Half Year 2021 Vodafone Group PLC Earnings Call (Q&A)
[music] hi, everyone hope Youre staying safe. Thank you for taking the time to.
Drilling Marguerite Europe myself per alethia results.
And you've seen that presentation. So we are open for Cuba day, just one point around volume to his talents and you saw that we had a specific slide in the deck regarding vantage sales and importantly, the relationship with Vodafone we are happy to take Q in a recalibrating average.
Relationship, but we can't go into any more specifics because as a capital markets day Tomorrow. I think you will find it very informative in terms of the strategy growth drivers capital structures are all your questions will be answered tomorrow, and because we're under regulatory constraints, how we can't go into.
Today.
So on that I think we have one question per analyst that never disciplined, but hopefully we can get through every one and I think we're starting with the Q.
Thank you Sir your first question does comes from Akhil Dattani of JP Morgan Your line is line.
Yes, hi, good morning, Thanks for taking the question.
The question is really around the.
Revenue trajectory going forward.
You've had a much better service revenue performance this quarter.
The consensus expected.
One of the components you could add is b to b cell C. Very keen to understand specifically what can be to be driving them. How we can think about that going forward and the second part of that is pricing.
If I'm understanding correctly traditionally a lot of your price increases kick in in Q2.
But actually this time around with the locked down they didnt and I am looking forward and saying that you are starting to put through a number of price increases into Q2 in Q4. So can you maybe just talk this pricing moves in just help us understand how that also drive the going forward to get.
Free cash flow.
Good I keel.
Comment first on that on your point on the B to B and then I could give you a picture of.
Moving cash path going forward.
As far as B to B is concerned we are very pleased with our performance I would say around pretty much all key KPI in that space.
If you look at the non there were that the low was evident at least that I can remember turned right.
More buyer, we've had good growth in fixed with Europe growing 6% in the quarter, we are leading in customer satisfaction in NPS in India to be in four out of five of our main markets now.
And so it's I would say broad based acceleration after the lock down in Q1, which we see very much being the result of.
Effectively being very fast.
POS in Q1 in being close to our customers deploying the range of products that were helping them going through through the crisis and I think we are now reaping the rewards of that so competing well I would say is the headline in b to B in terms of how we see the timelines then.
Overall I would split the answer into two parts may be near term. So the remainder of this fiscal year, and then and then longer term as.
As we look into Q2 and Q3 I think it's fair to say there are still some.
Drags that we can expect on our service revenue.
As you have seen the lockdown somehow to stop that in different ways.
Gross our markets and this for US is relevant on revenues on two fronts first one obviously international travel there was a bit of a recovery over the summer in Europe, I suppose we need to expect that.
This will now fall back down again with the locked down and then the second element. When there is still uncertainty for the reminder of the year is government support packages.
And.
For our long day, we laughed and how particularly.
Even in Africa.
So these are the moving parts sort of going forward I think on the back of the fact that we had good commercial momentum good demand for our services in B to B, we definitely see that the second half is going to better than the first half, but still a degree of facilitation as you'd expect.
Likely.
I want to also point out to the medium term because I think this is a bit of a special moment in terms of trends.
Because we have a significant drag from coated in particular on roaming.
As you have seen and we have seen in our release, we keep referring to service revenue growth also EXL me. The reason why we do that is that as we move into next year from April you will see that the roaming drag will lapse.
We will compare ourselves to a year where.
That was already very little travel and therefore, this will allow our underlying performance ex roaming which at the moment as you have seen is positive with 1.5% service revenue growth across the group Ekso means Europe now stable. This underlying performance that we're seeing.
Is going to be emerge.
And let alone the accelerated than if there was any recovery in international travel into next year.
So so clearly returned to growth.
Total service revenue performance expected for the coming year.
That's great thank and interest on the pricing basis, meaning are there any specific market you could I just wanted to standard pricing dynamics.
Very good point actually that you're raising on pricing because you're right Cove it did create a bit of.
Rephasing repositioning around around these moves what I would say in terms of near term service revenue gross don't see this as being a big driver of acceleration because as you mentioned in prior year, we also as well going through pricing cycles, maybe a little bit earlier or a little bit in a different timeframe, but have similar.
Size.
But I think I think it's fair to say, we will be looking to next year.
To see where the opportunities are just like we would normally.
Thanks very much.
Thank you. Your next question comes from Emmet Kelly of Morgan Stanley. Please.
Please go ahead.
And.
Yes. Good morning, everybody. Thank you for taking my question. So the similar question from me except on the EBIT. Aside. So you have reported EBITDA of minus 2% and H, one and if I look at the guidance. It suggests I guess positive EBITDA margin.
Roughly plus half a percentage to maybe plus 3% in the second half of the year can you maybe just say a few words on what the key drivers are often EBITDA improvements and maybe just referred to your cost cutting plan as well. Please thank you.
Sure.
In general terms Youre right, we expect.
EBITDA in the second out for the year to be let's say on the right side of zero.
And this is what we have factored in upgrading our guidance to what I would call. The upper end of our outlook range.
That we gave immediately post closing.
A number of drivers are the same as the one we just mentioned with a key also on a positive front strong commercial momentum and good demand for our services in B to B clearly offset by.
Some further drag.
On Earth link should be lower in the second outlet in the first half of the year because of seasonality, but as I said, probably the volumes, we fall back down again, we need to see.
In terms of cost progress well as you as you can imagine.
Someone asked me about cost we are very pleased.
With our results so far all the Cape size.
And our cost reduction programs and being either progressing at the same pace as before in the first half or have been accelerate ads and then you can look at things like digital transformation zone.
Integration of activities into share service I would say koby that not slowed us down in this journey actually in some instances we have.
In some supportive strength, particularly around digital coming from the change of behaviors that the customers that led you to Colby then we had a rocking dollars.
Big changes in going forward, so very very positive progress clearly some further opportunities ahead of us both in the near term and in the longer term you may remember that my another billion or.
Of cost reductions in Europe per between Fytwenty, one and a flight 23.
And I think that we have some really strong.
Assets to deliver this further improvements into the group operating models you have seen in the presentation. We're talking about what the good machine, we have now to effectively standardized similar processes across market integrate them package, then decide whats the best location to carry them through and automate them.
And on the back of that linked to also an integrated procurement process, we think that if anything the opportunities that post koby to further accelerate.
Our cost reduction programs.
Thank you very much.
Thank you. Your next question comes from Andrew Lane of Goldman Sachs Hunter. Your line is open.
Yeah. Good morning, guys I had a question on portfolio management, there's a lot of detail and very helpful detail. The presentation around the parameters for this and how you think about sales.
Could you give us any color more color on what this practically means how youre thinking about underperforming assets such as staying at the moment.
Yeah Andrew.
For recognizing in the presentation, we tried to laid out a framework and it really sort of our three core principles to lead free core principles have been there since I came in as group CEO with a solid. This is why we need to look at our portfolio going toward the first principle is that we need to ensure.
So that an asset.
As Ben.
Benefit from a regional scale, but also must be of local scale.
Let's have a credible and actionable long range plan that delivers return on capital employed bring to the market work over the long range plan that we agreed with US and then thirdly, we have to be the best owner of the asset we have to make sure that both the asset and group of benefit.
From a day in parts of the portfolio. So if we take Spain as an example, Margarita, Illinois two years ago.
Did a very deep dive on spine and we looked at low long range plan.
And frankly, we felt a group on the rights directory, we didnt have that confidence.
In the return on capital over the long range plan and so we did a very radical restructuring an alternative transformation strategy.
Totally different commercial plan, making sure we're competing high mid low end jewel branded we came out of football we drove digital transformation, we did network sharing on a more drastic and radical prices.
I think today is really good demonstration and frankly loss number of course has been really good demonstration of the progress that we've made I think the team have executed that transformation through excellently and I think that Youre now seeing us on the front foot in Spain, I think when you see us relative results to others I think they are a good set of.
Results, we're now number two on retail having just past orange.
We have two five consecutive quarters, either stable or improving mobile TV and fixed broadband and we've had to host of EBIT. Our expansion. So I think we've got a good organic plan and that will prove to improve returns over time.
Gross yeah.
Werther to be consolidation opportunities, we will always evaluate those opportunities.
If they are value accretive for our shareholders and we've always.
Taken that sort of pragmatic view low.
Pockets market on how to strengthen positions.
Thank you conscious off very short per caller, if I take it from your comments then that the the big improvement in Spanish trends that we saw in the quarter a sustainable into the second half of the year.
Yes, what I think youre, saying that we've got momentum of the business. If you remember in quarter. Four I think there was a first acknowledgement, yes, Europe business with momentum we were growing in the second half EBITDA, we said we'd be growing in the first off we are growing and I think even though the market has intensified from a competitive perspective, both at the.
And the low end I think we have competed very effectively.
Thank you.
Yes.
Thank you very much. Your next question comes from Jerry Dellis of Jefferies. Please go ahead.
Yes. Good morning. Thank you for taking my questions I wanted to ask about Fiveg decrease we understand the fiveg delivered as a mid band spectrum brings performance gains.
That makes sense spectrum is now fully available in all of your markets.
So what's the commercial cash for launching Fiveg in the low band spectrum first and is there a sort of a commercial necessity to being first to deploy fiveg market by market and perhaps related to that as there is some endearing gross uncertainty deficit at market by market to what extent is that uncertainty about.
Holding you back from fully investing thank you.
Jerry I think we made.
If you like we went on to the from FERC on Fiveg, We will one of the first to launch across Europe.
I think we landed that message in the minds of businesses and consumers very effectively of course it wasn't mass scale. It was small but it was widely dispersed through our European markets. So actually from a perception perspective, we're very much seeing as a leader in Fiveg. Then the question is.
As it starts to now ramp up and as you see we're deploying in I think is 126 cities currently across non markets in Europe. The question is how should we deployed.
Some operators are taking dynamic spectrum sharing so DSS.
Which is effectively giving you a fiveg symbol, but fourg performance and what we said as a company is now we don't want to do that because it will be misleading to consumers and businesses. What we want to do is is fiveg bill right. So.
So we want the real Fiveg performance, we know that if we deploy the significant three and a half gigahertz type level spectrum alone.
Along with 700 ultimately when it's available in each of the markets that is real five JV with starting with the cities with starting with the business part where there is an economic case because the demand is there from a data usage perspective, and also the user cases from a business perspective, I see threeg.
Browsing Fourg, Brazil, India five Jay this is about enterprises about businesses, enabling the capability moving forward in loyalty world and we have the world's largest loyalty platform.
So I think is about us focusing now on coverage may messages.
With an inferior product is about a superior product, where the economics really channel.
Thank you just a follow a uncertainty matter does that create a constraint.
Well clearly with low want clarity and we're working with each of the European come.
Countries and governments to implement on the European Fiveg two books. They are in the process of doing that the toolbox made the distinction between coal and Ryan we've already made our decision on coal, we're taking our outlook or over the next four to five years.
But ran very much different from cool and I think we're engaged with each of the governments on that so what I would say is I wouldn't say, it's been any material. The line maybe in some markets, we paused for a few months, but nothing more than that.
Thank you.
Your next question comes from Georgia, Yeah, Jake Kemeny from Citigroup Georges. Please go ahead.
Good morning. Thank you for taking my question it's on.
Regulation on me two in your introductory remarks, you highlighted the regulation is going in there on non actually in a number of countries. You are present, perhaps there's one exception which is per month.
Purchase now.
Im a percentage in two parts firstly I believe the market leader there until these were anticipated to marry two new material investments in the country until very this is the spectrum auction process be interested to hear your views on whether youre thinking.
Something similar for Vodafone and then secondly, more broadly by focusing on returns will comment on employment, you will be picking winners and losers on returns as we deploy capital in the long term. So do thing politicians and regular tumors are starting to understand the importance of low fare.
Regulation.
Mr to attract more competition from the group. Thank you.
Yes, George is a very good question it maybe I'll start with the latter lingering. So the first question, which is also all the time about social contracts I talk about what we bring to society, what we're willing to invest for our investors want to deploy in terms of serious cash.
So because we are in a kind of a world the demands.
Even greater for the products Watts I reinforce it's a contract and the contract is we want to invest where we need the right conditions and I talk about we need to create a healthier market structure.
And and healthier is about saying that our shareholders need to earn adequate.
Adequate return.
And we will deploy capital, where we see government's supporting that principle.
And so I have been actively engage with Europe paying commission I mean, I was with commissioner brutal last week VESCO GERD.
About three weeks before that that very actively engaged we got another industry meeting in a couple of weeks time talking about what makes a healthy industry structure and what things we need to have facilitated so I'd say very much leaning into that and they are listening because they understand the criticality.
Now have connectivity if they want a digital society, if they want a digital sustainable inclusive society, they need to provide a healthier structure and I think they are acknowledging that I try to put in the presentation number of evidence points costs. This is early days.
But then I turn to poach group.
And so Portugal's a really good example, where where we're saying that that spectrum auction structure was not provided a healthy industry structure that essentially with no market testing with no evidence of market failure whatsoever, a new.
Interest was being given.
Contagious turns both in terms of lower price for spectrum and no real obligations to roll out and can just do national roaming when we said where is the incentive for people really investing in some markets and we have plans to per eye center of excellence with 450.
It is in support group and we put it on pause as we said we are not going to support governments that work against existing operators in that way, especially when we were there for the crisis.
We've engaged the regulatory and government have changed the conditions that have improved the conditions now the new entrant group pay full price sales will have to rollout network fine.
But in my opinion and my team's opinion they have not gone far enough. We still believe this is Steve.
Steve.
And we still believe the economy.
What's going to Atlanta.
Contravenes.
European Telco low so so we are going to continue to disagree against them.
And while we do that we will have to consider the investments that we're making.
Yes, you have to realize if you want a healthy investor community there is about.
Clear thank you.
Thank you. Your next question comes from Pilates Tower, PBX I know you.
Your line is open.
Hi, everybody. Thank you for taking the question I, just really have a question on Germany, because I think you mentioned in your presentation about a quarter of your broadband base was taking one gigabit speeds and I think that the ARPU uplift was ranked that five euros per month as people upgrade is the kind of clarify high we should think about the trajectory into.
<unk> of 60, German service revenues going forward, because I think the American almost stable in Q2, so should we expect to pick up over the coming quarters and given that you have such a speed advantage in terms of German broadband and given that you've been promoting your one gig speeds of 40 50 years of months do you think your group.
Net adds in Germany should accelerate from here, so any color around Germany and broadband. Thank you very much.
So let me just through the high level and then maybe if you want to provide any sort of outlook he thought.
Comments, but I, we sit back and we say weve done really good job of upgrading gigabit network 22 million homes now passed with gigabit speeds. So so we're pleased with the execution in that respect.
We've had a decent run rate that accelerated in the quarter in terms of fixed broadband net adds so, especially on our cable.
Performance. So I would say we've got momentum I think two things we call out in Germany that we'd like to see some improvement and that is retail performance in the unity area. We we show a graph and Margaret is area, where they have not been quite as good as we've been in the KCG, we add to harmonize free.
The sales processes, and our TV roadmap of which we've got a player TV roadmap this year.
We've now harmonize the TV premium products.
GAAP OTI T product coming and then Vodafone TV product coming in the fourth quarter. So I'd say, we're definitely focused on gaining more momentum.
And our higher acceleration in the second half.
The adjusted maybe adding a technical point the reason why you see the gross flattish in the quarter is wholesale wholesale as being a negative drag in Germany, because we lapped the point in which the utilities were increased by Dutch telecom and this effect.
The total growth rate.
So let me just pick up on something you talked about TV, but how important do you think he is in a converged bundle because if we look at Spain, UK, obviously moved away from football in terms of Champions League in line League. We are actually seeing accelerating commercial trends. So overall, how important is TBD converged bundle.
No I think it's very important.
I think that over the long run, but the question is what type of bundle.
What we what we all key non is paying huge fees fall football within the bundle.
What we would rather do is have commercial arrangement with someone opened within the market like Sky for Germany. As an example, and then we'd focus on ensuring that we bring I mean, our Vodafone CV simply is bringing Walt I for Capex experience fix the euro box.
With linear plus apps with harmonized search across all channels to surface. The concept you are looking for voice activated so it's nice and easy for consumers to find what they're looking for cloud storage for your recordings. So we think that is the new.
Execution for CV, and we are scaling our position we're in seven markets already Germany launches as the market in Europe.
In quarter, four and then we will migrate customers to that experience on from the horizon box and the gig or TV books.
Great. Thanks.
Your next question summaries Patrick from Barclays. Your line is open.
Good morning, guys some cash.
Key cash the presentation seems to be around boosting.
Good returns and returns overall, so question on financings retail wholesale side, you talked about return on capital employed only 5% equaling slightly you said you weren't satisfied bounces, but thinking about Germany and outside of Europe, Larry's because you have a slide talking about not suits sharing and monetization.
Across the portfolio not ready, Germany, if I think commodity by utilization that will contribute about 30%.
A couple of ways, how your gross retail price that much over the coming quarters. So I guess your thoughts on wholesale in Germany, and they got cable we attempt to expand coming up is that enough. I mean would you think about using Drillisch for example, low there.
Views in the UK talks about balancing the retail and the home sales mix.
Ladies and gentlemen, thank you.
Maybe I just I just was reacting to your.
Points around termite growth more broadly at first before coming onto whole sales, which is.
German.
Gross is flat at the moment, but it is.
Suffering from the headwind of at.
Cody.
As well as obviously the exit from the one on one wholesale deal.
As I was mentioning earlier with accurate I think as you move into next year, you will see that the roaming headwind will go away.
And then over time also the whole say one.
Our blessing.
Areas of growth into our German business as you would expect right. Because we are we are driving conversion. We are diving cable penetration we were mentioning earlier in the Upselling of cable TWI Espeed. All these reasons why during day revenues of Germany, which had already growing in the quarter by 1.8 per.
Sam if you exclude the roaming are expected to continue to grow nicely I would say in the coming in the commission. So I was just reacting to that and before moving into the then what do we want to do with will say, yes look we have clearly considered.
Wholesale so we hope sales itself, we've been very focused.
Bring in that that.
Into action.
And I would say that generally we've wanted or not what we like about the wholesale arrangement as it does provide utilization of the assets, but still protect our differentiation in the marketplace.
Still we're focused at the higher speeds and we're completely differentiated at higher space. You know clearly we're engaging consider various options in the future and we'll always look at opportunities as long as differentiation is maintained and let's say the economics or acceptable.
Great quick follow up so I'm, just jumping back to us how big do not use net revenues are.
You might recall, the Swedish revenue segment the non system.
So we have both.
Hello.
Fixed and that.
Mobile revenues in the mix.
The drags that they create on our service revenue growth at the moment is around one percentage point. The total amount I think they are can be more precise but call. It around 300 million between fixed and mobile.
Okay. Thank you.
Okay.
Thank you. Our next question comes from type It Wright of Bank of America Merrill Lynch. David. Please go ahead.
Okay. Thank you very much accounts for taking the question.
I was going to ask about the portfolio management side once again.
I think it seems like Egypt, as mobile a little bit so.
So I was just looking to get maybe an update on.
Progress there.
And just second level.
Relating portfolio and going on to the how low sheet debate that I think is b.
Finally in concert some of the questions today, one of the things that was notable about Spain Margarita is stopped.
You chose to write down the asset I think as you did quite significant with your strategy.
You do run across the Vodafone group right now.
Fairly high level of intangibles and goodwill against your actual pp asset base.
So it does feel like other or should I say, all that some opportunity to reconsider some of that volume about.
The assets acquired over the last 10 years, when you're actually doing some of this return on capital analysis.
You know to get most of that picture and it works for.
For instance, you.
Quite the cable monster cable cable and wireless assets some time ago.
It's not the kind of asset that you could reconsider the valuation off so how are you actually thinking about that.
Potential volume some of these.
Significant goodwill and amortization drivers that are holding group mostly back. Thank you.
Okay, well, let me be very quick on Egypt.
Due diligence is effectively complete.
And now STC are engaged with sales.
Yeah.
Telecom, Egypt why because.
Yes telecom agents is a significant shareholder we have a shareholder agreements.
Clearly there needs to be a shareholder agreement between the two of them and therefore, it's an important consideration.
On the go forward relationship. So we are not really a policy to that conversation that's really between the two of them.
And we will see how they progressed.
And on the on the goodwill point I would say that we see very much as I can I say strict accounting process that we need to follow.
And we will keep following on the framework of rules aligned with our audit committee and our auditor. So it's very much driven by the mechanics.
Off of the accounting don't read into a tiny ria broader considerations.
Just want to make sure that we are I would say balanced and conservative.
From that perspective, because its an area of the basin, obviously ferola flow regulators.
From a financial perspective. So this is what we're.
What we are focusing on really a very transparent.
And Bob.
Balanced accounting exact size.
It is just following on it looks like if I may Nick on the whole sort of Spanish outlook. Okay. She began two years ago can you just give us a little bit more.
Insight into that mid term.
So the trajectory that you're really considering.
We have seen one or two of the.
Major telcos in Europe, maybe even Spain relic talked about.
Looking at return on capital employed in the assets continue to say right now that might even after giving away. So you know we talking is it a five year trajectory 10 year trajectory is it just anything more you can you can give us on that kind of timeline that you're giving these assets to any color.
Well when we talk.
Over the long range plan, we're talking three to five years. So so that's the the time horizon, we look at.
Yes for Spain as an example.
We took a structural actions and I think I think sometimes people didn't fully appreciate how many structural actions we took in terms of.
The digital side the transformation of the cost base. The network sharing of course, the network sharing is yet to really show.
In the <unk> that five year time horizon, but will increasingly be a benefit going forward one of the other things we day, which is not so so obviously as.
We did something with Spain that we are.
Operating increasingly through our markets, which is we wanted to get we wanted to simplify the business inside from an IP perspective cost perspective et cetera to do that you asked them migrate your price on to overbook pricing for both terrorists and so Spain is a really good example, where the price.
Base is on fated unlimited now.
That's important because it means that we don't have this long legacy of lots of historical pricing tariffs et cetera makes the terrorists people are on today's price and so we are less vulnerable to today's pricing and promos. The other thing that we didnt investment on was to drive in commitment.
So theres a substantial step up of in commitment on the price versus two years ago. So there's a number of things to make the actual.
Customer buys more resilient, which is why I think over the last five quarters, you are seeing a good customer price performance, which we can build on going forward.
Okay. Thanks, a lot. Thanks, a lot younger healthier looking picture me. Thank you guys.
Your next question comes from change that saw Nice day James. Please go ahead.
Yes, good morning, and thank you very much indeed would love to go back if possible. Please to the point around EBITDA growth from the phasing as EBITDA.
In the full year guidance, you're giving you pick out I think on slide 17 headwinds from roaming and then what you call out the COVID-19ien impacts.
Good morning, suspected specifically kind of what youre thinking about as far as our Batavia impacts because the commentary you've given so far actually sounded quite encouraging around interesting. So really trying to get an idea of what you see underlying EBITDA growth ex cozad.
At the moment and in terms of the phasing just wondering what you can say about the synergies from unity as I noticed in the German slide you said I think 83 million euros, a synergy gains.
But Dan in your commentary later in the presentation you talked about I think it was 257 million are now locked in.
That does not mean, we are actually going to see the phasing impact from the U.S. He said he start to accelerate from here on EBITDA. Thank you.
Sure James I'll start off with.
At Liberty and the synergies and then move on to EBITDA per.
From a synergy perspective, when we talk about having locked in over 250 million, which is around 50% of the target of the four to five years.
Essentially we mean that we have already negotiated for example in procurement the contractual conditions that will deliver the savings or established the.
The plans in the business to deliver low savings this will come to gradually over time.
I have seen in the I think in the slide on Germany. The exact amounts that have contributed to the German EBITDA.
The south here and we will continue obviously to report on that going forward.
As I mentioned earlier, we are very pleased with the speed.
At which the synergies are being delivered at the moment, we are about six months ahead.
Out of the first 12 months of execution I need to say the teams have done a fantastic job there.
That but clearly is.
It's a it's a multi year plan four to five years to get to the final goal. So I think we have a long road ahead of us and again, we will continue to report.
Regularly on it.
As far as then.
Then your question was around EBITDA, what do we see going forward from Covidien is that something beyond roaming.
For roaming specifically as I, probably mentioned already alia less of a drag in the second half maybe worse volume than in Q2, because of the lock down and the older loans.
No significant impact for us potentially are from the support.
That governments can keep two businesses are consumed less in the case of Africa for example.
On on on the crisis and this support has been a key.
Constant so far.
And therefore, we just want to drill out the fact that that's what has been driving the trends that we have seen so for example, just thinking about that.
We have called out that we didn't see a material impact on businesses. So far clearly I think our customers are also prioritizing our services in the current price. This and we would expect this to continue but that may be also supports that is coming from these packages and therefore, we need to be conscious of the fact.
Some of these packages where.
Going to stop or change significantly that may affect our performance. That's what we wanted to call out.
Thank you so would you be able to give an estimate 10 H one of what you think your organic EBITDA growth was X all the impacts.
I think it's fair.
Probably seen per to stay on on the X. roaming and visitors we have an internal debates as well on out per trade these and I need to say I think it's always.
Always easier to point to a single line in the TNL that you can see without.
Adding judgement element to it. So you have seen that EBITDA was minus 1.9% in the first styles and the drag from roaming was 270 million. So it would have been positive around to just under 2% extra.
Moving back.
Just narrowing it down to this day the say it wasn't the only impact because cash dropdowns affected us in Q1, but I think it's the India metric to cash also because it will then fall off.
Right, Thanks very much.
Your next question comes from Sam Mchugh from excess cash.
Sam Please go ahead.
Morning, guys just quick one on in spite of accounts. So you factor returned to growth. This quarter. So when you look at European markets, where do you think you see the best scope for gross I'm on enterprise mobile maybe you could just give us a better car about taking price and the reason I ask is increasingly we do see cokers installing apps on fountain.
Instituting the end price from for maybe the consumer from the how should we think about deflation of the overall I'm quite low power market and the medium to long term is that something you worry about or you're pretty confident you got some great relationships et cetera, thanks very much.
A sense that that's probably a question 'cause taken out wrong, let me let Mike.
Recall a couple of points.
First first of all I would say that we're seeing big demand from businesses small and large large.
Large customers predominantly one an outbreak has to see one in an upgrade next generation connectivity that plays to our strength because we don't have the legacy products will move from both selling so that's a positive for us of course, we got a very differentiated European footprint. That's another addition universe.
For the players you go to install that conversation. So I would say, we're definitely gaining share you can see that in the UK numbers, where you see large corporate moving more substantially I would say I'd say the second area is about the civil woken up to smoke so hosting space all woken up.
Digitization of their business model being critical and Youre going to see part of the UK recovery volume targeted purely ads. These digital so we see light vouchers for instance in Italy is the first example, there will be many more hours and we want to stand for that.
Champion puts me digitalization. So if you look at what we're doing on our website et cetera is leaning into that long term trend. So we think thats. Another advantage for us going forward and then I'll take third is just our own digital experience and the the cloud and digital services.
So what some of the income will serve as they try and create their own products. What we said is no we need to get the very best of breed of those cloud and digital services partner with the best in the market bring it quickly in a suite with Vodafone wrap around that and then so in his total solutions.
And I think it's more agile, it's more front for and its lower capital need on us going forward.
Relative to.
New low masses.
Thank you.
The next question comes from Nick first of weapon make your line is item.
Yeah. Thanks, So much day, just one question from me on net promoter scores you mentioned per net promoter scores for business.
What's going on in consumer and in particular, maybe country by country. Thanks very much.
Yes, Nick.
I am pleased to ask actually because.
What Weve said I think we had a very strong co bit response, I think it was really acknowledge that we were shoved leadership for our sector and just generally sectors.
We did all the right things I think the vulnerable species et cetera, and so for the first time ever we see such a big step up on NPL, So for both business and consumer on average across the European before we see the six percentage point gain.
So this is being systematic.
Africa systematic so yes, I think we're really delighted.
Not often you always get immediate recognition of everything today, but I think we learned that yeah. I think also the fact that we were at a certain stage already in our digital transformation help because if I look at some actions that we were running across our markets, particularly in southern Europe are up and become really the.
Non core point for example, our customers and we have already developed full customer journey through the App and for line than they could refer to when we could also somehow train the customers who and for example, the use to top up on line to just go to the App and do it and I think the ease of use came across really strongly.
And the final thing I'd say I've never had so many business customers.
And to me and say the speed at which you got organized yourself working from home and then reached out to us to help us through what was that for them a big challenge of getting into position to working from home and that's really as ingrained in a lot of.
Free seats with Paypal, Vodafone with us to help them because the diver in difficulties.
Thanks very much.
Thank you. Your next question comes up for the capital from Deutsche Bank. Please go ahead.
Good morning, and thank you I'd like to take you back to H. One result last year, some ice which seems like a lifetime ago, but not so long in tougher times.
But then you flagged near term Capex on cloud towers share in digital transformation, but raised the prospect that full year 22 that we might be seeing capex for so could we post next year see the double whammy of rising revenues falling at least holding capital intensive.
A day, maybe even a triple net margins go up as well and a very quick follow up on David's question on Egypt. Nick are you exposed to the cash out the spectrum that just happened.
That is thank you.
Product on that on the one is on Capex.
Let's say that we are pleased that we are progressing well this year with the Fiveg Rollouts and no impediments from from co lead and we are executing within our 5 billion of free.
Free cash flow guide as well.
If I look into a Friday 22, and beyond I would say, maybe I can call out.
A couple of moving parts I would say.
On one and I think we need to take into consideration.
The implementation of the new tool kit.
On runway, which.
We don't have clarity on that yet.
On the other end I think you will see.
See tomorrow through the presentation from the bank.
The impacts of vantage vantage I will steal the Thunder with AG, but has some.
Very exciting growth opportunities that we want to take in terms of if you on growth Capex.
This opportunity will in turn generate group of predictable cash flows.
For Vodafone and in total I would say not the very significant amount in a scale of our capex, what we need to take those into consideration when we do our next plant.
And then on the other end I think there are two other elements that will be at play first.
First of all a network sharing deal.
Probably as part of the discussion we were having in the past you know that they have ramp up phase we are going through and so we will see the benefits of the network sharing deals coming into play on our capital intensity. So and then I'll probably worth mentioning also the recovery fund.
You know that a substantial portion of that is earmarked for digital or for also for green initiatives. So we may have opportunities also coming from.
The European funds now all this will put into our next long range plan.
We will prepare a new plan for March and we will update you.
In May on now the next three years will look like.
Yes, Robert just on Asia, very quickly I would say that low you know the in Egypt with the number one player we have about 40% market share in that market. The other two players sort of in the high teens.
Lenses. So considerable leadership you saw in the auction that we skewed more spectrum than the others. So all we're doing is extending our leadership in that market enhances our long range plan that spectrum was a specific item in our discussion with the system.
Moving.
Your final question comes from Jake uplift line of Credit Suisse Shake up your line this item.
Hi, good morning, Thanks for taking the question.
Question on operating leverage within the business.
You, obviously talked a lot of per hopes to how the synergy realization is coming through faster than expected.
And how you're sort of running a bit ahead of plan on some of the other cost saving contracts, but if I look at your service revenues. It was down by about $120 million in the first six months and your EBITDA was down by about 80 million, there's not a huge difference between the decline in your service revenues near EBITDA.
And if I look on slide 15, it looks like there's a sort of 100 million increase in other costs.
So can you maybe comment a little bit on what are some of these other cost pressures you're seeing.
Is that something you expect to continue and more broadly should we be expecting to see more operating leverage going forward given the various costs.
Interest that you you got in the pipeline. Thank you.
Terrific and I think we'll have the opportunity to add to that.
The reviews that where we can go into maybe more the things of all the moving parts, but let me just say that.
Accordingly.
We had some.
The new movement, which led high intensity of direct cost implications that may not be the I would say normal revenue movements. So for example.
In.
Locked down in the first quarter that was the southern John incoming traffic, which generates revenues, but low margin because clearly it's reciprocal equally we have talked about roaming and eroding that if you want to is still happening is very much into European roaming.
Which has revenues, but equally costs and therefore ratios, which are not the norm are ones that you will see.
In India business. So you have a number of areas, which are a little bit skewed from from quarterly which is why your equation revenues minus opex is almost missing missing apart.
But we can going to into more detail. If you want with the actual numbers in front of us.
Great. Thank you.
So given that was our last question can I take the opportunity of thanking you all for joining margaret's or myself.
I have the opportunity to spend more time with you and our investors over the coming weeks.
Today was about demonstrating the resilience of Vodafone the commercial momentum that we have of the back of the actions that we've taken strategically transformed Vodafone we are two years in through a long term strategy, but we're making progress at speed clearly more to do.
But we look forward to continued dialogue so Kevin spacey.
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