Q1 FY26 Q&A Transcript

Vodafone Group Plc Q1FY26 Q&A Transcript

Deutsche Numis

Goldman Sachs

New Street Research

Bank of America Merrill Lynch

Bernstein Societe Generale

Kepler Cheuvreux

1

Barclays

Citigroup

Berenberg

JP Morgan

BNPP Exane

Robert Grindle

Good morning, Margherita and Luka. It was good to see the improved service revenue growth trend in Germany, which is approaching stable ex the MDU effect. How are you feeling about the prospect for getting back to Germany growth anytime soon? Commercial activity is a bit softer in Q1, however, with broadband net outs going backwards. Please, could you say something about what the dynamic is in the market at this point? Thank you. Perhaps I take the financial part. You are absolutely right. ex-MDU is almost stable in Q1. The key reasons for that, if I can just take a quick look back, is obviously the increase in wholesale revenue contribution +1% quarter-over-quarter, and then also another percent from a better business performance driven by IoT phasing, and also the effect that we had negative one-offs in mobile in Q4, which have not repeated themselves. We are obviously feeling good about the trajectory that we are on in Germany. As we had said at the full-year results, we fully expect Germany to be back in service revenue growth territory during the year, so it will come in the coming quarters. Now, you will hopefully understand that I am finding it hard to give you a precise quarterly service revenue guidance for a single market, but the way how to think about the next quarter obviously is we will finally lose the MDU impact due to the full lapping. That was close to 3% still of a negative impact in Q1. This will be gone. At the same time, we will, of course, continue to benefit from the ramp up of the 1&1 agreement to a full scale that we expect to reach in the second half of the year. Those are positives against that. As I said, in Q1, we had a positive phasing impact in our B2B business in IoT that is not expected to recur in Q2, and we, of course, also need to take into account the, I would say, long-term trend of TV headwinds that we are facing in the outside of the MDUs as well as the competitive environment in mobile, but this all being said, I think the momentum is clearly so strong that it will carry us back to growth during the year, while we also expect to see gradually improving trend on the profitability front in Germany. Maybe I take, Robert, the commercial performance side. I would say different sets of circumstances across mobile and fixed. Starting with mobile, no particular changes to the pricing environment since May, as you know, so the market remains very competitive. However, I need to say, as I anticipated in my introduction, that we look positively on our results in the quarter because, as you know, we care about value versus volumes, and if I look at what has happened in the last quarter, and I would say in the last few periods overall, the branded base, which is what we mostly care about because it has where our value stands, has improved in the last year, has grown, and its churn levels have consistently decreased. We have just recorded single-digit churn, and this is for the first time in the last four years on the branded base, and this is on the back, I would say, of two things. First of all, our customer experience step-up. We did say in May we had the best ever NPS in mobile as well as in fixed, and also you see the type of propositions that we are building around our branded base beyond the sort of front-book skirmishes.

Deutsche Numis

Luka Mucic

Vodafone Group

Margherita Della Valle

Vodafone Group

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