Q1 2022 Vodafone Group PLC Trading Statement Call

And improving shareholder value and we.

The mine still very focused on optimizing our portfolio I.

Moving forward to ensure that we keep a shareholder.

It's very much and a full fun and things that we all focused on and on that book rates are and I will take your questions.

Very much Nick I'll first question today comes from Andrew Lee from Goldman Sachs. Andrew. Please go ahead your line is knowledge and.

Yeah, Good morning, Nick and good morning, Margarita and how question on the revenue growth outlook and the first quarter and.

Great trends with the easy comps, but suppressed commercial momentum and particularly in Germany and so the.

And is is the first call into 'twenty 2 growth rate a high watermark for growth during the year and how should we think about commercial recovery through the years, especially in Germany.

Well I will let marguerite or answer in terms of service revenues sort of outlook or view I would just say in terms of trading I mean, clearly they remain challenging times I am not just talk and our industry challenge and toy sort of everyone and it was always very clear that it would not be.

I lived in the recovery. So we should expect bumps in the road, we are expecting pumps and the load in terms of and we're looking at things clearly as I said.

I am pleased with the 3% growth and the.

Underlying growth rate that we had and we're firmly on track on our guidance I'd say in terms of commercial activity. If I. If I look at clearly has been suppressed.

If we pick Germany as your example, what we saw in April and May was footfall down 80%.

It and start to improve the June but still down 50%. So we all I saw not day, yet in terms of normalization. If you look at it.

<unk> pools of Spain, and Italy on mobile net ports. These are still down year over year.

So I would say Oh boy I would just seeing I, even lower level of activity and as I say, you say that and that should so.

I I think this is the case, so let's see as we move into the back to school period, I think that becomes a very important.

We certainly are focused on the propositions the promotions the above the line campaigns that we will be hitting on back to school and we think that that will reignite our commercial momentum.

And 7 new growth of course, Q1 was a very very special quarter, we have seen roaming moving from being a headwind to obtain wins now and on top of that with that these are what I call 1 off effects from last year at this time seeing that.

And the shock of the pandemic and out market.

If you remember at the presentation, we did a year ago.

Q1, we were calling out a number of our effects, particularly things like business projects being delayed from Q1 into Q2, our prepaid top ups and more difficult in some markets and I would say probably the market, which was most affected by the beginning of the pandemic was Spain.

Well the emergency decree was particularly severe taken in aggregate.

These are 1 offs I would.

Worth about 1 percentage point, which as we say is not going to recur as we move into the next day support us.

But we are well on track to deliver growth this year both in and.

And Europe and Africa, and we are pleased with the momentum as Nick was mentioning uncertainties revenue 1 data point that I would call out from that perspective is that now we have all the data from the last 12 months and what we have seen is that if you take the 12 months to March 'twenty, 1 through the pandemic.

We have outperformed and I think they.

Service revenue growth all the incumbents and all the scaled player.

In our major European markets, both in fixed and.

And in mobile service revenue growth. So we are pleased with where we are and how you asked about the coming quarters of course.

And I I would say different growth drivers that are affecting the profile for the reminder of the year.

If I take into and consumer and business I would say in consumer net.

We're going to get the headwinds coming from the likes of space driven by the pandemic and the last 12 months as Nick said, we are now focused on re accelerating.

After the summer with the back to school periods and then it's very much be Turkey also volumes.

But also price and on price, we need to see how the balance between the more for more inflationary pricing actions that we I was taking works against the competitive pressures.

In business, we are set for acceleration.

Throughout the year you have seen the good results already in Q1, we are also gaining market share clearly and business and I think that and the speed of the acceleration will very much depend on the European recovery funds and how it will support our demand for in particular and digital services and.

So timing of that will be critical and in particular, how much of that will fall into the second half of D C and and how much will be phased over the coming year.

But if I step back I would say definitely as Nick mentioned already on track to deliver our guidance for this year.

He is not so much kind of that was really helpful. Thank you.

Yeah.

Thank you very much Andrew.

Our next question today comes from Nick <unk> from Redburn.

Nick. Please go ahead. Your line is now open.

Thanks, so much a day.

So just a question on Africa and Fintech Rudy.

Fantastic business.

Particularly in sparkling, but also and vertical.

It could be worthwhile.

10 per month.

And how.

Do you think about how you illustrate that and body.

And I guess, the London markets and as opposed to.

When I arrived.

Relatively well refresh reflects and perhaps 1 and sparkle.

Group.

Yes, Nick I I think Thats, a really important topic, you know Oh I have spoken about Empire and now for 10 years, I mean, I I'm very passionate about the transformational nature of it we've committed resource investment and we've never constrained the employees of platform.

And I really tried to evolve it.

I am Super excited I, I really think that the pandemic I mean.

We have.

It's 1 of those platforms you have to do an awful lot of investment over 3 or 4 years to gain scale and then become the default player within each of the markets and we've done that investment over the last 10 years. We are the number 1 player in all of the markets that we are range. So I was raised they all see with and Theyre Lesotho.

And the rest of your site, so having built that position.

And so the question of how you contribute scale true more if you like user cases going forward you saw that transaction volumes are materially up I mean, you've seen that and Vodacom international and <unk>.

It's revenue for employees and was up 43% I mean these are staggering numbers.

For a platform that's already number 1 and the marketplace and this is because we're really breaking out I will just pay it appears this is now companies paying the payroll.

And then pays people doing their utility bills using and pays us. So we really do think it's and the ecosystem of platform. That's a mindset, we're investing heavily behind it and 1 of the things we need to start thinking about as that transition journey between feature phones and smartphones and so we're now doing many apps.

And then we will allow us to do things like savings and micro loans funeral insurance et cetera, and so this is a new product set that is coming swim Isa.

And it clearly and South Africa, the financial services component will be done through what we'll call and vote of pay which is a suite per rep.

Execution and slightly different right all of this together, it's talk and 15% of Vodacom service revenue. So when I have spoken to schmale and we strategize about wherever he wants type that we've said, what we really need to start separates and this business and sell into separate legal entities make sure that we show complete true.

And inspire and say of this business and what it means to growth and <unk>.

<unk> and.

And then that also allows us other opportunities organically going forward and so I would say at this moment.

And we're driving hard we're investing heavily we're doing commercial partnerships with I lead Pi, we might do other commercial partnerships with other people I think there's an opportunity to say empire outside of their footprint and Africa, because its really getting traction so many opportunities organic maybe inorganic and the future.

And separate out the platform and then think about how we drive for shareholder value.

How long would it take to separate out the platform legal entities.

We're running through that process, we have been for the law. So I want to say 9 months, we moved to platform down from the group down into Africa, because I was an important component as well.

Hosting the lungs, Italy and then.

There's a number of.

Part of the execution.

Okay fantastic. Thank you.

Thank you.

Thank you very much net our next question today comes from Joe just yards economy. Joe just please go ahead and launch now.

And.

Uh huh.

Thanks for taking my question.

And maybe a follow up on how the comments you made around back to school and commercial momentum. If we look at these results perhaps per 1 area of weakness has been songs you are.

Part of the army and fixed.

I'm sorry, I just wanted to ask maybe a general question about what other issues, you're seeing different markets I figured out and some of them are competitive markets margin tell me on Spain, where everybody's have corn and PON, where the cash.

And priority and <unk> Haas.

I could be more auction.

And to stabilizing our kpis and be more promotional and then maybe I can.

I guess sluggish I part of the question for Germany.

And I expect when the fruitful returns back to normal levels for the kpis to fully recover or other or any other headwinds you may be facing thank you.

Okay.

Joe just maybe a few comments and then Margaret can do some builds.

Look I.

I think we as a company have always been focused on value rather than chasing volume. So so we are a good rational player and the marketplace, we compete and our structural way now increasingly on a dual brand strategy. So for every market from a pricing perspective.

And we go through and exercise, where we identify the various brands that were competing against and decide how we're going to position pricing versus those brands and then we hope that position so as I move up move down we adjust accordingly.

And to ensure that.

We have made it very clear what points of differentiation, we have and where we need so much. So I would say we stay disciplined on that clearly a short sharp and footfall is down the west and you can do and stroke lots of above the line marketing money into a market that's pretty quiet and this is an example.

And Germany, so when we saw that the retail.

Activity was low footfall was low and what we said is for quarter..1 we're not going to go above the line and this would be wasted Marc and resource and what we'll do is we're stalled out for later in the year. When we felt the oldest stores would open so I look as an example in Germany.

Generally that's been and our approach across all of the market share.

So you Guy.

Retail has been open and we've been above the line we've been commercially from flow to it because it was appropriate to do that clearly we manage advice for lower churn and you'll stay in that instance, it.

If I look at Germany, specifically I would turn around and just I look we have a.

Clearly shaped siri.

A series of propositions and promotions folds abaxis scope. So I mean, we're good to go as we are through the whole of Europe.

We have worked at CV portfolio I think it's a strong portfolio we'd be disappointed if we would not be and I believe that the retail stores because that's a really important part of the TV portfolios stores. So we're good to go on the CD portfolio.

Palm and noise that propositions and pricing we've integrated our sales channels. These are all things we talked about over the last couple of quarters. It's just we haven't had the retail sites really drive this.

I view it as soon as that retail the site is fully open.

And we're on the front, but again and we're confident that we have compelling propositions to drive.

And just maybe to add that our fixed is not exactly the same in the markets I think that aren't that different dynamics across different markets and there were just a couple of points I wanted to point out 1 is related to consumer and its the fact that I should take a market like Italy growth has now moved.

Very much into SWA.

And as a source of expansion and for our first W. As reported which and mobile so just keep that in mind. When you look at the numbers because the market growth has really shifted that and consumer.

And the other aspect is business sales.

The 77, new and fixed and from business, which is driven by very different factors. It has lots of 40% and and certain markets now in our in house and in Europe, and as you have seen from our reporting and business, we are growing well and we expect further acceleration because.

All the areas of growth in seats that distinguish off and we havent been at least the legacy product focusing on SD Wan and I know that.

New products will be even more.

Propelled by the European recovery funds. So I think it's just something to keep in mind. When you project the <unk> growth in the coming quarters.

Okay.

Thank you very much Georgia.

Our next question today comes from Jeremy Dellis from Jeffries.

Geri. Please go ahead. Your line is now open.

Yes. Good morning. Thank you for taking my question I have a question really relates to what you're saying is the retail.

Footfall recovers in the months of June and July.

How are you seeing that share footfall translating into net adds recovery I mean I.

I see what happens and the rest of the year is highly uncertain and perhaps if you could comment on what Youre seeing in June and July pace that would be helpful. And if you could make particular reference to the German situation plays where I think we saw about 30000 and cable net adds and the last quarter and then I sort of essentially only.

Patients from DSO, I think very interesting for us to understand what recovery you might be seeing in June and July that thank you.

Well I, Jerry I I don't think it's appropriate to get down into weekly projections results et cetera, well I think on a.

On a slightly higher level I would say that as stores that Vodafone footfall result, bouncing back across retail and not our retail, but just the retail and full stop and I think it's because a lot of that has been the fact that the stores have opened back up just as we're moving into the vacation.

Periods, and so I'd say people are prioritizing other things at the moment I don't know.

So I would say this is very much the test will be back to school period, and saying more towards the end of August and September as being a more normalized activity going forward.

<unk> seen everyone's talking about the double Jack certificates.

And you've seen what's happened and France et cetera. So I just I just think at the moment.

Nowhere near normalization, if we look at the months of June July yet.

Thank you very much.

Thank you very much Gerry.

Our next question today comes from Jacob Bluestone from Credit Suisse.

Jacob Please go ahead your line.

And is now open.

And good morning, and thanks for taking the question.

Another question on Germany, as well just trying to understand the weakness and net adds and a little bit more detail for fixed net adds are down 70% year on year, and footfall and the shops at <unk> 70 per cent for retail stores arent your only distribution channel and CCAR online you've got phone and so on so just seems like that.

And net adds dropped is bigger than the footfall.

So, presumably there's something else going on I presume your online sales arent down 70% as well. So can you just sort of help us understand is it literally just low.

And the football and the shops and low conversion or is it something more broad happening here in Germany that explains quite why the net adds are quite so weak and maybe if you can also just contrasted a bit was the numbers. We saw from day to you last quarter and <unk>.

It is showing a much stronger fixed line performance excuse me and maybe just help us understand the differences and your trends versus what they've disclosed so far.

Jacob I I would say just in simple terms.

When you are in.

Knocked downs and restrictions, it's always going to favor the incumbent because they have the base and I are constantly marketing to the price of course weak and markets, where I base, but what we're looking to do is take share and the marketplace and Thats why rates are there is a very important part to take share.

Within the market. So what I would say is that that effectively.

Churn levels are down activity levels are down if you were a customer at this point in time and semi Lockdowns are you really going to change your fixed broadband provider is not going to be top of mind. So this is what I mean, we made a conscious decision, we're not going to run above the line campaigns, because India and stimulating.

Trying to stimulate demand when people are saying well I mean.

And I think about it but I'm going to do it when we're out of lockdown restrictions. So I was at very natural thing in my opinion that people would say and that particular product yeah, I'm going to wait until I know back to normalization and I might consider provider, which guys. We will be very much on the front book.

I would say that for a fixed in particular.

You can subscribe.

Subscribe online, but in most cases, you still need and engineers to come into your home to do the modification and again not something I think people who wanted to do particularly in April and May in in Germany, and probably not something you're very inclined to do and this particular point in time.

And there's a real I I think there's a real so you get the hard facts of Covid and then you get the sense and then around concerns and I think the Delta Varian coming into Europe has has if you liked suppressed a little bit because people are concerned and I think it's only when they say yes.

Okay. It's come through maybe the cases go up a host of volume inflation doesn't really move com.

Confidence returns, it's a confidence thing so I just think at the moment people are saying I'm going to stick with my current provider.

As I think you pointed out.

Historic figures I would churn and Germany I mean, it's.

It's not like.

We are underperforming and churn.

Got it thank you.

Thank you very much Jacobs.

Our next question today comes from Javier.

Teresa I sorry, other ACO from societies, you know how I will cover. Please go ahead. Your line is now open.

Hi, Good morning could you and me.

Yes, absolutely I smiled and clear.

Right.

Yeah, just moving away from Germany, and go into another country and Italy.

Reduction in churn and has damaged Vodafone and because of the market the way you're winning market share that has helped you and a microwave loosing market share, particularly in mobile.

So I was just wondering if you can give us a piece of color on what you would expect over the next few quarters considering that.

And the economy reopens.

And it's very likely to be to remain aggressive.

And and fix that go into launch and much very likely the offer and you'll have particularly you're going to use the same wholesaler.

So and the other side you can also competition from the incumbent has recently signed a partnership between the content. That's on so you've got basically 2 different drivers coming against you. So how youll retention policies going to bolt and that market and what do you reckon, we'll be your trends you pointed to.

And so over the next 2 or 3 quarters, given where they sit today and then just a quick 1 unfortunate and not being able to ask in the past, but I want to ask this 1 on India, India. This week has filed with the Supreme Court, saying, that's not public sector bank, because we didn't book I guarantee Vodafone and idea.

And so the asset or the assets already in Q2, they are with banks and.

And since September they tried to response I know, it's almost a year no 1 has come and with fresh fence because they want the controlling shareholders I bought a phone to basically help comp as well. So if you can tell us what's the strategy as it is now <unk> been very firm the past at least over the last 12 months to principal amounts and the spring fresh funds.

But and you're trying to look and the markets, but so far nothing and of course is doing in Spain.

Deteriorating and suddenly so whats it going to break the impact from the analyst day, there could be some repercussions from the other investment needs us to guarantee the sales coming from Vodafone idea.

<unk>.

Very comprehensive I would tell you well and whether you'd say your home market and I will take him yesterday do you want to go for sure.

Italy, very competitive and as you mentioned.

We have some ups and downs and regularly particularly in the prepaid market, but I would say the last few 2 weeks. The last couple of months in Italy, and certainly seen an increase in competitive intensity.

More allowances in mobile we have and it's 1 of the other.

And the T mobile network, operator billing on TV would be a headline of $5.99 for 100 gig, which clearly than CF sustainable and competitive pressure on pricing as also heat.

And the fixed by the way <unk> and order they Mason and what we were discussing earlier and Italy, we have seen after the spike at the beginning of the pandemic in the fixed market, we've seen demand and drying up and moving towards SWA and in that context price competition is heightened.

And to your point I don't see D says and reversing Indian entity, given that there is and upcoming launch of Iliad.

So very competitive amongst the various factor you mentioned the agreement with doesn't and I need to say I wouldn't put in this.

I think competition.

And football on T V.

Key factor in the Italian market.

Less seats and you subscribe even less thing for football.

And nowhere.

And markets like Spain and of course also food believes available free over the top as well. So I don't think this is going to be a critical factor, but back to what we see in terms of growth in the coming quarter competition will continue to be intense but I thought.

I would and you have seen the results improving.

Benefiting now of course from lapping the roaming drag, which was particularly strong and Italy, but in the coming quarters. We will also see the benefit of our new wholesale deals coming into line in service revenue and then a little bit more in terms of medium term.

The European recovery funds with Mason and get as many times today, but Italy is the market that we get the latter just and location 1 other than $90 billion of which 70 million is that is Graham.

And it's fair to say that we're very well positioned ourselves.

And it and it benefits from the increased demands on business services from the European Recovery Fund and I was mentioning earlier I turn the first 77 and his business. We are consistently taking share of the market and therefore, we have a really great assets to get advantage from this and we need to.

And how it will phase in terms of timing, but a general improving trend on the back of these factors.

And just turning to India.

And really India is a question for Vodafone and idea.

But within the going concern statements I highlighted very clearly they are.

And then as a going concern.

On refinancing of debt coming due.

And so as a monetization of assets in terms of government support so AGR or flow pricing et cetera.

And raising funds. So I mean, it is a as you say I highly stressed situation a difficult situation that they are trying to navigate I mean, we as a group try to provide them as much practical support as we can but I want to make it very clear we are not put in.

New equity into India.

Thanks.

Thank you very much Tom Yeah.

Our next question today comes from Emmet Kelly from Morgan Stanley. Please go ahead. Your line is now open.

And yes, good morning, Nik and good morning, Margarita and thank you for taking my question and I have a question just on your introductory comments Mick and you mentioned that you and the management and before and are still looking at.

And the portfolio and options relating to the portfolio to do never shareholder value can you, maybe just expand a little back on your remarks and Bosch options are open to you. Unfortunately I can't.

Yes look I I.

I think we have demonstrated over the last 2 and a half years since I've been CEO and low grades and the CFO that we are constantly optimizing the portfolio.

To drive shareholder value and we will continue to do that very actively.

What do I mean by very actively I mean, if I give you. Some examples of areas. So vantage trials. We are really pleased with the fact that boat sales is now up and running.

And what the share price has moved almost just over 20% since the IPO. So I think that was a vindication of the fact, we kept the initial sale.

Quite moderate.

Retaining.

Approximately 82% of the interest and that company I think we did the timing was good so I mean, because now we are poised to help.

Dry 5 G, but also consolidate.

And if you like the early rounds of the sector.

In Europe. So I think that is a really good growth opportunity for us going forward and we would want to type that we are clearly open to as I've said before co controlled scenarios.

Sort of like minded industrial players wouldn't seem to do combinations and the future. So we would certainly.

Explore and and sustain those types of discussions. So we've done I think once do more things with voltage styles going forward I would say second space would be.

In Africa.

Africa, clearly, we have Egypt, and you saw that we did I knew shareholder agreement with Telecom, Egypt that gave us the optionality non op.

Legation, but optionality to move it within the group, we could potentially move it to vodacom that could always be a scenario. You know we did that was a safari chrome and I think that was very successful.

And no obligation book, but it's an option for us to explore and then finally I would just say just in general Couldnt swallow the ocean through Europe.

I still think.

That there is opportunity to consolidate.

I think that in terms of how governments are now viewing consolidation and I think they've seen how critical we are as critical national infrastructure. They understand the returns issue of the sector now I really think they understand that I am having a series of very good conversations I've spoken to the sex true spikes the U K as an example.

Earlier in the week on this particular topic and I think I want to make sure. We are a healthy sector because I understand we enable sector a sector. So we enable all other sectors and therefore, they need to have competitive infrastructure for the country to be competitive globally.

So what I would say the conversation around what is the right amount of infrastructure in the country with the infrastructure and consolidate versus retail and other permutations and we're exploring a lot of different.

Aspects, so I would say.

To see what can be realized so I would say very very active in this area and we see of course it comes with complications because you've got EU competition Commission, but even that saga Commissioner vessel.

Come in and say.

But she was holding our meeting in October so really sort of stand back and start a conversation around the competitive framework that exists today.

And might not change at all or it might be slightly moderates it or they might do something more substantive, but I think conversations around things like.

The definition of of the market and which you participate become a more relevant conversation.

And we argue as I move to tightly define at the moment and it's broader than it looks.

And things like ensuring that they are.

Reinforcing and enforcing our competition law when needed more rigorously than they do in certain situations to stop abuse. These types of things I think could be positive in terms of direction.

Thank you very much.

Thank you very much Amit.

Our next question today comes from James <unk> from New Street.

James. Please go ahead. Your line is now open.

I guess good morning, Thank you Nick Smart reach as I had a question really on your business outlook that you are seeing and the commentary you've given that so firstly.

And yes, there is at the full year and severance you announced increase in your Capex spend.

<unk> business initiative, and you said some of that was going to be success based as I would love to hear and update on what success ratios you are seeing at the moment.

The Iot and campus networks.

Uh huh.

And then secondly, you talk a bit about the European and recovery.

I think we won't agree has the potential to be very significant we'd love to hear kind of what you're seeing now bottom out on the ground on your ability to actually then feeds.

Some of these contracts what are you hearing from the Smbs.

Some of these funds are going towards to digitalize, and Europe, and a teacher that and win some of the contracts from them and directly thank you.

Yes, James Let me I mean first of all so we announced saying we're going to invest in digital services and it does placements are all to build these digital services. If you remember we were talking about a lot more integration and other People's services answer why I platform. So that we can bring.

And those services to light so can I give you a tangible example, because it's sort of somewhat answers both Spain is a really good income for the recovery funds so as I.

I.

Punished governance, I mean I've been impressed at the speed and we've got the government has moved I mean since.

And since I met them in April and I went through his what you could do to make a difference for our sector. I mean I have hit every single point.

US with them so whether it was the good spectrum outcome that we have with lower pricing et cetera, and lower taxes.

Can I get sort of tens of millions benefit moving forward.

Third was around where could you really make a difference on accelerates and digitalization and smedes. So they they have <unk> 3 billion euros for the digitalization of space, but already has said that they will release half a billion dollars in November.

They all setting up effectively a digital hub.

To claim your subsidy and.

And what they're doing is they are targets and the first half a billion on companies with employees. Once a 49, so let's say.

So how and small and yes, Paul space and.

And I are going to give a 90% 90 day.

And subsidy level.

Digital services.

So what is the mean and we formed a consortium.

A telephone and code so really the 2 of US I mean, this would be the same youre going to see and all markets and sales and the incumbents because of that business profile tends to be the 2 operates as the controlled consortiums and so then we form I series of companies that come behind us in terms of.

Offering digital and services integrated with our offering that we can bring to our customer base and I can use and 90% subsidy against those services and importantly, the 90% is paid upfront.

And then we put the customer on a 2 year 3 year contract for those services.

And we're really working very hard to.

And we've contributed a lot to the shaping of this but also to the.

Ensuring that this will be a seamless experience for our customers. So I would say this is the best case, we have at the moment and what we'll do.

And some other governments around Europe and same please replicate.

Really good model for us and we're hearing good traction across the board everyone through tax vouchers, whatever so some of the other countries might be more complicated but this is a really good example, volume now and.

I know if you got some built no the only deals would be the type of services that.

And we'll be both will be bundles, you will have I don't know a security Bongo and E Commerce volume, though.

And the support systems bundles, so that it's easy for companies of this size to move out to satisfy their needs and we can each bond as you will have a combination of services readily available from the consortium.

So I and 1 final group because you specifically mentioned it was mogul mobile private networks of which again I think we've taken a real leadership position, we believe and local private networks, we're investing behind it with standardized the key thing here and how do you make it a series of products as opposed to it's always a book.

Look expensive solution, we want to make sure that we can do this at scale.

The size and effectively through pilots and what youre going to see I think is traction and dedicated private networks and the.

And both sophisticated version so that's why our customers campus.

Tree etcetera manufacturing plant and logistics support.

Both of these I I sort of hybrid Wan and so you got dedicated and and you got to the hybrid and the hybrid and then mix is the ability to use I made and macro network and the dedicated and nuts and slightly more sophisticated and that needed some more technology roadmap developments.

Alright.

And because these are yes. These are really I.

I think we have a really exciting proposition roadmap ahead of us and so I think the hardest thing we have at the moment is prioritization and said that.

Demand there is.

Its shift and that you can hear what was I and shifts in our proposition prioritization and sequencing for the EU recovery funds, where the money moves we want to make sure. We've got the strongest proposition and partners lined up and it's a good seamless experience for vouchers or whatever.

And then develop more broader strategic.

French AC products over time.

That's great. Thank you I appreciate all the color there.

Thank you very much James.

Our next question today comes from Adam Fox Rumley from HSBC. Adam. Please go ahead. Your line is now open.

Thank you very much you mentioned that the above the line marketing and some pretty limited at the moment and I think the <unk>.

Reasons, you put forth that Mike makes a lot of sense.

And how you think that's affecting customers' perception of and.

Desire for 5 G.

It's not so much talking about I am not so much talking about customers on the bleeding edge, but more of a larger pool of customers.

Or do you think is kind of unlimited tariffs.

Bill and Lorie and Bill shock is being removed just really the thing that's driving up some amendments. Thank you.

And I cannot give a view on this because I.

A consumer customer 5 G makes no difference no difference on performance, but any use case that they are using today and what we can see over the next 5 years. So <unk> is not for consumers. So I mean, it's nice I would say I got 5 <unk> 5 and then.

And I Couldnt, but this is a business application you heard my passion around mobile private networks et cetera, that's where the monetization is.

And so what we're focused on is building and <unk> network for businesses and secondly in cities to lower our unitary costs.

To your point about unlimited because it has a lower unitary costs, which cause unlimited and we can deliver.

Lower unit cost so we want to build the lowest unit cost factory and the industry in Europe. So that we can compete on any level against any player and on.

And superior margin and so we're building it for that so we are not doing some of these deployments and some of our other peers do and which is used and DSS.

Which is just trying to run a coverage plane for 5 G and actually what we've seen is a reduction in performance on the blend of 5 G. Fuji on that net book with DSS. So I I would say so going back to your marketing point I think what we want to be more pockets and is the merits of Ah ha.

High quality net book.

That is a blend of <unk> 5 Jay you just wanted to know if you want to know is reliable that you've got the.

Coverage that you've got the performance you need that you don't get dropped calls et cetera. It's a seamless experience we wanted to live and that's where our customers and that's our priority is high priority for consumers is a high quality network. The businesses. We are targeting 5 G. Because we think that that is I monetization and transformational for our customers.

Experience.

Of course above the line, we can talk about network.

I Couldnt see network, we can talk about propositions, depending on which quarter, we're in and whether we have it.

So I think things.

Thanks.

And so much.

Thank you very much Adam.

So we have time for 1 more question today from Carl Murdock Smith.

From.

And back call. Please go ahead.

Oh, you're on mute.

But that that they are impressive headset.

I mean, it really you do learn line, you're flying so number of size shape.

Yeah.

Carl maybe just make sure that youll headset and itself isn't needed there might be a thing on the wire merits not I know you can mitigate that.

I have no idea behind them.

No I think it will happen.

Not giving up on my and my Trusty headsets.

I just wanted to ask about the decision to stay with comfort and warehouse and.

The U K and.

And I kind of what's the new agreement gives you a size is particularly interesting.

Giving you your personal history with that and given the what you would see of U K business, you actually left coughing.

So I was just wondering if you could add some comments and stuff.

Okay, I mean, clearly it's a confidential commercial contract book, but let me give you the essence as well as to your question I mean, I I think it was a feeling that a lot of off price as of last call. If I went and where exits and the indirect channels. The ultra is no day no. It's just less golf I and the women's where a lot of other I would argue more.

More aggressive and more expensive indirect channels.

And so if you stand back and the U K setting indirect channels and I've always felt even though I did exit cough and I've always felt have a role to play to complement.

Our operators because they are offering something to a different target audience share.

The issue I always had was we make no money on the life of the customer and secondly, there was a high churn profiles and so those 2 together and not good economics for us what I would say it was something where we bought together.

<unk> per loyal base and this is the agreement we now have with copper and so the big difference is we make money day 1.

<unk> is similarly, so they carry on selling their handsets, but this is Tim I really so you pick the handset and then it comes to Vodafone on a Sim only.

Uh huh.

<unk> currently we are working together on the base to improve the loyal and see lower the churn and give more products and services. So what I would say is it's a fundamentally different arrangement between the 2 of us I.

I think proves to be successful for both of us because it has the right construct at the start which is these are our customers together and how do we take them on a journey of more products and services and embed loyalty over a period of time and I think we could do that together and so that's why.

And we're pleased to move forward on that basis, and we would rather work with indirect channels that have that philosophy, rather than I price sell high churn.

I am not so.

Ethical.

And.

What would I say.

Our approach to commercials.

Okay. That's great. Thanks, very much or maybe I should say Roger given that given the headset.

[laughter].

Thank you.

And the last question and I think so I look thank you all for taking the time to join US I hope.

And that you will take a bit of time out over the summer because I think everyone needs a little bit of a break 1 way or the other.

And I look we look forward to the back to school. Please if you have not Vodafone and phone customer I can't think why you wouldn't be you need to become 1 and we're gonna have great propositions and the marketplace and I look forward, we look forward to seeing you.

All in November.

Hello.

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And.