Vodafone Group Plc Q1 FY2025 earnings call

• Successfully completed the sale of Spain in May and commenced a €2 billion share buyback program. • Progressed transactions in Italy and the U.K., and finalized a 50-50 JV for Vantage Towers, receiving €1.3 billion in cash with total net proceeds from Vantage sell-down and IPO at €8.8 billion. • Strategic priorities focus on customers, simplicity, and growth, with continuous reallocation of resources and focus on operational excellence. • 7,000 role reductions and a new simplified Exco structure implemented for simplicity. • Customer satisfaction improving across Europe. • B2B expected to perform well for the year with strong demand in digital services.

In Q1, Africa and Turkey had strong revenue growth. In Europe, top-line trends slowed due to lapping of higher inflation-linked price rises in the prior year and phasing of project work in business. In Germany, service revenue declined as expected with 2.6 million households signed onto new commercial terms for the MDU TV law change. B2B growth slowed this quarter but expects improvement sequentially throughout the rest of the year. Europe overall had a 2.3% growth in Q1 with 3.3% growth in B2B.

• Full-year guidance reiterated, in line with Q1 results. • Germany expected to be a positive contributor across top-line, profits, and cash flow in FY 2026, with tailwinds from losing MDU headwind, fixed broadband turning positive, B2B demand, and one-on-one national roaming deal. • B2B growth expected to improve sequentially throughout the rest of the year, with Q4 exit rate expected above FY 2024 levels. • Europe overall expected to have favorable trends driven by B2B sequential improvement.

• Uncertainty in Germany's commercial performance despite progress. • Potential impact of competitors' actions, e.g., Deutsche Telekom's broadband strategy shifts. • Uncertainties in India's market environment affecting potential cash out from the Indian holding company.

Q: Robert Grindle asked about how to frame Germany performance in the context of the turnaround plan.

A: Margherita and Luka discussed changes in Germany like MDU progress, network improvements, commercial focus on branded channels, and 3,300 role reductions, noting transformation takes time but progress is being made.

Q: Andrew Lee asked about Germany's run rate of underlying organic service revenue growth.

A: Margherita and Luka mentioned Germany is a growth market, losing MDU headwind, fixed broadband turning positive, B2B demand tailwinds, and one-on-one national roaming deal as tailwinds for FY 2026.

Q: Siyi He asked about UK market dynamics.

A: Margherita stated UK has strong commercial momentum, business seeing good demand building, consumer with growth in fixed broadband and mobile, low churn, and low single-digit growth guidance remains valid.

Q: Maurice Patrick asked about pricing across European assets.

A: Margherita discussed value versus volume, discipline in focusing on customer lifetime value, effective pricing mechanisms across Europe varying by country, and fixed broadband impacts in Germany.

Q: David Wright asked about Germany broadband losses and price taking.

A: Margherita explained delayed churn reactions from price increases, upcoming improvement due to network and customer value management actions, and seen improvement in June and July trends.

Q: Carl Murdock-Smith asked about UK pricing move.

A: Margherita stated new contracts from July have new conditions, supported Ofcom consultation, and no price increase on social tariffs in UK.

Q: Akhil Dattani asked about broader European service revenue and Germany pricing.

A: Margherita and Luka discussed Europe's U-shaped recovery, Germany's Q2 impact from MDU and price lapping, and Germany's competitiveness despite competitors' actions.

Q: Andrea Devita asked about EBITDA.

A: Luka discussed EBITDA growth broad-based except Germany, phasing in year, investments in B2B and customer experience, and Q2 expected step down due to MDU impact.

Q: James Ratzer asked about India and Germany broadband.

A: Margherita said Indusshares placement repaid loan, premature to talk India value, and Germany customers leaving vary but not material to fiber; Luka commented on Germany B2B sequential improvement.

Q: Polo Tang asked about India and Germany network and revenues.

A: Margherita said network ready for one-on-one NRA, testing started, Luka said revenue ramp-up to take about a year, and final contract not yet fully signed.

Q: Emmet Kelly asked about Turkey.

A: Margherita and Luka discussed Turkey's strong performance, growth in ICT services and financial services, and Egypt's similar positive growth with financial services app growth.