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Vodafone Group Plc. FY25 Q&A Transcript JP Morgan
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Andrew Lee Goldman Sachs
I just had one question, the German recovery, following on from Akhil's question, and the improvement through FY26 specifically. Are you in a position yet where you can see strong potential to grow the ex 1&1 underlying revenues and EBITDAaL in Germany in the third or fourth quarter of this year? And if not, why not? The follow-up to that really is, you highlighted broadband customers are flat at the moment in Germany. But with those ARPU pressures that you are assuming through FY26, if you cannot grow in the second half of this year at some point, what needs to change for you to grow in FY27? Do you think either execution needs to continue to get better? Or do you think the growth is out of your hands?
Margherita Della Valle Vodafone
Thank you, Andrew. I may build on FY27 and what we need, but first, Luka, on the service revenue trajectory during the year.
Luka Mucic Vodafone
Yes. I mean, as we have said, we expect to return to growth in service revenues during FY26. A major component of that will be the 1&1 contribution, obviously. Again, I think we had this conversation before. I would always argue that this is a commercial agreement as you would also see other agreements in the wholesale space with MVNOs and others that contribute simply to the results. From that perspective, it is for me really a bit hard to disentangle this from the overarching performance of the country. The rest is essentially going to be a function of the competitive intensity in mobile. This plays a significant role. In terms of the rest of the performance there, from a service revenue perspective, keep in mind, we have just talked and discussed about broadband. We are actually very happy that we have stabilised the base. This was a significant part of the underlying performance outside of the MDUs in FY25. This is now stable. ARPU actually also quite in a reasonable shape. But what you should not forget is that we have also constant underlying TV drag, as I would call it. Because TV has been, for a while, even outside of the MDUs, in a structural decline. I think that will continue into the mid-term. If you make the math out of that, then you will obviously understand that 1&1 is an important contributor that will materially help to bring us back to growth. Just going straight actually to the point, Andrew, you made around the ex 1&1 growth rate. I think the final answer will very much depend on the pricing conditions in mobile. The jury is still out on that one. But let me say upfront that I think in the current market environment that we just discussed with Akhil, I think it is unlikely that ex 1&1, which I agree with Luka, should not be taken in isolation. You could talk about Lyca and others. But that is where we are. In terms of 2027 then, so much better exit, of course, in Germany in 2026. Overall results, much better than in 2025 but in particular, second half with a better exit as we go into 2027 then. I mean, Luka could also give you lots of new moving parts because there will be more of 1&1. There will be no more MDUs. There will be full annualisation at that point of the commercial investments that we have made, including the A&R, which, as you know, transitions through the years or all sorts of mechanical support like this.
Margherita Della Valle Vodafone
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