Full Year 2024 Vodafone Group Public Ltd Co Earnings Call

Margherita Della Valle: All segments are now growing, as you have seen, and our performance in business was particularly strong, with service revenue growth accelerating to 5% this year. But beyond our progress on our strategic priorities. I am pleased with the financial results we have delivered, having slightly exceeded our guidance for the year. Our service revenue growth has been accelerating throughout the year, and EBITDA grew by 2% in a year with significant inflationary headwinds, especially energy prices, as well as significant reinvestments we have made to improve our customer experience. But looking ahead to next year, much more still needs to be done.

Growing as you have seen in our performance in business was particularly strong with service revenue growth accelerated to 5% this year.

Beyond the progress on our strategic priorities.

I am pleased with the financial results we have delivered.

Slightly exceeded our guidance for the year.

Our service revenue growth has been accelerating throughout the year and EBITDA grew by 2%.

Here with significant inflationary headwinds, especially energy prices.

As well as significant investments, we have made to improve our customer experience.

But looking ahead to next year.

Much more still needs to be done.

Margherita Della Valle: We have clear areas of focus for FY25 to drive operational excellence across the group. We will once more step up investment in our customer experience and focus on improving our underlying performance in Germany, which includes a broad range of actions across our fixed and mobile propositions, our channel strategy, the MDU transition, and the utilization and quality of our network. This will also continue to accelerate our momentum in business and simplify our operations throughout the group.

We have clear areas of focus for FY 'twenty five to drive operational excellence across the group.

One small step up investments in our customer experience and focus on improving our underlying performance in Germany.

Which includes a broad range of actions across our fixed and mobile proposition.

Channel strategy, DMD transition and the utilization and quality of our networks.

We'll also continue to accelerate our momentum in business and simplify our operations throughout the group.

Margherita Della Valle: Our operational transformation will enable us to build a better Vodafone, generating growth and delivering the best experience possible for our 300 million consumers and 5 million business customers. And with that, both Luka and I will now take your questions.

Our operational transformation will enable us to build the better Vodafone generating growth and delivering the best experience possible for our 300 million consumers and 5 million business customers.

Speaker Change: And with that both Luke and I will now take your questions.

Operator: Thank you, Margherita. We will now take our first question from Emmet Kelly at Morgan Stanley. Emmet, please go ahead.

Luke: Thank you Margarita we will now take our first question from Kelly with Morgan Stanley. Please.

Kelly: Please go ahead.

Emmet Bryan Kelly: Yes, thank you very much. Very good morning to everyone, and thank you for taking my question. Just the one question, please.

Kelly: Yes. Thank you very much very good morning to everyone and thank you for taking my question.

Emmet Bryan Kelly: You have published your guidance for the forthcoming year, and, as always, there are a lot of moving parts with any European telco company. Can you please say a few words about the various puts and takes on the top line and also at the EBITDA level? Clearly, at EBITDA, I see a lot of moving parts, whether it's energy, MDUs, cost savings, etc. So just a few words on how we should think about the top line in EBITDA, the key drivers. Thank you.

Kelly: The one question please.

You have public your.

Your guidance for the forthcoming year and as always there's a lot of.

Speaker Change: Moving parts with any European Telco company could you maybe say a few words about the various puts and takes on the top line and also at the EBITDA level clearly at EBITDA I see a lot of moving parts, whether it's energy empty use cost savings et cetera. So just a few words on how we should think about the top line and EBITDA.

Speaker Change: The key drivers. Thank you. Thank you Amit Luca Formula.

Operator: Thank you, Emmet. Luka?

Luka Mucic: Yeah, thanks a lot, Emmet, for the question. I know the drill by now.

Speaker Change: Thanks, a lot.

Speaker Change: For the question I know the truth I know.

Luca: So obviously first of all let's just recognize that we're very pleased with the momentum with which we are exiting.

Luka Mucic: So obviously, first of all, let's just recognize that we are very pleased with the momentum with which we are exiting FY24. We've seen an acceleration on the top line to 7.1% growth at the group level. Very importantly, also the underlying performance in Germany has been very solid with 0.6% headline growth, but 1.5% underlying. So in addition to that, we have in the Vodafone business a strong end to the year with 5.4% growth.

Luca: Slide 24, and we've seen an acceleration on the top line to seven 1% growth at the group level very importantly, also the underlying performance in Germany has been very solid with <unk>, 6% headline growth of one 5%.

Luca: Underlying so.

Luca: In addition to that we have in Vodafone business.

Luka Mucic: So all of that is underpinning confidence in the fact that our transformation is actually yielding positive market momentum as well. When we then look into FY25, to start with the top line, we would continue to expect decent growth in FY25 from a component perspective. In Germany, as we all know, it's a transitional year with the MDU headwind building up strongly now.

And to the year with five 4% growth. So all of that is.

Luca: Underpinning our confidence in the fact that our transformation is actually yielding positive market momentum as well when we then look into FY 'twenty five.

Luca: To start with the top line.

Luca: We would continue to expect decent growth also in FY 'twenty five from a component perspective in Germany as we all know it's a transitional year with the MDU headwind building up strongly now we don't expect that our positive underlying growth that we are.

Luka Mucic: We don't expect that our positive underlying growth, which we expect to continue also in FY25, will be sufficient to make up for that. So we expect Germany's service revenue performance in FY25 to turn negative before then in FY26, obviously making room for Germany returning as an important growth engine for the group. In the rest of Europe, we would expect a slowdown in growth because of the unwinding of CPI-driven increases, which will be very positive on the EBITDA front.

Luca: <unk> to continue also in FY 'twenty five will be sufficient to make up for that so we expect German new service revenue performance in FY 'twenty five to turn negative before then in FY 'twenty, six obviously, making room for Germany, returning as an important growth engine for the group.

Luca: In the rest of Europe, we would expect.

Luca: A slowdown of growth because of the unwinding of CPI, driven increases, which will be very positive on the EBITDA front I will come to that in a second but on the service revenue growth side, we will certainly see a step down in the U K I would estimate with low single digit growth in the rest of Europe.

Luka Mucic: I will come to that in a second, but on the service revenue growth side, we will certainly see a step down. In the UK, I would estimate low single-digit growth. In the rest of Europe, it should remain slightly higher than that, but certainly a bit lower than what we saw in FY24.

Luca: Remain slightly higher than that but certainly a bit lower than what we have seen in FY 'twenty four and the rest of the group in the emerging markets will continue to grow very strongly.

Luka Mucic: And the rest of the group in the emerging markets will continue to grow very strongly. On the EBITDA front, as you have seen, we are guiding for growth in FY25, which is, I would say, a strong statement given that, obviously, also on the EBITDA front, the MDU transition is adding a sizable headwind. As a result of that, Germany's EBITDA will also be negative in FY25. In the rest of Europe, it will develop very favorably because of the energy cost unwind and the generally good commercial performance that we have seen in FY24, then translating into full-scale benefits on the profit front.

On the EBITDA front as you have seen we are guiding for growth in FY 'twenty, five which is I would say a strong statement given that obviously also on the EBITDA front the MDU transition.

Luca: Adding a sizable headwind.

Luca: As a result of that Germany, EBITDA will also be negative in FY 'twenty five in the rest of Europe. It will develop very favorably because of the energy cost unwind and the generally good commercial performance that we have seen in FY 'twenty. Four then translating into a full scale benefits on the profit.

Luca: And in the emerging markets, we continue to see strong growth prospects beyond all of this I think it's very important that we are setting Vodafone up for being a sustainable growth story for the future. So with this transitional year in the MDU headwinds out of the way we are.

Luka Mucic: And in emerging markets, we continue to see strong growth prospects. Beyond all of this, I think it's very important that we are setting Vodafone up to be a sustainable growth story for the future. So with this transitional year and the MDU headwinds out of the way, we certainly expect FY26 to be a year of growth in both the top line as well as in the EBITDA line. So we should see a nice step up going into FY26. Thank you.

Luca: Certainly expect FY 'twenty six to be a year of growth in both the top line as well as.

Luca: On the EBITDA line, so we should see a nice step up going into FY 'twenty six.

Speaker Change: Okay. Thank you very much.

Speaker Change: Okay.

Operator: Thank you very much. Thank you, Emmet. Our next question comes from Polo Tang at UBS. Hi, thanks for taking the question. So it's just one question on Germany, so if you look at Germany...

Operator: Thank you, Emmet. Our next question comes from Polo Tang at UBS. Hi, thanks for joining us.

Speaker Change: Thank you and our next.

Prototypes: Question comes from prototypes at UBS.

Prototypes: Hi, Thanks for.

UBS: Hi, Thanks for taking the question. So just one question on Germany. So if you look at Germany broadband net adds that you didn't see much of an improvement quarter on quarter. So can you give some color in terms of what's happening with German broadband net adds for April and May and how confident are you that the broadband base can stabilize and can you.

UBS: Comment on what's happening with competitive dynamics for the Germany market. Thank you.

Luka Mucic: Thank you, Polo. Six broadband in Q4. We have completed the $7.5 million repricing that we have done throughout the year and still had one month of technical disconnection from the customers impacted by price rises. But you're right; that would have warranted a bigger quarter-on-quarter improvement in net heads compared to what we have seen. And what we see happening today in the market is that, having done such large-scale repricing on our base, we are seeing a degree of a halo effect on customer perceptions from this pricing that takes some time to fade.

Speaker Change: Thank you Paulo fixed broadband.

Speaker Change: In Q4.

Speaker Change: We have completed the $7 5 million repricing that we have done through the year and still and one month of technical disconnection from the customers impacted by price rises, but you're right, that's where that warranted a big gap quarter on quarter improvement.

Speaker Change: In net adds compared to what we have seen and what we see happening today in the market is effectively that having done such.

Speaker Change: Large scale re pricing on our base.

Speaker Change: Seeing a beginning of a halo effect on customer perceptions from these pricing that takes some time to state in terms of what we expect for Q1 is an improvement on net ads quarter on quarter and we see this continuing.

Luka Mucic: In terms of what we expect for Q1, there will be an improvement in net heads quarter-on-quarter, and we see this continuing throughout the year. We have a number of actions in place as well that will support this ongoing improvement together with the fading of the price increase memory, let's say. In particular, as you may have seen from the presentation, we are changing the way we communicate with our customers on fixed line. We have a big re-engineering of customer management processes in play.

Speaker Change: Throughout the year.

Speaker Change: Yes.

A number of actions in place as well that will support this ongoing improvement to add together with the fading of the price increase.

Speaker Change: And Laurie let's say.

Speaker Change: In particular, who may have seen from the presentation. We are changing the way we are communicating with our customers in fixed line were the big.

Speaker Change: Engineering of customer management processes.

Luka Mucic: And also, a little bit later in the year, in the second half, we will open up off-footprint fiber connections so that our customers that are on DSL or mobile-only customers and want to benefit from ISP but cannot access the cable network will also be able to benefit from ISP. As I said, over time, we expect continued improvement on this KPI, and, of course, our target is to have a fair share of the market value growth.

Speaker Change: In play and also that a little bit later in the year in the second half we will open up our footprint fiber connections. So that our customers that are on DSL or mobile only customers and want to benefit from ISP, but cannot access the cable network.

Speaker Change: We'll also be able to benefit from ISP.

Speaker Change: As I said over time, we expect continued improvement on disc API and of course, our targets is to have our fair share of the market value growth.

Okay.

Carl Murdock: Our next question comes from Carl Murdock-Smith at Birnberg. Carl, please go ahead.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Carl Murdock Smith, that's a band back comps.

Speaker Change: Please go ahead.

Carl Murdock: Thank you very much. I haven't lost my voice this quarter, so I'm able to ask a question. I'd like to ask about the German MDU single billing transition. On your comment today that you expect to retain around 50% of the 8.5 million MDU TV households, can you provide a bit more color on what you've seen so far to give you the confidence to give that figure? Given that the 8.5 million customers account for revenue of around 800 million euros, is it fair to therefore think of that 50% as implying around 400 million euros of revenue?

Speaker Change: How much I haven't lost my voice this quarter, sorry, I'm able to answer the question.

Speaker Change: I'd like to ask about the German MDU single billing transition on your comments today that you expect to retain around 50% of the $8 5 million and the TV households can you provide a bit more color on what you've seen so far that gives you the confidence to give that figure given that the $8 5 million customers account for revenue.

Speaker Change: If around 800 million euros is it faster therefore think about 50% is implying around 400 million euros of revenue and a year ago, you talked about committing to 100 million euros of results to executing the transition last year, what would be the comparable results.

Carl Murdock: And a year ago, you talked about committing 100 million euros of resources to executing the transition last year. What would the comparable resource figure be for the coming year that might reasonably be expected to drop away after this year? Thank you.

Speaker Change: For the for the coming year.

Speaker Change: Reasonably be expected to drop away. After this year. Thank you.

Margherita Della Valle: Thank you, Carl. I will let Luka take on the investment and the financial impact. But just in terms of what we are seeing, let me say that it's a very big impact, of course, but I'm very pleased with how our teams have progressed in the execution of this. And also, I need to say, very pleased with the strength of our partnership with the Housing Association, which has allowed very strong cooperation in addressing the transition.

Speaker Change: Thank you Carol I will let Luke I'll take on the investment and the financial impact, but just in terms of the.

Speaker Change: What we are seeing let me say that.

Speaker Change: It's a very big impact of course, but I'm very pleased with all of them.

Our teams have progressed in the execution on this and also I need to say very pleased with the strength of our partnership.

Luke: The housing association that has allowed a very strong cooperation in addressing the transition if you think about our sales and marketing machine.

Margherita Della Valle: If you think about our sales and marketing machine, we are nationwide reminding customers that they need to take action. And we are saying this very clearly above the line, but we also have in place a series of nudges as customers go through the process to remind them about the choices they need to make. We have now gone through effectively four months of bigger volumes, with the January wave being the most significant. As you have seen in our results, we have, as of the end of March, secured 1.9 million customers in the period.

Luke: Nationwide reminding customers that they need to.

Luke: To take action and we are seeing this very clearly above the line, but we also have in place.

Luke: And the series of Nudges as customers go through the process to remind them.

Luke: About the choices they need they need to make.

Luke: We have.

Luke: Gone through now effectively four months of the bigger volumes with particularly the January wave being the most significant as you have seen in our results. We have had as of the end of March secured $1 9 million.

Margherita Della Valle: And this is about 60% of the addressable base that we have processed through in that phase. And with the visibility we have now, it's giving us the confidence to say that we expect to land on around 50% penetration. Clearly, the first to come through also tend to be the most proactive, and therefore we expect a degree of moderation over time. But it will all add up, to your point, to a 400 million drag from a financial perspective.

Luke: Customers in the period and this is about 60% of the addressable base that we have processed through.

Luke: In that phase and with the visibility we have now it's giving us the confidence to say that we expect to land on around 50%.

Luke: <unk> clearly the first to come through also tend to be the most proactive and therefore, we expect a degree of moderation overtime.

Luke: We'll all add up to your point to a 400 million drag from a financial perspective, and I'll, let <unk> give a bit more color on this.

Margherita Della Valle: And then maybe Luca can give a bit more color on this. Yeah, in particular on the investment, because of the pure revenue impact, and with that also the EBITDA impact, because it's an extremely high-margin business. I think you have already said everything that needs to be said, Margarita.

Speaker Change: Particular on the investment because on the on the pure revenue impact.

Speaker Change: That also EBITDA impact because it is an extremely high margin business. I think you have already said everything that needs to be said moderate but in terms of the investment Youre right.

Luka Mucic: But in terms of the investment, you're right. The total transformation program is coming along with an investment price tag of 100 million. Out of this, we have already spent the first half in FY24. That's one of the reasons why we also had a negative EBITDA performance in half year two in Germany. So there is a second 50 million coming now in FY25, and this will then obviously unwind and not stay with us going into FY26.

Total transformation program.

Speaker Change: Is coming along with an investment price of $100 million out of this we have already spent the first half in FY 'twenty four and Thats one of the reasons why we also had in our half year two in Germany negative EBITDA performance. So there is a second $50 million coming now in FY 'twenty.

Speaker Change: <unk> and this will then obviously unwind and not stay with us going into FY 'twenty.

Luka Mucic: Let me maybe just add that, of course, this is a very large impact and it's a big drag on our guidance for FY25, not just for Germany but for the group as a whole. And we're really both of us looking forward to FY26, when Germany will be back to be an important growth engine for the group after this drag. And of course, this will reflect, as Luca was mentioning earlier, also on our growth potential overall. We are guiding for growth already in FY25, despite these 400 million, so we are looking forward to 26.

Speaker Change: Maybe just to add that of course this is a very large impact and it's a big drag.

Speaker Change: Our guidance for FY 'twenty, five not just for Germany, but for the group as a whole and we are really both of US looking forward to and slide 26, when Germany, where the box to be an important growth engine for the group after the strike.

Speaker Change: And of course this will reflect that Luca was mentioning earlier also not our outgrowth potential overall, we are guiding for growth already in 'twenty five despite.

Speaker Change: These $400 million.

Speaker Change: So looking forward to 2006.

Speaker Change: That's great thanks very much.

Operator: The next question this morning comes from Akhil Dattani at J.P. Morgan.

Speaker Change: The next question. This morning comes from acute autonomy at J P. Morgan.

Akhil Dattani: Hi morning. Thanks for taking the question. I wanted to drill a little bit deeper into the comment you made, Margherita, on fundamentally transforming Vodafone to growth. And there are two parts to that.

Acute Autonomy: Hi morning, Thanks for taking the question.

Speaker Change: Wanted to drill a little bit deeper into the comments you made margarita on fundamentally transforming vodafone to growth.

Akhil Dattani: The first is I wondered if you could elaborate on exactly what sort of metrics are key for you when you think about growth. You know, is it revenue? Is it EBITDA? Is it cash flow?

Acute Autonomy: And there's two parts to that the first is I wonder if you could elaborate on exactly what sort of metrics are key for you. When you think about growing revenues. The EBITDA was at cash flow and any sort of high level thoughts around this would have growth rates or levels, you aspire to but the.

Margherita Della Valle: And any sort of high-level thoughts around this sort of growth rate or level you aspire to. But the bigger sort of picture point of this is that one of the things we've seen in the sector over the last two years is that a lot of companies have started giving midterm guidance targets across a whole range of financials. And I just wondered what your thoughts were on that transition as you sound a lot more confident now about your growth trajectory. Could you similarly consider providing midterm targets? Thank you. Thank you, Akhil.

Acute Autonomy: A bigger picture point of this is that.

Acute Autonomy: One of the things we've seen in the sector over the last two years is that a lot of companies that started getting mid term guidance targets.

Acute Autonomy: Across a whole range of financials.

Acute Autonomy: And I just wondered what your thoughts were on that transition as you sound a lot more confident now on your growth trajectory could you similarly consider providing midterm targets. Thank you.

Margherita Della Valle: Thank you, Akhil. Ultimately, when we think about growth, we go towards two fundamental KPIs that I think summarise our position, which is free cash flow growth and return on capital growth, which is a key objective for us. As drivers of that, you will have seen that we have set up a new scorecard since last year. And if I had to say what I mostly care about within that scorecard to enable, ultimately, free cash flow and returns growth, there are two things. Customer satisfaction, reduction in tractors, and NPS improvement. I'm sure we may have a chance to talk more about this on the call.

Speaker Change: Thank you.

Speaker Change: Ultimately when we think about growth.

Speaker Change: We go towards two fundamental kpis that I think summarize our position, which is free cash flow growth and return on capital go tweak.

Speaker Change: Key objective.

Speaker Change: Ralph as drivers of that you will have seen that we.

Speaker Change: We have set up a new score cards since last year, and if I had to say what I, mostly care about within that score card to enable ultimately free cash flow and returns growth is is two things.

Speaker Change: Customer satisfaction reduction in the tractors NPS improvement until we may have a chance to talk more about this in the call. I think this is fundamental for the longer term health of the business and then.

Operator: I think this is fundamental for the longer-term health of the business and driving the opportunity for growth in B2B because I think it's much higher than what we see today. And it's in our hands to really drive this, and with the change in the shape of the group, winning on business, and winning on customer satisfaction. These are all things that are now in our hands because we are in good growth markets in terms of where we operate, and we also have good local scale.

Driving the opportunity of growth in <unk>, because I think it's much higher than what we see today and it's in our hands to really.

Speaker Change: Drive this and with the change of the shape of the group winning business winning on customer.

Speaker Change: Customer satisfaction. These are all things that are now in our hands because we are in good growth markets in terms of where we operate where we have also good local scale. So it's literally in our hands now there is a really good question on so what about the meat.

Operator: So it's literally in our hands. Now, you raised a really good question on so what about the midterm? I think standing back, you will understand that we see very much FY25 as a year of transition. And not just because of what's happening in Germany with the MDUs, but more broadly, we need to complete, the deals that we have announced this year or in the last fiscal year now and from FY26 with the UK merger you will see another change of perimeter so although I think we have done a big effort and we need to thank also our finance and IR teams in giving you already guidance based on the new perimeter with the discontinued operations there will be another change of perimeter with the merger so what we can say today is what we have just talked about which is we are guiding for growth in 25 and this is our traditional guidance but despite the headwinds of the MDUs and when we think about the longer term beyond 25 clearly we look at it positively because we will miss that drag which by the way we talked about 400 million EBITDA but there is also working capital as you know which is a mission and so it's quite sizable on our free cash flow map.

Speaker Change: Ah I think standing back you will understand that we see very much FY 'twenty five as a year of transition and not just because of what's happening in Germany with <unk>, but more broadly.

Speaker Change: We need to complete.

Speaker Change: The deals that we've announced.

Speaker Change: This year.

Speaker Change: In the last fiscal year, now and from FY 'twenty six with the UK merger you will see another change of things that are sold though I think we have done a big effort and we need to thank also our finance and IR teams in giving you already guidance based on the new perimeter with the discontinued operations that will be in order.

Speaker Change: Change of perimeter with the merger so what we can say today is what we have just talked about which is we are guiding for growth in 'twenty five.

Speaker Change: And this is our traditional guidance, but despite the headwinds of the us and when we think about the longer term beyond 25 clearly.

Speaker Change: We look at it positively because we will miss that drag which by the way we talked about on the EMEA on EBITDA, but there is also working capital as you know which is Lisa so it's quite sizable on on our free cash flow metric.

Speaker Change: Great. Thanks, so much.

Speaker Change: Yes.

Operator: The next question comes from Steve Malcolm, Edward Byrne. Please go ahead, Steve.

The next question comes from Steve Malcolm correctly, then please go ahead Steve.

Steve Malcolm: Yeah, good morning. Thanks for taking the question. A nice segue into the UK merger process. Just a couple of quick link questions.

Yeah. Good morning, Thanks for taking my questions and nice segue into the U K merger process.

Steve Malcolm: First, good to see you've got security clearance from the government. Do you think that has any bearing on the CMA approval process? And then just, you know, I guess, as your exit from Italy kind of loudly testifies, not all mobile mergers are born equal. Can you, I know you won't specify, but can you give us a flavor of whether you have any red lines on potential remedies? That would see you walk away from that merger. That'd be great, thanks.

Steve Malcolm: Couple of quick questions first.

Steve Malcolm: Could take a security clearance and the government doing that has any bearing on the CME CMA approval process and then just I guess as your exit from Italy kind of lately testifies Noto mobile mergers are born equal.

Speaker Change: Can you.

Speaker Change: Specify but can you give us a flavor of whether you have any red lines on potential remedies that would say you walk away from that merger.

That'd be great. Thanks.

Margherita Della Valle: Sure, Steve. I mean, starting from the end, absolutely.

Speaker Change: Sure seems starting from the end absolutely we don't think that this merger in the UK where on any.

Margherita Della Valle: We don't think that this merger in the UK warrants any remedy. And we've been very, very clear in the last few months about why. Keep in mind, it's completely different from either the merger that recently happened in Spain between Orange and MassMovie or completely different from the mergers that were discussed in the UK itself in previous years. And the reason why it's so different, and you're right, each situation is very specific, is that what we are doing in the UK is merging the two smaller, mobile-only players, which have low market shares and no returns that give them the possibility to invest appropriately in the market.

Speaker Change: Any of that money.

Speaker Change: And we've been very very clear in the last few months about the why keep in mind, it's completely different from either the merger that recently happened in space between our engine must movies all completely different from the merger that the.

Speaker Change: Mergers that were discussed in the U K south in previous years and the reason why it's so different and Youre right. Each situation is very specific is that what we are doing in the U K is merging the two smaller mobile only players which have low market share.

Speaker Change: And no returns that give them the possibility to invest appropriately in the market and it's not me speaking it's also been a.

Margherita Della Valle: And it's not me speaking, it's also been Ofcom. In the UK, you have three large converged players, results of previous mergers. By combining the two smaller guys in the market, we are actually going to see a positive in terms of impact on competition, because we will have a third scaled mobile network with not just the ability to invest, which in itself will create good dynamics for the UK market overall, but also the ability to have the capacity to compete on retail, but also on wholesale, which importantly is a market which drives very much retail pricing today, but where MVNOs are essentially facing a duopoly in the market today.

Speaker Change: Ofcom in the U K and the U F. Three largest converged player results of previous mergers by combining the two smaller guys in the market. We are actually going to see a positive in terms of impact on competition, because we will have a third scaled mobile <unk>.

Speaker Change: Look we're it's not just the ability to invest which in itself will create book dynamics for the UK market overall, but also the ability to have the capacity to compete on retail, but also on wholesale which importantly is the market's which drives very much retail pricing today, but where <unk> essentially.

Speaker Change: In a duopoly in in the market today, so sorry, very passionate about this but I think it's a it's a very strong proposition for all stakeholders.

Margherita Della Valle: So, sorry, very passionate about this, but I think it's a very strong proposition for all stakeholders. As you would expect, we are going through phase two at the moment, very deep engagement, and you're absolutely right, the security approval has no riddle cross to that. It was expected, and it came without any surprise, but the CMA process will continue all the way probably to the end of the year, and what we are doing now is having very intense reviews in order to address all the issues that were on the shopping list of phase one, as expected.

Speaker Change: Would expect we are going to phase III at the moment very deep.

Speaker Change: Deep engagement and Youre, absolutely right. The security approval has no read across to that it was expected and it came without any surprise, but the CMA process will continue.

Speaker Change: All the way probably to the end of the year and what we are doing now is having very intense and views in order to address all the issues that were in the shopping list of phase one.

Speaker Change: As expected.

Margherita Della Valle: So we should take from that that you are assuming that the remedies will be light and you'll be very disciplined in, you know, any proposed remedies and your willingness to accept them. They expect us to be...

Speaker Change: So we should take from that that you are assuming that the remedies will be light.

Speaker Change: We're very disciplined in any proposed remedies and your willingness to accept them.

Margherita Della Valle: You should expect us to be extremely disciplined because, again, I don't think any remedy is needed. Plus, you know why we are doing what we are doing, and you have seen our actions in Italy and the UK. We need to play in good markets where we have opportunities for good returns, and the synergies in the UK merger will provide just that.

Speaker Change: They expect us to be extremely disciplined because again I don't think any of that may be as needed plus you know why we're doing what we're doing and you have seen our actions in Italy, and the U K. We are we need to play in good markets, where do we have.

Speaker Change: The opportunities for good returns and then the synergies in the U K merger will provide just stopped.

Speaker Change: Great. Thanks very much.

Operator: Thank you. The next question comes from James Ratzer at Newstreet. James, please go ahead.

Speaker Change: Thank you. The next question comes from James.

James: That's new St. James Please go ahead.

James Ratzer: Yes, good morning Margherita and Luka, and thank you for taking the question. I'm really interested in learning a bit more about your current relationship with 1&1 in Germany. You know, now we're into FY25. We'd be interested if you could give us any more precise guidance on the revenue impact you're expecting from that contract this year and, you know, maybe going into FY26 when the EBITDA impact, I think, will be more significant.

James: Hi, Yes, good morning, Marguerite trend Luca.

Taking the question.

James: So it's really interested in learning a bit more about your current relationship with one and one in Germany now we're into FY 'twenty five we'd be interested if you can give us any more precise guidance.

James Ratzer: On the revenue impact youre expecting from that contract this year maybe.

James Ratzer: And yesterday we saw BNets suggest, as part of the consultation, that they're looking really for one of the MNOs to potentially lease or give up some low-band spectrum to 1&1, and that could potentially involve a network sharing or RAN sharing deal. Are you interested in helping to provide that? What's your willingness to consider it maybe a deeper deal with one-on-one as part of this BNets proposal? Thank you.

James Ratzer: Maybe going into FY 2006, when EBIT dollar impact I think will be more significant and yesterday, we sold the next.

James Ratzer: Suggest as part of the consultation that Theyre looking ready for one of the <unk> to potentially lease or give up some.

James Ratzer: Low band spectrum to one on one and that could potentially involve a network sharing of ran sharing deal.

Speaker Change: Are you interested.

Speaker Change: In helping to provide that what's your willingness to consider it maybe a deeper deal with one on one as part of its peanuts proposal. Thank you.

Margherita Della Valle: Thank you, James. I'll take the last part and then ask Luka to comment on the financial side. We're happy with the deal we have today with 1&1, which, as you know, is a very long-term deal and partnership with 1&1. It's been in place for up to 18 years. And as part of that, we will effectively carry the traffic for the, I think, 13 million now One-on-one customers wherever One-on-one will not build its network. So from that perspective, we will need our spectrum to answer your question. And so that's what you should expect.

Speaker Change: Thank you James I'll take the last part and then ask Luke to comment on the on the financial side.

Speaker Change: We're happy with the deal we have today with one and one which as you know is a very long term.

Speaker Change: Deal.

Speaker Change: And partnership.

Speaker Change: With one N one.

Established for.

Speaker Change: Up to 18 years and as part of that we will effectively carry the traffic for them I think 13 million now.

Speaker Change: One and one that customers, whereas in one and one will not be in the snack door. So from that perspective, we would need our spectrum.

Speaker Change: To answer your question.

Speaker Change: And so that that's what you should expect financially.

Luka Mucic: Yeah, so first of all, obviously, we are going to start the migration, one-on-one, we're going to start the migration of customers to our networks in the fall of this year. So you shouldn't expect a significant impact of the national roaming agreement in FY25.

Speaker Change: So first of all obviously, we are going to start the migration or a one on one we're going to we'll start the migration of customers to our networks.

Speaker Change: All this year, so you shouldn't expect.

A significant impact.

Speaker Change: Of.

Speaker Change: The.

Speaker Change: National roaming agreement in FY 'twenty five it will be helpful of course.

Luka Mucic: It will be helpful, of course, but especially on the cash flow front, as we also have to invest in some additional CAPEX in order to support the onboarding, it will be neutral on the cash flow side. So think about the revenue and EBITDA impact in the high double-digit million range and then the similar amount of CAPEX that we will require. And then, of course, as the onboarding is completed, going into FY26, it will be a favorable tailwind to our results.

Speaker Change: But especially on the cash flow front.

Speaker Change: So we also have to invest into some additional capex in order to support the onboarding. It will be neutral on the cash flow side, So think about our revenue and EBITDA impact in the high double digit million range and then a similar amount of capex that we will require.

Speaker Change: And then of course as the Onboarding is completed.

Speaker Change: Into FY 2006, it will be favorable.

Speaker Change: Tailwind to our results, but again for FY 'twenty five not enough to counter the impact from the MDU, especially as it will take time to die the migration so in terms of.

Luka Mucic: But again, for FY25, not enough to counter the impact of the MDUs, for sure. Yes, and it will take time to drive the migration. So in terms of service revenue headline, it's really the back end of how to for it to be really material.

Speaker Change: Service revenue headline, it's really us to backend of us to for it to be really material.

James Ratzer: Got it. And can I ask you, I think you gave a pretty clear message on Spectrum there, but would you be open to any RAN sharing agreement with them?

Speaker Change: Got it and kind of housekeeping I'm, asking you gave a pretty clear message on spectrum that but would you be open to any ran sharing agreement with them as I said, we're really happy with the position we have today and we don't expect any changes to that as you know we're busy implementing the agreement we have now and opening up our network and that's not true.

Margherita Della Valle: As I said, we're really happy with the position we are in today, and we don't expect any changes to that. As you know, we are busy implementing the agreement we have now and opening up our network. Let's not forget that through the...

Margherita Della Valle: Let's not forget that through the NRA, we have given one-on-one very long-term planning security, and I think that's a significant contribution. Thank you. The next question this morning comes from Robert Grindle at Deutsche Numis. Robert, please go ahead. Good morning and thank you.

So that truly are a we have given a one on one.

Speaker Change: Very long term planning security and I think thats a significant contribution.

Speaker Change: Keith.

Operator: The next question this morning comes from Robert Grindle at Deutsche Numis. Robert, please go ahead.

Speaker Change: The next question. This morning comes from Robert Grindle Deutsche <unk> numerous Robert Please go ahead.

Margherita Della Valle: Thank you, Robert. Luka, who's directly involved, may take the vantage side on the Netherlands. We are pleased with where we are, in a nutshell, a strong asset in a good market there. We have reorganized the way we manage our non-controlled assets. You may have noticed that we have set up a new division called Vodafone Investment, and this is because I really believe that we need to manage those assets differently from the controlled one.

Robert Grindle: Good morning. Thank you my question is about your non consolidated but controlled assets. Please.

Robert Grindle: Liberty is transferring its <unk> stake to a Benelux Holdco is an interesting at all to you guys and then the very considerable holdings stake I think you still have 60% is that still the plan to drop to 51 of the deals that closed perhaps or is there a different future there. Thank you.

Luca: Thank you Robert Luca was directly involved may.

Luca: May take the vantage site on the Netherlands.

Speaker Change: We are pleased with where we are in a nutshell strong asset in a in a good.

Speaker Change: In a good market.

Speaker Change: That we have just reorganize the way we manage our non controlled assets. You may have noticed that we have set up a new division called Vodafone investment and this is because I really believe that we need to manage those assets differently from the controlled one.

Margherita Della Valle: We have set up a very light team of financial and operational experts that will be entirely focused on governance, not just for Vodafone's ego, but for the entire portfolio of investments, which of course includes vantage, but also includes satellite and other things which are less well known. And I think this will really allow us to drive the best value creation for these assets. But as far as Vodafone's ego is concerned, happy with our position today, if I think if you want M&A, my focus is going to be on completing the three deals we have announced in Europe in the last year and perhaps on Vantage.

Speaker Change: We have set up.

Speaker Change: Very light team of financial and operational experts that will be entirely focused on governance, not just for Vodafone zynga, but for the entire portfolio off.

Speaker Change: Investments, which of course includes vantage, but also includes satellite and other things, which have less less well known and I think this will really allow us to drive the best value creation for these offsets, but as far as the as Vodafone Ziegler is concerned with our position today.

Speaker Change: So I'm thinking if you won't M&A my focus is going to be in completing the TD and as we have announced in Europe in the last year.

Margherita Della Valle: And perhaps on a vantage point, thanks for mentioning this or asking the question, because I think it's really a great example of the value crystallization potential that we have in the portfolio of Vodafone Investments. As you know, we have already received proceeds of 5.4 billion euros for the disposals that we have done so far at a very attractive 26 times EBITDA multiple. We still stand at 60% of the shareholding in Oak Holdings. However, we remain in constructive dialogue with the private equity consortium that is now joining us in Oak Holdings.

Speaker Change: Perhaps on vantage. Thanks for mentioning this so asking the question because I think it's really.

Speaker Change: A great example of the value crystallization potential that we have in the portfolio for telephone investments as you know and we have already received proceeds of $5 4 billion.

Speaker Change: Euros for the.

Disposals that we have done so far.

Speaker Change: At a very attractive 26 times.

EBIDTA multiple.

Speaker Change: We still stand at 60% of shareholding in Oh coatings. However, we remain in constructive dialogue with <unk> private equity consortium that is.

Speaker Change: Joining us in <unk> holdings.

So.

Margherita Della Valle: So, we still see an opportunity to further sell down shares. There is no reason why we should stay at 60%. So, this is a work in progress and certainly a very good value crystallization opportunity for us.

Speaker Change: We.

Still see an opportunity to.

Further sell down shares there is no reason why we should stay at 60%.

Speaker Change: So this is suburb in progress and certainly a very good value crystallization opportunity for us.

Speaker Change: Thank you.

Operator: The next question comes from Jakob Bluestone on the BNPP exam.

Speaker Change: The next question comes from Jacob Bluestone at BNP exam.

Jakob Bluestone: Hi, good morning. Thanks for taking my question. I had a question on your free cash flow bridge. You're guiding for free cash flow in FY25 of at least $2.4 billion versus the $2.6 billion you did in FY25. And I was just hoping you could help us understand what kind of bridge between those two.

Jakob Bluestone: Hi, Good morning, Thanks for taking my question I had a question on your free cash flow bridge.

Jakob Bluestone: You're guiding for free cash flow in FY 'twenty five of at least $2 4 billion versus the $2 6 billion you did in FY 'twenty Fives and I was just hoping you could help us understand what's kind of the bridge between those two you're EBITDA, you've said it would be sort of roughly flat at 11 billion on a pro forma basis.

Jakob Bluestone: Your EBITDA, you've said, will be sort of roughly flat at $11 billion on a pro forma basis. I think you said back in March your capex would be flat as well. I guess you had a tax one-off in Germany, which maybe explains some of the difference. But if you can maybe just help us understand what drives this lower free cash flow in FY25.

Jakob Bluestone: <unk>.

Jakob Bluestone: Thank you set back in March or Capex, it would be flat as well.

Jakob Bluestone: He had a tax one offs in Germany.

Jakob Bluestone: Which maybe explain some of the difference, but if you could maybe just help us understand.

Jakob Bluestone: What drives the lower free cash flow in FY 'twenty five.

Operator: Thank you. Yeah. So the first one...

Luka Mucic: Well, first of all, I perfectly appreciate that there are lots of moving parts and puts and takes and complexities that have arisen from the whole discontinued operations situation. And, first of all, our IR team remains fully available to lead you through all of the details of the bridge. And we have also included, I would say, a pretty useful walk that outlines the major parts of it in the back half of our presentation.

Speaker Change: So first of all I mean I perfectly appreciate that there are lots of moving parts and puts and takes and complexities that have been arising from the old.

Speaker Change: Discontinued operations situation.

Speaker Change: First of all our IR team remains fully available to lead you through all of the details of the bridge and we are also included.

Speaker Change: I would say a pretty useful block.

Outlines the major.

Speaker Change: Parts of it in the back half of our presentation. When you talk about the free cash flow in particular, so two six.

Luka Mucic: When you talk about free cash flow in particular, so 2.6 and 2.4, there are two elements there. One is obviously FX and currencies with 100 million. And the other one is the fact that we do not expect to continue to recharge about 100 million below-the-line recharges to Spain after the completion of the disposal. That explains the difference. And for the rest and details, I'm very happy for you to reach out to IR.

Speaker Change: And the $2 four.

Speaker Change: Two elements there one is obviously <unk>.

Some currencies with our $100 million.

Speaker Change: Hmm.

The other one most effect that we do not.

Speaker Change: Expect to continue to recharge about $100 million.

Speaker Change: Below the line recharges to Spain. After the completion of the disposal that explains the difference.

Speaker Change: For the rest of detail so I'm very happy for you to reach out to IR.

Luka Mucic: From a substance perspective, beyond the sort of like-for-like reconciliations, Jakob, I think one important point is worth noting, which is that we are guiding to at least 2.4. So slightly different from around 2.4, which is actually the EBITDA guidance. So see this as the bottom end of what we expect to achieve. So FY24 like-for-like 2.4, FY25 from 2.4 upwards. And last

Speaker Change: From a substance perspective beyond the sort of like for like reconciliations.

Speaker Change: Jacob I think one important point is worth, noting which is we are guiding to at least.

Speaker Change: Two four so slightly different from around which is actually the EBITDA guidance. So CD.

Speaker Change: The bottom end of what we expect to achieve.

Speaker Change: <unk>.

As slide 24 like for like two for FY 'twenty five from $2 four.

Luka Mucic: And last but not least, in that ambition for growth, let's not forget that we are working through a 500 million negative impact from the MDUs, which consists of the 400 million that we have talked about previously, plus an additional 100 million working capital track. So that's something that you should have in the back of your mind, at least as well. Understand. Thank you.

Speaker Change: No.

Speaker Change: Last but not least in that ambition for growth, let's not forget that we're working through a $500 million negative impact from the MD use which consists of the $400 million that we have talked about previously plus an additional 100 million working capital correct. So that's something that you should have in the back of your.

Speaker Change: Mind at least as well.

Speaker Change: Understood. Thank you.

Operator: Thank you. The next question comes from Maurice Patrick at Barclays. Maurice, please unmute yourself and go ahead.

The next question from Maurice Patrick at Barclays Morris. Please sandwiches. So please go ahead.

Speaker Change: Yeah.

Maurice Patrick: Thanks guys for taking the question today. If I could ask a question on the central function, always an exciting area to ask about, really the outlook for revenues and costs in the central function for FY25 and 26 would be very helpful. Thank you. Sure, I'll uh...

Maurice Patrick: Thanks, guys for taking the question today, if I can ask a question on the on the central function.

Maurice Patrick: So I think I heard you ask about.

Speaker Change: What is the question.

Maurice Patrick: To extent the costs and the central function conflicts up and down with the revenues I think in your response to Jacob's question. Just now you talked about 100, but even also headwind at the central level due to the timing.

Maurice Patrick: Timing of Spain.

Maurice Patrick: Deconsolidation with the filters it go now.

Maurice Patrick: Presumably that in 12 months time, because the same thing taking place with Swisscom playing.

Maurice Patrick: Playing so I think it's $350 million.

Maurice Patrick: If you could give some thoughts on the outlook for revenues and costs in the central function for FY 'twenty five 'twenty six would be very helpful. Thank you.

Margherita Della Valle: Sure, I'll give you the bigger picture, but just going back to the point that Luka was mentioning earlier, that was an accounting effect, as opposed to what really matters, which is the EBITDA impacts, if you want, coming from central functions to your point between revenues and costs. We don't expect any... trended costs or negative EBITDA impact from the evolution of our shared operations going forward. And this is effectively driven by two reasons, which is why I was keen to explain this. The first is that, as you know, we have changed the way we run our shared operations. We have made them commercial. What does that mean? That means that

Maurice Patrick: Sure.

Speaker Change: I'll give you the bigger picture, but just going back to the point that Luca was mentioning earlier that was an accounting effect as opposed to what really matters, which is the EBITDA impacts Asia coming from central functions to your point between revenues and cost.

Speaker Change: We don't expect any.

Speaker Change: And that cost or negative EBITDA impact from the evolution of our shared operations going forward.

Speaker Change: This is effectively driven by two reasons, which is why I was keen to explain this the first is as you know we have changed the way we run our sand operations. We have made them commercial what does that mean that means that.

Margherita Della Valle: With the Vodafone market, let alone external partners, we now have MSAs in place for markets buying shared operations services, which means we will track very closely volumes and unitary costs, and the control of this dynamic will allow us to scale up and down the cost with the demand, whether it's internal demand or external demand, indeed from our new partners. Keep in mind that these operations are very flexible in nature. Over 90% of the employees of our shared operations are in locations where we effectively have very efficient cost bases and also flexibility.

Speaker Change: With the Vodafone market, let alone the external part.

Speaker Change: <unk>, we now have msas in place for that market's buying gas.

Speaker Change: And operation services.

Speaker Change: This means we will track very closely volumes and unitary cost under control on this dynamic will allow us to scale up and down the cost with the demand.

Speaker Change: That its internal demand or external demand indeed from our new partners keep in mind that these operations are very flexible in nature over 90% of the employees of our shared operations.

Speaker Change: In the locations, where effectively we have a very efficient.

Our cost basis and also.

Speaker Change: Flexibility.

Margherita Della Valle: If we think about actually the last time we said we had completed 5,000 roles reduction in the last year as a result of a new, you remember, 11,000 role reduction plan, well, of these 5,000, over 50% were actually in shared operations. So we have plenty of flexibility, and we will apply this flexibility to our commercial model. The second reason is what you mentioned, which is that we're starting this journey in Italy and Spain with GONA and Swisscom buying services from our shared operations of 460 million, and we have a range of contracts of varying duration up to five years that will give us plenty of time to see how our partners plan to evolve their demand so that we can respond flexibly.

Speaker Change: Yeah.

Speaker Change: Think about what's actually in the last we said we have a complete that 5000 crores reduction in.

Speaker Change: The last year as a result of new remember 11000 role reduction plan well have these 5000 over 50% we're actually in sales operations. So we have plenty of flexibility and we will track this flexibility to our commercial model. The second reason is what you mentioned, which is we're starting this journey in Italy and Spain.

Speaker Change: With that Golar and Swisscom buying services from our share of the operations of $460 million and we have a range of contracts providing duration.

Speaker Change: Up to five years that will give us plenty of time to Seattle.

Speaker Change: Our partners plan to evolve their demand so that we can respond respond flexibly. So we do not see any negative coming from this we actually do see anything look as the productivity targets more efficiencies opportunities because sand operation through scale and automation and <unk>.

Margherita Della Valle: So we do not see any negatives coming from this. We actually do see, and it's in the look at the productivity targets, more efficiency opportunities because shared operation through scale and automation and AI now coming into line will drive us productivity opportunities.

Speaker Change: I know coming into line will drive us productivity.

Speaker Change: Fortuitous.

Speaker Change: Thank you.

Operator: The next question comes from David Wright at Bank of America Merrill Lynch. David, please go ahead.

Speaker Change: The next question comes from David Wright Bank of America Merrill Lynch. David. Please go ahead.

David Wright: Hi guys, thank you, and I hope you can hear me well. I might focus and follow up a little on Robert's question, please, just on the vantage stake. Obviously, when I look at the dividend received, it's not hugely efficient versus your cost of debt on what could be the proceeds. But just on the ability to sell down the vantage stake, the obvious question is, what would you use the money for?

David Wright: Hi, guys. Thank you and I Hope you can hear me well.

David Wright: I might focus on follow up a little on Robert <unk> question. Please just on the vantage stake.

David Wright: Obviously, when I look at the dividend received its not.

David Wright: Hugely efficient versus your cost of debt on what could be the proceeds but.

David Wright: But just on the ability to sell down the vantage stake. The obvious question is what would you use the money for your balance sheets in very good shape, you already have a significant buyback plans.

David Wright: Your balance sheet's in very good shape. You already have a significant buyback planned. Is this the potential plug for more German fiber? And if I might just – I had to ask – and if I might just add a little add-on, the buyback I know Spain is due to complete imminently, according to your presentation. Does the buyback follow the Spanish proceeds immediately?

David Wright: Is this the potential for more German fiber.

And if I might just I had to ask and if I might just a just a little.

David Wright: It looked a lot on the buyback kind of Spanish do too.

David Wright: Complete imminently. According to your presentation does the buyback follow imminently, the Spain proceeds.

Margherita Della Valle: I'll let Luka take on the buybacks, but you needed to ask, David, and I needed to answer. It's the full year results. It's an anniversary.

David Wright: Thanks.

David Wright: I, let look at it on the buybacks and but I need to you need it to ask David and I need to ask.

David Wright: Full year results as its none of luxury and I would hope that the answer on thermal side. There is no. We are happy with where we are with our cable network, where if you looked at our presentation. We have increased the segments in Germany by 30% and this is within our normal capex envelope and we continue to increase.

Margherita Della Valle: The answer to German fiber is no. We are happy with where we are with our cable network. If you have looked at our presentation, we have increased the segments in Germany by 30%, and this is within our normal CAPEX envelope, and we continue to increase them. We actually saw really good dynamics in customer satisfaction in Germany, which we may want to talk about later, and of course, we have the OXG rollout now ongoing in six countries and cities in Germany, including Dusseldorf and Dortmund.

David Wright: We actually saw really good dynamics in our customer satisfaction in Germany, we may want to talk about.

David Wright: Later and of course, we have <unk> rollout now ongoing in six cities in Germany, including Dusseldorf and darkness. So we are happy with where we are but on.

Margherita Della Valle: So we are happy with where we are. But what do we do with the money and buybacks? Well, first of all, on the share buybacks.

Speaker Change: What do we do with pneumonia and buybacks, but first of all on the share buybacks just to be very clear.

Luka Mucic: Well, first of all, on the share buybacks, just to be very clear, you're right, we expect to receive final approvals imminently, and we would intend to launch the share buyback very shortly after that. So this all follows on the heels of each other. So that's very clear.

Speaker Change: Yes, Youre right, we expect to receive final approvals imminently.

Speaker Change: We would intend to launch the share buyback very shortly after that so this all follows on the heels of each other.

Speaker Change: So that's very clear and in terms of.

Luka Mucic: And in terms of vantage, as Margherita said, no, we won't invest in fiber. And that would leave, obviously, the potential for either additional shareholder returns or additional deleveraging or additional value-accretive investments, let's say, in business B2B opportunities. But with whatever we do, it will be focused on driving the right returns for our shareholders. And we will make that choice once we succeed.

Speaker Change: Vantage so as Margaret said, no we wont invested in fiber and.

Speaker Change: That would leave obviously the potential for either additional shareholder returns or additional deleveraging.

Speaker Change: Additional value accretive investments I'd say in business.

Speaker Change: To be opportunities, so, but with whatever we do it will be focused on driving the right returns for our shareholders and we will make that choice once we succeed.

Speaker Change: Thank you guys. Thank you. Thank you.

Operator: The next question this morning comes from Ottavio Adorisio at Bernstein.

Speaker Change: The next question. This morning comes from a Tau you at a rescue that density.

Ottavio Adorisio: Hi, good morning. I have one question and a couple of clarifications. The question is about the Vodafone investments that you set up today. In the question, you talk extensively about vantage towers. My question is mostly about the other.

Tau: Hi, good morning.

Tau: One question on a couple of clarifications. The question is on the.

On the Vodafone investments do you setup today.

Tau: Hugh.

Tau: Through the question you talk extensively about vantage towers. My question is mostly on the others.

Ottavio Adorisio: And the question is to Margherita, who is going to be the ultimate owner of this infrastructure? Do you reckon this 50-50 JV will stay forever, or, like you do in the UK, are you willing to take full ownership of the asset? The qualifications are mostly on the guidance, how much the free cash flow guidance includes the Swiss compayments and how much it will be for this year and how much it will be for FY26.

Tau: As to the macro eater, who is going to be the ultimate owners of this infrastructure you reckon. This 50 50 JV will stay forever.

Tau: Like Q2 in the U K U.

Tau: Willing to take full ownership of the assets the clarification, so mostly on the guidance how much on the free cash flow guidance.

Tau: Included in the Swisscom payments and how much will be this year and I watch before FY 2006.

Ottavio Adorisio: And the other one is based basically on free cash flow. You guys deal with adjusted free cash flow. You can tell us what to expect from this structure and integration costs for next year that can be booked below the line. Thanks.

And the other one is on basically on free cash flow you've got still an adjusted free cash flow you can tell us what's expected restructuring integration costs for next year.

Tau: Booked below the line thanks.

Margherita Della Valle: Okay, I hope I have noted everything, Ottavio. I'll start, and then hand over to Luka for the integration and restructuring costs. I think your question on the 50. You mentioned owning 100% of Vodafone investments. Are you referring to an asset in particular in the portfolio? I was looking at the slides, and I can see that there are tons of 50-50 JVs, not consolidated. And because some of this is infrastructure that you're going to use for a long time. So my question is, who is going to be the ultimate owner of the assets? It's just, do you run it as it is?

Speaker Change: Okay I hope I have noted that we're seeing a tabular I'll start and then and then Andover too.

Speaker Change: To Luca for the integration and restructuring costs I think your question on the 50, you mentioned owning 100% in Vodafone investments are you referring to an asset in particular in the portfolio.

Looking at the slides and I can see that tons, a 50 50 JV.

Speaker Change: Consolidated.

Speaker Change: Because some of this infrastructure that you're going to use for a long time. So my question is we've got to be the ultimate owner of the assets is just the run.

Speaker Change: <unk> okay.

Speaker Change: Do you plan to buy back at some stage.

Margherita Della Valle: OK. Or are you trying to buy it back? No, if it's sort of the broader picture, again, we have just reorganized, splitting control from non-control, and that tells you that we intend to maintain the portfolio as non-controlled. And if I think about the list that is in there, there are plenty of good reasons for it to stay this way in the future. So don't expect, I'm trying to think about the list is very long, but if I think about Vantage, or if I think about Vodafone Ziggo, I don't see us moving into owning 100% of these assets in the future.

Yeah.

If it's sort of the broader picture again, we have just reorganized splitting controllers for non control and that tells you that we intend to maintain the portfolio of <unk>.

Speaker Change: Non controlled and if I think about that.

Speaker Change: That's adding data there are plenty of good reasons for it to stay this way.

Speaker Change: In the future. So don't expect the I'm trying to think about the list is very long, but if I think about vantage or if I think about Vodafone zero.

Speaker Change: I don't see us moving into owning 100% of these assets in the future.

Margherita Della Valle: As far as also taking the free cash flows off the table at the payment level, of course, we have no recharges to Swisscom in FY25. So clearly, the guidance is not affected by this. And we have not issued guidance yet for FY26. But as you have seen from the deal announcement, Swisscom is effectively taking over the same area of recharges that were happening with Vodafone Italy. So no major changes are expected from that in FY26.

Speaker Change: Sorry, I was also just to take the free cash flows.

Speaker Change: Off the table.

Speaker Change: At the payment level of course, we have no other charges to swisscom in FY 'twenty five so clearly the guidance is not affected by this and we have not issued guidance yet for FY 'twenty six but as you have seen from the deal announcement.

Speaker Change: Swisscom is effectively taking over the same perimeter of.

But any charges that were happening with Vodafone, Italy, So no major changes expected from that in FY 'twenty six.

Margherita Della Valle: Just nevertheless, coming back on FY25, what we have mentioned in our release is that, outside of our guidance, we are obviously expecting a continued cash flow contribution from discontinued operations in Italy, mainly of 400 million, but that is outside of our guidance and would come on top. In terms of the restructuring, and if I may add the spectrum payments that stand between the adjusted free cash flow and what I would call the real free cash flow of the company for FY25, I would see an aggregate amount similar to what we saw in FY24. Cash flow will go slightly up on the spectrum side, with broadly similar numbers as we had in FY24, making up in aggregate for roughly the same.

Speaker Change: Perhaps just nevertheless, coming back on FY 'twenty five what we have mentioned in our release is that outside of our guidance. We are obviously expecting a continued.

Speaker Change: Cash flow contribution from discontinued operations in Italy, mainly a $400 million, but that is outside of our guidance and would come on top.

Speaker Change: In terms of the restructuring and if I may add spectrum.

Speaker Change: Impairments saw that stand between the adjusted free cash flow and what I would call the real free cash flow.

Speaker Change: Of the company.

Speaker Change: For FY 'twenty, five I would see in aggregate.

Speaker Change: Similar amount as we have seen in FY 'twenty for restructuring will go slightly up.

Speaker Change: On the spectrum side.

Speaker Change: Broadly similar number.

Speaker Change: So as I as we have had in FY 'twenty for making up in aggregate for roughly the same amount.

Margherita Della Valle: Many thanks, Margherita. My question was not about Vodafone's legal advantage but about the JV without. So who's going to be the ultimate owner of that asset? Ah, I see, I see, sorry. OXG, we don't see any reason to build fiber on the balance sheet, as we were discussing with David earlier. In terms of, we expect the 50-50 relationship to continue as it is. We have a long way ahead, which is a six-year build to give us 7 million households, and you shouldn't expect us to make any changes there in that time frame.

Speaker Change: Many thanks Margaret My question was not on Vodafone Siegel advantage by both on the JV with us.

Speaker Change: So it was going to be the ultimate owner of that asset.

Speaker Change: See I see sorry, Oh, Gee, we don't see any reason to build fiber on balance sheet as we were discussing with David earlier.

Speaker Change: In terms of so we expect a 50 50 relationship to continue as it is we have a long way ahead, which is a six year build to give US 7 million <unk> and you shouldn't expect us to make any changes there.

In that timeframe.

Speaker Change: Thank you.

Operator: The next question comes from Georgios Ierodiaconou at Citigroup. Georgios, please go ahead.

Speaker Change: Your next question comes from Joseph <unk> at Citigroup.

Joseph: Please go ahead.

Georgios Ierodiaconou: Good morning and thank you for taking my question. I just wanted to focus a bit on OPEX, and I think Luka you made a comment earlier about service revenue may ease in some markets, but the cost pressures will also start to reverse. You gave quite a bit of detail around energy. Is it possible to also maybe give us some indications around labor costs within the new perimeter in Europe last year versus this year and what your expectations are, whether there are any pending negotiations to still be finalized?

Joseph: Good morning, Thank you for taking my question.

Joseph: I was just wanted to focus a bit on opex and I.

Joseph: Luke are you made a comment earlier about <unk>.

Joseph: Service revenue may ease in some markets, but the cost pressures, we will also start to reverse.

Joseph: Gave quite a bit of detail around and Archie.

Joseph: Is it possible to also maybe give us some indications around labor cost within the new.

Joseph: Amy <unk> in Europe.

Joseph: Last year versus this year and what your expectations are.

Speaker Change: Are there any pending negotiations.

Speaker Change: To be finalized and maybe if I could ask one clarification around.

Georgios Ierodiaconou: And maybe if I could ask one clarification around the Additional $300 million of cost savings. I just wanted to clarify within that you're not including any flexing of costs around central functions from any potential changes in the contracts with other customers. Thank you.

Speaker Change: Additional $300 million of cost savings.

Speaker Change: I just wanted to clarify within that you're not including any flexing off.

Speaker Change: Cost around.

Speaker Change: Central functions from any potential changes in the contracts.

Speaker Change: Hi, there.

Speaker Change: Customers. Thank you.

Luka Mucic: Yeah, so let me take this. So first of all, year over year, you're absolutely right. I mean, energy will be a tailwind from an OPEX perspective. Last year, we had in Europe, in the new perimeter, so excluding Italy and Spain, roughly 200 million of headwind, and about 80% of that will unwind in FY25.

Speaker Change: Yes, So let me take let me take this so first of all year over year, you're absolutely right I mean.

Speaker Change: <unk> will be a tailwind.

Speaker Change: From an opex perspective.

Speaker Change: Last year, we had in Europe, and the new parameters, so, excluding Italy and Spain.

Speaker Change: Roughly $200 million of headwind and about 80% of that.

Luka Mucic: In terms of the rest of the labor cost, we are actually not facing a significant headwind as far as we can see, and so this should remain actually quite constructive. Unlike, for example, some others in the market in Germany, we have an existing two-year deal with the labor unions.

Speaker Change: That will unwind.

Speaker Change: Slide 25 in terms of the rest labor cost.

Speaker Change: We are actually.

Speaker Change: Not facing.

Speaker Change: Significant headwind as far as we can see so.

Speaker Change: <unk> should remain.

Speaker Change: Actually quite constructive.

Speaker Change: Unlike for example, some others in the market in Germany, we have an existing two year deal with.

Luka Mucic: So in that respect, our salary levels for 2025 are set already. And that's typically the largest part of where you can expect some moderation. In other countries, inflation rates have come down, and hence the salary rounds are also pretty moderate. So this is not going to be a major uncertainty. So that has moderated. And then, in terms of the 300 million and central functions, well, we are looking for efficiencies and productivity across the board.

Speaker Change: Yeah.

Speaker Change: Our unions so in that respect.

Speaker Change: Sure.

Speaker Change: Salary levels for 2025 are set already and Thats typically the largest part of where you can expect some moderation in the other.

Countries, the inflation rates have come down in the salary rounds also pretty moderate. So this is not going to be.

Speaker Change: A major uncertainty so that has moderated and then in terms of the 300 million.

Speaker Change: Central functions well.

Speaker Change: Looking for efficiencies and productivity across the board.

Speaker Change: That of course also includes the central functions, but that is not tied to a loss of opportunity. So to say in terms of the business that we're recovering because margarita has set very rightfully and that we are indeed cover with our existing relationships with.

Luka Mucic: That, of course, also includes the central functions. But that is not tied to a loss of opportunity, so to say, in terms of the business that we are covering, because Margarita has said very correctly and that we are indeed covered with our existing relationships with Sigona and Swisscom. But of course, we still have an ambition across the board, across all entities, including the group functions, to drive for further efficiencies through simplification, standardization, leveraging of technology, AI, and so on. And we're very busy working on that. It's obviously an area that I'm passionate about, also given my background coming from the software industry.

Speaker Change: Non swisscom, but of course, we still have an ambition across the board across all entities, including the group functions.

Speaker Change: To drive further efficiencies through simplification standardization leveraging of technology.

And so on and we're very busy working on that it's obviously an area that I'm passionate about.

Also given my background coming from the software industry.

Speaker Change: Thank you Georges.

Operator: Thank you. We have time for one more question this morning from Andrew Lee at Goldman Sachs. Andrew, please go ahead.

Georges: Thank you we have time for one more question this morning.

Andrew Lee at Goldman Sachs. Andrew. Please go ahead.

Andrew Lee: Yeah, good morning. I just wanted to maybe bring us back to your right at the start and your answer to Emmet's question at the beginning about kind of trends through 25 and into 26. You made some pretty clear and helpful commentary around the puts and takes and temporary factors from 25 going into 26 and said 26 should see a step up, which obviously we'd expect given the cable TV headwinds and FY25.

Andrew Lee: Yes, good morning.

Andrew Lee: Wanted to maybe bring us back to your stock and your answer to it.

Andrew Lee: Our next question the beginning about kind of trends through 25 minutes 26, you made some pretty clear and helpful commentary around the puts and takes.

Andrew Lee: Temporary factors.

Speaker Change: From 25, <unk> 26, 26 should see a step up.

Obviously, you would expect given the cable TV headwinds in FY 'twenty five so just wanted to try and better understand how you're thinking about the underlying growth across the group I think if we adjust for the one on one contracts adjust to the energy tail winds in FY 'twenty five.

Andrew Lee: So I just wanted to try and better understand how you're thinking about the underlying growth across the group. I think if we adjust for the one-on-one contract, adjust for the energy tailwinds and FY25, adjust for the cable TV headwind, and try and get to an underlying sense of what you're guiding to for EBITDA growth for FY25, it looks like around three to four percent. And so how are you thinking about the trajectory of underlying EBITDA growth?

For the cable TV headwind and try and get to an underlying sense of what youre guiding to an EBITDA growth for FY 'twenty five it looks like around 3% to 4%.

Speaker Change: And so how are you thinking about the trajectory of underlying EBITDA growth do you think that improves into FY 'twenty six.

Speaker Change: And perhaps if I might also get more specifically oxy, Germany is absolutely the heart of that do you think we've reached a sustainable level of one 5% organic service revenue growth this quarter ex the cable TV, how do you think.

Andrew Lee: Do you think that improves into FY26? And perhaps if I might ask a bit more specifically, obviously, Germany is absolutely at the heart of that. Do you think we've reached a sustainable level at one and a half percent organic service revenue growth this quarter, ex cable TV? How do you think group trends on an underlying basis progress from 25 into 26, and specifically in Germany? Thank you.

Speaker Change: Group trends on an underlying basis progress from 'twenty, five 'twenty, six and specifically, Germany. Thank you.

Luka Mucic: Perhaps you could cover the prospects for Germany, but maybe you start with the building blocks. And just since we are almost out of time, I just want to confirm that I think you have highlighted the right building blocks.

Speaker Change: Maybe cover the prospects for Germany, but maybe start with the building blocks.

Speaker Change: And just since we are almost out of time I just want to confirm that I think you have highlighted the right building blocks, but what does that translate into its actually.

Luka Mucic: But what does that translate into? It actually means that we will likely see a U-shape of our performance in FY25 because the headwinds, in particular on the MDU front, are mainly going to hit us in terms of year-over-year growth impact in the first half year, as this impact will now magnify in Q1 and even further in Q2. And we will also see the lapping of our German price rises for fixed broadband in Q2, and then the positive impacts one on one.

Speaker Change: We will likely see a U shape of our performance.

<unk> 25, because the headwinds in particular on the MDU front.

Speaker Change: Are mainly going to hit us in terms of year over year growth impact in the first half year as this impact will magnify in Q1 and even further in Q2 and we will also see the lapping of our German price rises in fixed broadband in Q2, and then the positive impact like one on one.

Luka Mucic: I would add to this also the step up in performance that we still expect to see in the Vodafone business. As we are now putting additional investments in, as we see the market opportunity, we expect the pipeline build-up that we're already witnessing then to translate from the second half year into further growth opportunities that, obviously, will carry us also into FY26 and going forward. Therefore, you should see a U-shape in terms of growth performance in FY25. And then once we have the impact of the MDUs annualized and out of the way, then we can clearly see the full underlying strength of the growth coming to fruition.

Speaker Change: Add to this also the step up in performance that we still expect to see in Vodafone business as we are now putting additional.

Speaker Change: <unk> investments in as we see the market opportunity, we expect the pipeline build up that we are already witnessing them to translate from the second half year into further growth opportunities that obviously will carry us also into FY 2006, and going forward. Therefore, you should see a U shape in.

Speaker Change: In terms of the growth performance in FY 'twenty five and then once we have the impact from the MD use annualized and out of the way then clearly we can see the underlying strength of the growth coming to fruition.

Margherita Della Valle: And in terms of longer-term prospects, so please, with underlying 1.5 into 4, we now see this U shape impacting Germany during this fiscal year, but clearly, our ambition has to be to accelerate and take our fair share of the market growth. It's in our hands, it's a good market where we have scale, a strong brand, strong networks. The new team has a big agenda for that that we will deliver during FY25.

Speaker Change: And in terms of longer term prospects. So pleased with having underlying one five in Q4, we now see this U shape.

Impacting Germany during this fiscal year, but clearly our ambition is to be to accelerate and take our fair share of the market go it's in our hands. It's a good market where we have.

Speaker Change: Scaling our strong brand strong networks.

Speaker Change: The new team is a big agenda for that.

Margherita Della Valle: If I think about maybe the MDO transition we have covered, but in terms of actions fixed versus mobile, on fixed, it's all going to be about post-pricing, commercial performance, as I said earlier, with the focus on CVM and footprint. In mobile, what you will see happening is a continued switch between non-branded channels towards branded channels. It's fair to say that the market in Germany at the low end, particularly in the non-branded channels, has been heating up recently.

Speaker Change: We will then either during FY 'twenty five if I think about.

Speaker Change: Maybe and do transition we have covered in terms of actions.

Speaker Change: <unk> versus mobile and fixed it's all going to be about post pricing commercial performance as I said earlier.

Speaker Change: With the focus on CDN and.

Speaker Change: Our footprint in mobile what you will see happening is a continued.

Speaker Change: Uh huh.

Switch between non branded towards branded channels, it's fair to say that the market in Germany at the low end, particularly around the non branded China channels has been heating up recently there is a lot of promotional.

Speaker Change: Aspects going on at the lower end of the market Youll see this somehow reflected into our mobile net adds in the quarter and will continue into Q1, our strategy. There in terms of that growth as I say it will not change we cared about 70 70, we don't care about.

Margherita Della Valle: There are a lot of promotional aspects going on at the lower end of the market. You see this somehow reflected in our mobile methods in the quarter and will continue into Q1. Our strategy there in terms of driving growth, as I said, will not change. We care about service revenue, we don't care about volumes, and we will continue to push our branded channels supported by more investment in customer experience and the brand itself in Germany, looking forward to driving customer satisfaction even higher.

Speaker Change: About volumes and we will continue to push our branded channel supported by more investment in customer experience and brand itself in Germany and <unk>.

Looking forward to drive customer satisfaction, even higher this year was a year of stabilization.

Margherita Della Valle: This year was a year of stabilization supported by the improved performance of the cable network, which we were very happy to have achieved despite the price increases. We need to drive this up to deliver higher underlying service revenue growth going forward into FY26 in Germany and get the acceleration that Luca was talking about.

Speaker Change: Sorted by the improved performance of the cable network.

Speaker Change: Which we were very happy to have achieved despite the price increases we need to drive.

Speaker Change: This up to then either higher underlying 77, new growth going forward into FY 'twenty six.

Speaker Change: In Germany, and get the acceleration that Luca was was talking about.

Speaker Change: Thank you.

Margherita Della Valle: Thank you. This concludes the Q&A session this morning, and I would now like to hand it back to Margherita for any closing remarks.

Speaker Change: Thank you. This concludes the Q&A session. This morning, and I would now like to hand back to Margarita for any closing remarks.

Margherita Della Valle: Just thank you very much to all of you for being here for questions today and looking forward to seeing you again in July for our Q1 results. Thank you. Thank you very much.

Margarita: Just thank you very much for all of you.

Margarita: For him being here for questions today, and looking forward to see you again in July for our Q1 results. Thank you. Thank you very much.

Margarita: Yeah.

[music].