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Vodafone Group Plc. FY25 Q&A Transcript JP Morgan
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Carl Murdock-Smith Citigroup Margherita Della Valle Vodafone
Margherita, as you are kind enough to tee it up, I will step in and ask. One of the highlights of today's guidance was the strength at the Group level, largely due to Africa and Turkey. What gives you confidence of the medium-term growth opportunity in those markets in euro terms? What has driven that step change in growth in cash flow generation? What synergies are there across the Group and what options might you consider in the medium term if investors continue to apply different weightings to euro of free cash flow from Europe versus the euro free cash flow from elsewhere in the Group? I would call out the fact that when I talk about 66% of cash flow generated within our current growth portfolio, it is not just Turkey and Africa, but it is going to be increasingly the UK and of course the consistent position of our other European markets for completeness. Now if I look then at Turkey and Africa and the reasons behind the performance that you have seen where we have demonstrated hard currency growth in all our geographies. I would say a two-part answer. The first is the discipline where you have high inflationary environment to grow revenue ahead of inflation and costs below inflation applied in the day- to-day execution in these markets. This is a muscle I think we have trained quite well by now. But it is not just that. There are also two other aspects. One is the quality of our performance and the second is the actual market potential per se. If I maybe start from the market potential, I mean it is visible to everyone that these are markets where connectivity has still potential to grow. The population is growing. Data is growing. Data is being monetised. But what is most attractive is that there are also what we would call non-linear growth opportunities in these markets that we are exploiting, again, talking about digital services, right. Whether you are talking about financial services, of course, for Africa or whether you are talking about other digital services. For example, sovereign data centres in those territories are already making an impact. There is a broad range of services where Vodafone in those markets is effectively the provider of choice. That give us confidence on a multi-year growth. And then on top of that, we are pleased with our execution in those geographies, whether you look at Turkey, whether you look at Egypt, whether you look at Africa more broadly. I mean, we discussed, I think a couple of calls ago about what is driving the growth in Turkey, for example. You will have seen, we continue to build on our highest ever market share. We outperformed market growth. We have really clear execution plans and strong teams in place to make the most of this potential opportunity. Then you close with saying, okay, this is all well and good. I see the growth coming. But in all the calls, we talk about Germany, and therefore, is there anything you want to change about that? I think what you will see us doing is continuing to bring to life as we did in the results presentation today that the Group is covering a number of different geographies, Europe, Africa, Germany, other countries, the UK. That is what we are going to continue to work on driving performance. Ultimately, we have a single goal, which is sustainable mid-term adjusted free cash flow growth. We said back in March 2023 that we had the goal to use the cash flow level of those days as a base to grow from. I think we have proven in the last two years that we have executed on our financial guidance. Now it is time to go into the proper growth phase, also thank you to all these opportunities.
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