And there is, is great to see how the scaled platform that we have built is already delivering savings.And there are a number of areas where we are being pretty innovative. I mean, you have some of the examples in the presentation, and those are already delivering real savings and contributing to the net target that we set. What else to say there? Well, there are headwinds and we also need to be very aware of those in terms of inflationary pressures on payroll, on energy, on the cost of the tower leases. But despite the headwinds, we have made a faster start in the first half and we will continue accelerating in the delivery. And we expect to deliver over €200 million euros of net cost reduction already this fiscal. As Margherita said, I mean, there is a long track record of delivering against targets. And as we have more visibility and progress on our delivery, we will update on progress, of course, and also, we will update on further opportunities as we've done in the past. But the short summary is a billion to the bottom line in Europe, and roughly a quarter of that will be delivered on the first year of the plan. So, a very sort of logical phasing.
Andrew Lee Goldman Sachs
Margherita Della Valle Vodafone Group
Pilar López Vodafone Group
Margherita Della Valle Vodafone Group
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Thank you.
Andrew Lee Goldman Sachs Joshua Mills BNP Paribas Exane
Hi, guys. Thanks for the questions. I'm going to dig into Germany a bit more detail.
So firstly, on the service revenue trends, you talked about strong B2B growth. Could you just give us an update on what percentage of German service revenue is coming from B2B at the moment? And then within the mix, it looks like the digital services business has been a big driver of that. So perhaps you could give maybe a bit of flavour on whether it's much better digital service revenue growth that's driving this, whether the connectivity side of things has really changed as well. That would be the first question. And then secondly, on competition, results last week in DT were commenting a bit on mobile competition, and we've seen the launch of the new Simsalasim MVNO and also the general mobile market. So, are you seeing any change on mobile competition going forwards? Thanks very much. Maybe in a nutshell, I start from the second part, which is - not really. I would say we have seen a few moves in this quarter, some up, some down, net-net. I think nothing is materially changing in the pricing environment in Germany. And all the MVNOs you're talking about, MVNOs are not new in any of our markets. And so, I would say, generally speaking, very much more of the same. On B2B, turning around B2B was one of our key priorities in Germany. And as I was mentioning earlier, you see now the consistent growth. So maybe I can give you a bit more data points behind this. In terms of sizing, roughly roughly, IR can help with the precision, but imagine roughly 25% of the revenues in Germany from B2B and 25% a little bit more of the B2B revenues coming from digital services. Now, this last percentage is moving very fast. So, we need to update it. But our strategy in Germany has really been to focus on gaining share on the new growth areas: Cloud, AI, Security. And we're also improving our connectivity, by the way, to your point, The first is, we have, you might remember me saying it for across the Group, we have spent quite a bit of time and investment in expanding our portfolio in digital services. And so, if I take the things that maybe are more relevant to Germany in the near term, just to give you a sense, we have launched an AI concierge service to support SME driving their productivities. We are seeing great success from our German cyber security operation centre to serve our B2B customers. And then we have launched a sovereign AI proposition also in the last six months. Now, this is, I would say, the organic side, but second driver, we have also been investing inorganically. You might remember we have acquired, maybe it's a year ago now, Skaylink, a company that is helping customers, particularly in the Mittelstand in Germany, moving to the Cloud. And again, if I look at, I don't know, the last two quarters, we've already signed over a hundred contracts with Vodafone customers. So significant synergies, we bring together all our range of services. but all the growth, the real growth is coming from digital services. Three things have made the difference to us in the last year.
Margherita Della Valle Vodafone Group
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And last but not least, I would call out our team in Germany. It's fair to say that we have gone through, again, a lot of change, sale processes, effectiveness. The team has been great at building a strong pipeline and we see the momentum and we will see the momentum continuing in the quarters to come. So, expect this to be a good growth opportunity for us in Germany. Absolutely one of our best growth opportunities ahead of us. By the way, I say Germany, not just in Germany. Hello guys, hopefully you can hear me. Yeah, on Germany again, there's obviously been a lot of discussion around bringing the costs down. I wonder to what extent you think about bringing the capex down, decapitalising the business, and whether that could be more network sharing agreements, whether it be on the mobile side or even the fixed line side. You know, Deutsche Telekom, I think, indicated a potential willingness to share in fibre. Is that a route that you could pursue? And I say that within a sort of a general framework of cable infrastructure operators moving in that direction. And then just a super quick add-on on Germany, which is just on the accounting side, maybe to confirm. You mentioned a provision taken against the ECJ ruling. Is that a cash flow out item this fiscal year? And is that provision included in the cash flow guidance? Thank you.
David Wright Bank of America Merrill Lynch
Thank you, David. Maybe, Pilar, you can take the provision.
Margherita Della Valle Vodafone Group
I mean, we've taken a provision, a small provision related to the ongoing class action. We don't expect the class action to conclude at best at late calendar 2027. So, again, a small provision. And again, from a cash, potential cash timing perspective, we don't expect the action to conclude again at best late 2027. So, I hope that helps you.
Pilar López Vodafone Group David Wright Bank of America Merrill Lynch Pilar López Vodafone Group
So, that's not in this year's cash flow guidance?
Absolutely not, and it’s small.
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The process will last well into 2027, the core process. But we said it's small. It's worth saying that when you look at the EBITDAaL trends in H1 in Germany, it's worth 2 percentage points. So, we've done -3.2% and -2pp of that was this provision.
Margherita Della Valle Vodafone Group
Really sorry. So, just to confirm that the EBITDAaL is adjusted for the €100 million or so?
David Wright Bank of America Merrill Lynch
Yes.
Margherita Della Valle Vodafone Group
But the cash flow guidance is only adjusted for the derecognition, which is more like €60 – 65 million.
David Wright Bank of America Merrill Lynch Pilar López Vodafone Group David Wright Bank of America Merrill Lynch
Correct.
Okay. Thank you. And then on to the infrastructure, Margherita.
Yes, on to the capex. I would say, David, I wouldn't guide to any material reduction of our capital intensity in Germany. And this is because if you think about you were going on our fixed line strategy, obviously, we will continue to invest on mobile, digital services and the like. But specifically, as a recap of our strategy in fixed in Germany, we have three pillars, as you know. One is continuing to invest in our cable network. And our cable network performance will continue to grow for years to come. Within our capex envelope, we are continuing to fiberize the cable network. And it's getting closer and closer to the buildings in Germany, meter by meter. On top of that, as you know, we reallocate frequencies and all the things that are
Margherita Della Valle Vodafone Group
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strengthening the cable performance. We have just increased the uplink speeds, for example, for our business customers in Germany. The cable roadmap has its own evolution, positive evolution. In parallel with that, we are building fibres within OXG. And this always happy to do in partnerships, as you have seen. We have now reached 1.1 million households. We expect to be at 1.4 at the end of the fiscal year. We are probably the second biggest fibre builder in the country now. We are building across more than 75 cities. So, this is progressing well. And then last but not least, our objective in every market in Vodafone is to give to our customers the broadest possible choice in making sure they access gigabit products, which is why in the DSL areas, we're also wholesaling fibre in Germany where it's available. And therefore, that gives us the possibility to essentially sell gigabit speeds to more than three quarters of German households and we will continue to do so. Anyway, back to where we started, you should continue to expect the cable network to evolve and you should continue to expect our portfolio of capex initiatives in Germany to be broadly similar. We will continue to build fibre through partnerships.
Thank you. Thank you.
David Wright Bank of America Merrill Lynch
Yes, good morning and thanks very much for taking the question. So, I mean, Margherita, my question really builds a bit more on the question from Andrew earlier around cost reduction. I don't want to kind of underestimate the difficulty and the kind of challenge you have in terms of the cost reduction and the magnitude of what you've announced. But it seems like since you announced it back in May, we've also had one very big change, which was that Xavier Niel announced that he is coming on to your shareholder register and he has obviously a kind of very kind of strong and successful reputation on being very aggressive around cost reduction. So, as presumably, you've had preliminary discussions with him and his team. Do you think your kind of €2.0 billion target is you going absolutely flat out on cost reduction from here? I mean, is there any scope at all, given, you know, the kind of maybe the fresh eyes his team might have brought to your business, that there can be any scope for that to be increased? And what can you say at this stage also about what we should expect around board representation? I think the voting rights now are just a fraction below 20%. I mean, if we use the e& select framework, that might allow him one board seat. Is that all we should expect? Or do you think he could end up taking two board seats? Thank you. James, on Vega, I think it's important to say that we never comment on engagement with individual shareholders. But in this particular case, the share transfer is still not approved. So, the effects are not completed. There is a number of regulatory processes still open, particularly the NSI (National Security and Investment) process in the UK. And this is about national security. I think Vega's expectations were for a conclusion of all these processes by the end of this calendar year. But that's not where we are. And it would really not be appropriate for me to comment or speculate on behalf of a future shareholder.
James Ratzer New Street Research
Margherita Della Valle Vodafone Group
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If I instead answer around our own plans, again, you have been with us for a long time, so you're familiar with all the cost transformation programmes that we have also run in the past. I need to say there is one characteristic, you may have heard me say this before, that I do care about when we announce cost transformation, which is to be able to commit to net opex reduction that effectively can be really directly visible in the P&L. I think you are used to that with us. And that's how, as we started our new growth chapter in May, we shaped our forecast for the future. As Pilar was saying earlier, this plan comes from, if you want, the various opportunities that we have today as we update every three years or so into a new plan and it's a combination of overall simplification continuing, UK synergies, and very significant contribution that AI is making into our operations. As we look at all this, we look at what's possible and we benchmark as much as we possibly can. We have just started, and so in terms of the future, as Pilar was mentioning, we will continue to update you and we'll see what the opportunities are, exactly as we used to do in previous occasions.
Great, thank you.
James Ratzer New Street Research
Thank you and good morning. I'm going to follow up on the costs, I'm afraid. It's not about your costs out, it's about the costs of taking those costs out, because you've had a fast start and you plan to do more in H2, including the German headcount reduction. But there doesn't seem to be any increase in the restructuring costs that you're talking about, the €700 million or so. So, were the German headcount reductions always in the plan for that, or did you get better value elsewhere? Maybe it's AI, maybe you're just getting good at this. That will be helpful. Thank you. The short answer, Rob, I will give it, is that it was already in the plan. We announced these plans back in May and by definition, the impact were included in our May guidance. So, no change, no surprises. It's interesting how many questions on cost we get today and we didn't get in May. We have probably a lot to say then.
Robert Grindle Deutsche Numis
Margherita Della Valle Vodafone Group
Nevertheless, you seem to be going ahead of plan, whereas you're meeting your targets. So good going. Thanks.
Robert Grindle Deutsche Numis
Thank you.
Margherita Della Valle Vodafone Group
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Vodafone Group Plc H1 FY27 Q&A Transcript
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Hi, thanks for taking the question. I just have one question in terms of OXG. So you have a new partner for the Fibre JV with SocGen replacing Altice in Germany. However, this means that Vodafone will now have to fund equity injections of up to €1.2 billion euros. Can you clarify how these equity injections will be accounted for, and will it impact Adjusted free cash flow? I think the situation is a little bit different, but let me tell you where we stand. So first of all, we have been pleased to welcome a new partner in OXG. SocGen knew OXG well because they were involved from the very start and their presence essentially gives us an enhanced funding position together with full strategic flexibility as we look into the future. The governance of the JV is unchanged. The objectives of the JV are unchanged. Now, SocGen comes in with different terms from Altice and this is because we are at a different stage of the rollout. They are a financial investor, not a strategic investor, but perhaps the most important point is we should face it. The conditions in the fibre market in Germany today are very different from where they were four years ago now. So that's where we are. In terms of funding and equity contribution, the funding of the JV will be a mix of debt and equity and in exactly what proportion, I think that also evolves over time depending on the rollout, again, overall conditions and the strategy that the JV will want to adopt. But from a Vodafone perspective, keep in mind that any equity that will come out from the mix of debt and equity will be very much phased over the duration of the build. And I think you have seen this very clearly in the last two to three years, we've built 1.1 million households and equity contributions from both partners have been very much phased. So they will continue to be phased and we will see the impact as we go along.
Polo Tang UBS
Margherita Della Valle Vodafone Group
Thanks.
Polo Tang UBS
Yes, good morning, everybody. Thank you for taking my question. My question is on Africa, please. So you have been consolidating the extra 15% equity stake in Safaricom since the 1st of July. Obviously, the acquisition takes you to a majority, gives you consolidation of Kenya, Ethiopia and the tech business. However, I think most of us know that in September, Kenya's high court declared the 15% stake sale void. Might be a question maybe more for Vodacom, but I'd be keen to get your opinion on this. Can you give us an update on where we stand today and how this situation might evolve going forward? What's your expectation there? Thank you very much. Thank you, Emmet. Absolutely. I mean, consistently with our strategy, it was a very natural step for us to add this 15% stake into Safaricom that we have been working with for a very long time. As you know, leading telcos, strong positions and strong growth opportunities also between connectivity and financial services. We had local legal challenges in the Kenyan court, as you say.
Emmet Kelly Morgan Stanley
Margherita Della Valle Vodafone Group
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Vodafone Group Plc H1 FY27 Q&A Transcript
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That process is now going through the appeals court and the appeal has been fast-tracked for urgent resolution. So, we look forward to that. In the meantime, as we wait for the conclusion of the appeal, you will have seen the court has indicated that the status quo is maintained. So, we keep going and look forward to the conclusion of the legal process.
Thank you very much.
Emmet Kelly Morgan Stanley
Thank you. This concludes our Q&A session this morning. I'd now like to hand back to Margherita for any closing remarks.
Operator
Just want to say thank you for your time, thank you for following us and looking forward to see you again when we have the results of our full year. Thank you.
Margherita Della Valle Vodafone Group
- End of transcript -
14
Vodafone Group Plc H1 FY27 Q&A Transcript
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Morgan Stanley
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UBS
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