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Vodafone Group Plc. FY25 Q&A Transcript JP Morgan
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Vodafone has changed: We have taken action, with more still to do On Customers, we have refocused the culture of Vodafone on delivering the seamless and consistent experience our customers expect. And we have changed. Just two examples. In the UK and Germany we have achieved a number of ‘best evers’ on customer experience. In the UK, our market-leading NPS has been driving the lowest ever levels of churn for both mobile and broadband. In Germany, while there is more to do, we have made a real step-change, delivering our best ever net promoter scores, and halving the gap to the incumbent in the market. At the same time, we are becoming a leaner organisation. We have actioned the planned 10,000 role reductions, and the introduction of commercial models in our shared operations will now enable us to accelerate productivity and efficiency gains. Financially, we have delivered our transformation and the MDU transition within the adjusted free cash flow outlook communicated in May 2023. Vodafone will grow: Our medium-term outlook As a result of the transformation done in the last two years, we are now well positioned to grow our adjusted free cash flow over the medium-term, with two thirds of our adjusted free cash flow coming from growing assets, while the remaining third is generated from Germany, which we are turning around. Let me start with Germany. Over the last two years, we have faced a number of challenges, with a declining broadband base, the massive task of implementing the MDU transition and more recently heightened competition in mobile. Against this backdrop, we have been single-mindedly focussed on driving a structural reset of our operations, centred around delivering a better service to our customers. Two years on, with a new management team, investments in our networks and customer experience and a company-wide restructuring heading towards completion, we are looking at a number of positive trends in our structural leading indicators. Reversing the inertial decline in our customer satisfaction, we have now delivered our best net promoter scores, with dramatic improvements across all products. Whilst we are still far from where we want to be, we are already seeing the benefits in terms of increased loyalty. We will continue to invest in our operational transformation throughout FY26, and whilst we expect market conditions to remain challenging, our results will benefit from our now stable customer base and from the growing contribution of the 1&1 customer base migrating on to our network. But whilst Germany is our priority market, we should not lose sight of the fact that two thirds of our adjusted free cash flow is generated across what we can call our growth footprint. In the UK, we had a strong performance in FY25 both in terms of KPIs and financials. We delivered strong EBITDAaL growth of 8%, and are now the NPS leader in the market across both mobile and fixed, resulting in record low levels of customer churn. Looking ahead, through our merger with Three, which will complete soon, we will be uniquely positioned for EBITDAaL and adjusted free cash flow growth, as leaders on all dimensions in mobile, and leading challenger in fixed broadband. As you know, we will also benefit from our integration, with £700 million annual costs and CAPEX synergies and additional revenue synergies, for example in FWA. Across Africa and Türkiye, we have strong local positions in each market, and significant growth opportunities beyond core connectivity. We will continue to grow cash flows in euros though the cycle, alongside delivering good returns. Finally, we should not forget our Vodafone Investments division and its operational, infrastructure, and innovation businesses. These provide a mix of dividend flows to us, and the potential for value realisation when appropriate. With that, I will pass over to Luka to discuss our financials.
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