Vodafone Group Plc

Good morning, everyone, and thank you for joining us for our Q1 trading update. Before going to Q&A, I would like to provide you with a brief summary outlining the key highlights from our Q1 results, as well as the broader set of actions we are taking to transform Vodafone. Overall, our Q1 results were in line with our expectations and consistent with our full year guidance, which we have reiterated today. We continued to deliver strong revenue growth in Africa and Turkey, whilst in Europe, top-line trends slowed, largely due to the lapping of higher inflation-linked price rises in the prior year and the phasing of project work in business. In parallel, Group EBITDA accelerated to plus 5.1% in Q1, as lower inflation helped drive good operational leverage across the Group. In our largest market, Germany, service revenue declined as expected as we continue to navigate the significant MDU TV law change. We have now successfully signed 2.6 million households onto the new commercial terms and customer retention is tracking in line with the around 50% guidance we provided in May. However, I'm not yet satisfied with our commercial performance in Germany. Our new team are taking the actions needed to drive better results and support the broader turnaround of the business. Finally, in B2B, while growth slowed this quarter due to project phasing, we have visibility of strong demand. Therefore, we expect growth to improve sequentially throughout the rest of the year, with our Q4 exit rate expected to be above FY24 levels. Beyond these results, we have continued to make good progress on our transactions. We successfully completed the sale of Spain in May and subsequently commenced a 2 billion share buyback program. We also continue to progress our transactions in Italy and the UK. And earlier this week, we announced the last step in our plans to deliver the co-control structure we had originally envisaged for Vantage Towers. As a result, we now have a 50-50 JV and we'll receive a further 1.3 billion in cash, taking the total net proceeds from the sell-down and IPO advantage to 8.8 billion. Finally, we are continuing to drive the broader transformation of the group through our strategic priorities focusing on customers, simplicity, and growth. This requires a continuous reallocation of resources and relentless focus on operational excellence. And we're starting to make real progress. All markets are moving in the right direction with tangible improvements in customer satisfaction across Europe. We are also taking significant steps to become a simpler business, having already actioned 7,000 role reductions and implemented a new simplified EXCO structure. And on growth, we expect good performance in business for the year as a whole, supported by our new team and the additional investments we are making to broaden our product set and expand our managed service capabilities. We are taking now the actions needed to deliver an improved performance and underpin the broader turnaround of Vodafone. With that, Luca and I are looking forward to your questions.

Thank you, Margherita. As a reminder to analysts, please only pose one question to give everybody a chance to speak. Our first question this morning comes from Robert Grindle at Deutsche Numis. Robert, please go ahead.

Good morning and thank you also for the increased disclosure surprise this morning. If I may take you straight back to Germany, service revenue growth was broadly in line, though of course slowing. TV losses similar to last quarter, and you said just now in line with plan, broadband losses also similar to last quarter. Taking a step back, how would you frame the Germany performance in the context of your turnaround plan? Are there puts and takes as to where you're hoping to get to? Thank you. Thank you, Robert.

I will let maybe Luca deal with the puts and takes and the financial mechanics. I suspect there will be more questions on Germany today, so maybe it can make sense for me to start by sharing my perspective on where we are in terms of what has changed already, what's progressing, and where there is more to be done. If we look to where we are today, I think we have seen four really significant changes in our German operations. Number one, you mentioned it, the MDUs. In the last 12 months, we have prepared our sales machines to this execution. Admittedly, we are still in the middle of the peak because it's July, but as we said, it's progressing very well, fully in line with our expectations. Number two, the investment we have put, and you have heard me talking about this before, in our networks, both fixed and mobile, particularly fixed, are starting to pay off. In the last, I think, couple of months, our fixed network in Germany has been rated as best quality and most reliable network in the country across all technologies, not by one, but by three different independent testers. Number three on commercials, we have, as you know, changed significantly our approach to our channels and we have been refocusing the company away from the low value resellers towards branded channels. And then finally, we are now midway through a very significant simplification of our operations, 3,300 roles reductions. This will make our company much more agile and effective in the market. Now, obviously, a transformation of this scale takes time and there is much more to do. As I was just saying a minute ago, we cannot be yet satisfied with our commercial performance, but we keep progressing. And if I just give you a sense of the priorities that we are focusing on now, first of all, We are completing a new team composed of industry-leading experts. We have upped again this year, as we explained at TRN in May, our investment in a number of areas. Number one, customer experience and brand, and also B2B. And this is going to continue to strengthen our improvement that we are already seeing now in customer satisfaction, as well as the effectiveness of our execution. as we said in May, again, this is a year of transition in Germany for more than one reason. You know this very well, but I'd like to say I'm really very pleased with the actions that the new team is taking. And we are setting today the foundations of the re-acceleration you are going to see exiting this year and into FY26. But here I'm moving to Luca on the results.

And in particular on the puts and takes. First of all obviously the big theme in Germany all the way through FY25 will be of course the TV transformation. I think we have done our best to outline the impacts that we are seeing and what is very positive is that this is becoming more and more certain because We have not only the further data from Q1 now, which has certainly confirmed the conversion rates that we were looking for, but we have also now data for July, which is obviously the biggest impact that we're expecting. And that is also in line. So from that perspective, I see this as a very positive. It's taking place. I would say, basically any remaining uncertainty out of the equation, which is good. What is also as expected, honestly speaking, is then the performance that we have seen in fixed broadband overall. You have seen that the declines in fixed broadband from a revenue perspective with the minus 2% are essentially all down to the TV transformation. We have seen as well, and that was fully expected too, that there is in the underlying only a very small to no growth, but that is due to the fact that our price increases from last year have started to lap, and we can expect the full impact of that then in the second quarter as well. But that is all really as expected. On the mobile side, where we had a decline of 0.8%, That is mainly down to the business performance. Consumer mobile has continued to grow, but in business, we had the phasing impacts that Margarita had highlighted already. So IoT is posted in mobile and in IoT platforms. We had a slowdown and we also had some effects from corporate resigns of the past year that played a role in this respect as well. When I then come to the operational performance there, I would say the one element that we still need to work on, but that we are confident we will see improvement now, is actually the net ads performance in fixed broadband. You're right, it has seen some improvement, but we believe that with the new CVM measures that have come in place and the right attention to it, Our ambition, of course, remains to further make progress in this respect. So when you then add everything together and ask me about how against my expectation we are third in Germany, I would say pretty much in line. Perhaps the project phasing impact in B2B has been a little bit more pronounced than I would have expected. I would have always expected a slowdown, but perhaps there was half a percent in there that we did not fully see. On the flip side, we had a very strong order entry performance in the first quarter in digital services, and that will not only in Germany, by the way, but also for the rest of the portfolio and drive growth in particular as we go into the second half year. So in general, B2B will be a sequential growth story from now on for the remainder of the year. So from that perspective, we're actually in a good place. So we are on the very famous now U-shape.

Thank you. Thank you, Robert. The next question comes from Andrew Lee at Goldman Sachs. Andrew, please go ahead.

Good morning, everyone. So my question is also on Germany, and you've just given us loads of useful information there and help on kind of what you're doing structurally to improve things. Marguerite, one of your comments within that was we really see the benefits come through as we exit FY25 and into FY26. And I guess the key question that everyone's trying to get on top of is what is that run rate? Can you get... that run rate of underlying organic service revenue growth back to where it was last quarter at 1.5% X the MDU impact or above. We understand that you've got this heavy headwind from price lapping in the second quarter, which probably means underlying growth around 2.5% or underlying declines around 2.5% or 2% to 2.5%. Can you help us understand that? what things look like and the scale of improvement, the scale of growth that can be at the back end of the year because it seems like it's only then your execution that's the issue rather than kind of comp issues or anything like that. Thank you.

Thank you, Andrew. And I think you are spot on in a way in your conclusions because Germany is a growth market. which continues to grow well, and therefore it's going to be in our hands to take a fair share of that market growth. And from that perspective, we will have a number of tools in our hands in terms of tailwinds coming into FY26. Effectively, we lose the headwind of the MDUs. And then at that point, it's down to having stabilized and taken then our fair share of the market value growth also in fixed broadband. which will turn into a positive. It's down to B2B. We've talking a lot about phasing in this quarter, but as Luca mentioned, we have a strong tailwind of demand coming through in digital services. So we see this improving as we move forward. And then of course, we will also benefit from the onboarding of the one-on-one national roaming deal. So fair share of market growth is how I would describe the reasonable expectation.

And perhaps if I may just add to that, of course, this will also then impact positively the bottom line performance in Germany, as we will see this top line acceleration coming through. Plus, on top of it, we had this year an extra 100 million working capital headwind from the MDU transformation that will also then dissipate. So therefore, we expect Germany to be a positive contributor

uh across the board not only on the top line but also in terms of profits and cash flow in fy26 thank you can i just ask one clarification just your comment margaret on the fair share of um market growth it looks like market growth kind of two to three percent are you including the one-on-one onboarding within that fair share of market growth um expectation or is that on an underlying structural basis

Honestly, it depends on what your timeframe is, Andrew, and we're not yet guiding on sort of the quarterly profile of FY26. So I would say it's too early to tell exactly what the number will be. But the important point is that this is our objective and the actions we are putting in place now are going in that direction. We will then see what the phasing of one and one will be, what the phasing of the market profile will be. I think this is far too early now.

Thank you.

Thank you, Andrew. The next question this morning comes from Siyi He at Citigroup. Siyi, please unmute yourself and go ahead.

Hello, hi, good morning. Thank you for taking my questions. My question is on the UK. I think at the beginning of this year, you highlighted that the pressure from the low price inflation and the recontracting with lower front book. But in Q1, you reported a stable service revenue and you have kept the low single digit growth in the UK top line guidance unchanged. It seems to me that the ARPU impact is a bit better than expected. I'm just wondering if you can make some comments on the market dynamics in the UK and where you see the drivers to help you meet the growth target for the year. Thank you.

Thank you. Actually, we are really progressing well in the UK. We have a strong commercial momentum. As you said, we've had a sort of step down on the top line driven entirely by the different levels of inflation in the market now. But lower inflation is obviously not just good for our customers. It's also good for us because we see the benefit in costs. which is why we continue to say expect good EBITDA performance in the UK this year with better operational leverage. But if I stick to what's going on in the market and what we see, maybe taking in turn consumer and business, On business, we have had the impact of the price dilution also affecting B2B because SME and so obviously are also impacted. But as elsewhere, we see good demand building up, good momentum. And therefore, we are very confident that business will be back to be a growth driver in the UK for this fiscal year. In consumer, we are leading in growth in fixed broadband, as you know. So it's a nice growth momentum that we are getting there. And also in mobile, we are growing nicely. You may have seen our 22,000 net ads in this quarter. And this is now starting to show the very positive impact of all the work we have done on customer experience. Also in the UK, we are recording in this quarter the lowest churn ever in the UK. And the number of, let's say, an epic customer in the base has reduced 40% versus where it was about a year ago. So healthy net ads performance. Stepping back, I mean, the low single digit growth rate indication we gave in May will... remains absolutely valid, but you should expect good growth in terms of EBITDA and continued commercial momentum in the market.

Thank you very much.

Thank you. The next question comes from Morris Patrick at Barclays. Morris, please go ahead.

Yeah. Hi, guys. Thank you for taking the question. Hope you can hear me fine. If I ask a question maybe more widely around pricing rather than just Germany. But, you know, if you if you think about pricing, you've had tailwinds coming through on your pricing plans because of inflation. You talked about that in the UK. But, you know, you saw the impact of German pricing increase seems to be a loss of broadband market share. I'm just keen to understand a little bit about your thoughts more widely on pricing. Like, do you think the consumer has scope to take greater price increases? When you think about your value of a volume approach, you've talked about how do you think about pricing in that context? So wider thoughts about pricing across your European assets more widely would be very helpful. Thank you.

Sure, Maurice. Maybe I'll say the sort of value versus volume point is always valid wherever, I would say, the pricing points are and wherever the inflation is. Despite the focus that tends to be put on net ads in mobile, which I think are a very imperfect KPI, I would say fixed broadband is a different thing because they come with a certain output. we will continue to remain disciplined in all circumstances and focus on where we get good customer lifetime value. A key example of that, I'm sure we'll talk more about this later, is the reseller market in Germany, where sometimes the customer numbers can be big, but the lifetime value is very small. So you won't see us pursuing these volumes. More broadly on prices, I think probably, I don't know, when it was three years ago, when we were having this conversation, we were thinking, can the industry actually adapt to an inflationary environment? And I think our efforts have proven that this is actually possible. Now we are in a good phase, as I was saying earlier, because everyone prefers, including us, a much lower inflation dynamic. But we have adopted, across Europe, effective mechanisms, it varies across countries and obviously situations, you know this better than me, that allow us to continue to progress. in this direction, again, very much depending on where the inflation levels are today. One point you mentioned which is important to me is the fixed broadband impacts in Germany. And it's true that as we are today, we are suffering from this hangover churn that comes from having repriced by five euros, seven and a half million. It's over 70% of our base. So if you take the churn in isolation, clearly it's a negative, but if you stand back and look at the whole execution, which actually has been made possible, as you know, by the step up on the network front, then it's definitely value accreting and will continue to be value accreting for Vodafone significantly because If you look at the last five quarters, more or less, we would have lost well less than 5% of the base, and the price increase was very different. And as Luca was mentioning, we are now seeing this moderating, so it's not going to last forever. So overall, I need to say the execution on price increases has been different in every market, better success here, less success there. It depends. But overall, I think the industry has stepped up and we are pleased with the position we are now, including the fact that inflation is stepping down, which is great news. Thank you very much.

Thank you, Maurice. Next up this morning is David Wright from Bank of America, Merrill Lynch. David, please go ahead.

OK, thank you, guys. Hopefully everyone can hear me. Germany again. Just digging into this dynamic, and I think you've talked about it there, Margarita, but the German broadband losses number is not really improved quarter on quarter. And yet this price lapping is You talk about the hangover, but what is that exactly? Because what I'm struggling to understand is you talk about the better network quality scores. You are cheaper than Deutsche Telekom in terms of your headline price with superior speeds, yet there's just no evidence at all of you being able to take price. Taking price has been a huge churn event for you guys. Not huge, but it's been a churn event that, as you've said, continues to hang over. So How can we be confident that you can continue to take any price in Germany? If your network scores are good, you are cheaper, but you're still losing customers. Thanks.

Thank you, David. Let me rebuild the whole history here. We have, as I said earlier, repriced seven and a half billion customers. We have completed the exercise back in January. And as we were going through the mechanics of notifying the price increases, as you may remember, we have seen very low level of churn, actually substantially below the original business case. However, some of those reactions have been somehow delayed, and that's what we are seeing in the numbers now. The most important point is what you are querying on, which is, is it going to improve? We need to see it getting better. And there are two reasons why it will get better. One is the distance simply from the price increase execution. And the second is the actions that you mentioned. The network. best experience we have ever had today and this is kind of gradually sinking through let's put it this way and then on the second front we have introduced much more dynamic customer value management on our base which we were lacking as a result of this effect you can expect step down quarter on quarter on the negative net heads going forward, quarter after quarter. And it's fair to say that we have already seen in June and July a very different profile with material improvement in the trends. So it takes a little bit of patience to see it through, but as I said earlier, it was worth it. And you will see it in this continuous improvement of the NetEd's performance. Not yet satisfied where we are today, I was very clear, but it will keep improving.

And do those expectations, do they also take into account the risk of Deutsche Telekom Housing Association penetration?

So, yes, is the short answer. The longer answer is we're not really seeing any difference in the housing association relationships that we have. We can talk more about the MDU transition more broadly, but if anything, the perimeter of our housing association partnerships in the last six months has net-net increased a little bit. So I think that the MDU transition is not making a difference in that aspect.

Okay, thank you so much.

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

Hi, thank you very much. I'm afraid it's another question on pricing, but I'll jump back over to the UK. I wanted to ask about the move to pounds and pence pricing that you enacted at the start of July. And specifically, how did you reach the three pounds a month for broadband and one pound a month for mobile figures? It's interesting that you've matched BT's increase in broadband, but you've gone for a discount in mobile to BT's one pound fifty per month increase when you've got lower market share and fixed than you do in mobile. And how proactive will you be in trying to migrate customers onto those new packages versus letting existing existing customers stay on CPI plus three point nine percent packages? Thank you.

Sure, Karl. On the latter, it's the normal dynamic of the markets that will get the mix to evolve over time. All new contracts that are being signed from the 1st of July are going to be with these new conditions. and we've been very supportive of these conditions because understand that in this case the customers value transparency and so we have supported the Ofcom consultation and have actually as you say implemented this straight away even before it was conclusive because of the certainty it gives to our customers, which obviously is a key priority for us. In terms of how we got there, actually, let me enter the numbers. I mean, vary depending on the offers we're talking about. So it's not as black and white as you were describing. There is a variation in the mobile space across plans on what the price increase is. and we have taken our view of what was appropriate in the circumstances with a very important element that is worth noting, which is that we have not applied any price increase to our social tariffs in the UK. It's been our approach ever since we introduced the social tariffs, we are protecting our vulnerable customers for inflation and it's been like this for the last three years. But then there are ranges depending on the price plans where we are. If I just maybe add one point, we are really pleased, as I was saying earlier, about our execution in the UK in terms of competitive dynamics. And we are commercially having good momentum and expect this to continue.

That's great. Thank you very much.

Thank you. The next question comes from Akil Datani at JPMorgan. Akil, please go ahead.

Hi, morning. Thanks for taking the question. If I could maybe ask a question on the broader European service revenue picture. Marguerite, you commented on a U-shaped recovery. I guess, firstly, it would be helpful to understand as we look into Q2 how deep that U looks. But I guess what I'm really trying to understand is what are the drivers that are giving you confidence as we get to the back end of the year, that revenue trends improve? Is it primarily project phasing and one-on-one, or are there any sort of commercial actions within that? And if I can just layer on top of that a question around Germany on the same topic, which is that, you know, you've talked a lot about pricing and what you're doing commercially, but maybe just to challenge the overall topic, you've probably seen earlier this month Deutsche Telekom in Broadband has actually shifted its strategy to push fiber more aggressively. So where they have fiber, they're no longer marketing VDSL. They have an entry-level offer of 150 meg, and they're actually cutting price to folks instead of actually driving up sales. So maybe if you can just talk to us around What gives you confidence you can continue to focus on pricing when at least from the outside it seems like Deutsche is more driving upsell rather than pushing price? Thanks a lot.

Maybe I'll take this last part and then let Luca comment on the moving parts on the European growth rate. In terms of pricing movements in the market, in broadband, I would say a couple of observations. The first is that clearly they seem to be focused on driving more fiber penetration, which today is relatively limited, let's put it this way, in the German environment. And then it also looks like they have been focusing rationally on monetizing the sort of upsell speeds and ponders, which I think is a logical thing to do. At our end, as it was mentioned earlier, we remain competitive and also, more importantly, the level of overlap between the areas where these offers will apply and so where fiber is marketed and our network is still very limited. And therefore, from that perspective, I would say this is not really impacting our competitiveness.

And in terms of Europe, thanks a lot for the question because it gives me finally an opportunity also to talk about the rest of Europe at least a bit because so far we have only discussed Germany and the UK and actually other Europe has been doing quite well in Q1. Of course, you have seen there also a step down in growth because we are applying CPI indexation on the top line side as well. 2.3% growth in Q1 and 3.3% in B2B. It's still holding up quite well. And I would expect there the trends to also develop favorably, mainly driven by B2B sequential improvement, as we also see there that the sign-up success that we have had early in the year in digital services will translate into incremental growth in half year two. Then you have the UK, where we would expect through the remainder of the year, actually a positive development. We stand firm on our low single digit expectation for the full year. So that tells you that there will be some not massive, but there will be some improvement as we move through the year, also driven by the B2B performance and continued solid performance in consumer, where I think we have proven again our competitive strength in the quarter. So that leaves Germany, and Germany is at the end of the day what will drive the U-shape also at the European level. We are going to reach now the eye of the storm, so to say, and the peak of the valley in Q2 with two effects coming to full fruition. One is the peak impact of the MDU transition. This is the big quarter where all almost the entire remaining base will make their move. So we'll see a big impact on that. You have to expect a sequential quarter over quarter impact of around 3% incremental negative track from that. So year over year that translate into four percentage points out of the MDUs. And then on top of this, we will have the full lapping of the price increases in fixed broadband from the prior year. That adds another two percentage points quarter over quarter. So that means that, of course, Germany will be significantly better. in negative growth, and that will also affect the growth rates at the European level. X the MDUs, we will expect Europe to remain in positive growth territory, but including the MDUs, there will be certainly a step down. Until then, in the second half year, things will start to improve. Let's not forget we are talking about for the fully 400 million top line impact coming from the MDUs alone. Q1 has seen 40 million roughly, so that leaves 360 million that we will have to counter with, again, Q2 then being in the full impact range. So call it 120 million essentially that we will face in Q2. But apart from this, I absolutely remain confident in the overarching momentum in Europe. We have now made the right moves. We are in the right markets. And if we see through FY25, we will also see Europe, of course, not only Germany back to growth. That's clear.

That's clear. Lucas, so just a very quick follow up to your comments on Germany. You mentioned five percent points of quarter on quarter drag when we take the MDU impact and the full lapping of prices. So that takes you at around six and a half percent decline in Germany. Is that the sort of starting point or are there any other things that we're missing here?

That's the major math. As I said, we would expect some sequential improvement in B2B compared to Q1, but that's not yet going to be a massive countering impact. That should rather start to build up for the second half.

Very clear. Thanks a lot.

Thank you, the next question comes from Andrea Devita at Intesa Sao Paulo. Andrea, please go ahead.

Yes, hello, thank you for taking my question. It's on ABTDA, so thank you for disclosing this additional info as well. So I see 240 million year-on-year increasing revenues and 55 in ABTDA. Just if you can provide some additional info on the build-out of this ABTDA growth in terms of inflation impact are investments in customer experience and product development, savings and inflation. And second, the shape of this ABTDA throughout the year. So I understand Q2 could be the trough in terms of year-on-year growth. And finally, if there is already a decline in Germany in the first quarter. or if there is a meaningful behavior to be mentioned across countries.

Thank you. Yeah, perhaps I'll take that and try to summarize it because I think you have a lot of details that you have asked for here. But in general, the growth that we have seen in EBITDA, the 5.1% is really broad-based. So all of our... geographical segments have been growing EBTA with the exception of Germany. In Germany, we have been very clear from the beginning that nobody should expect EBTA in this transitional year to grow the headwinds from the MDU transition, not only in terms of the direct impact, but also the incremental investment into the program are too high for that, but all of the other geographical segments. segments have been growing. In terms of the shape to be expected, clearly we started the year with a performance that is ahead of the percentage growth that we have guided for the full year. That tells you that there is some phasing to be expected here, but that is again mainly coming down to the impact of the MDU transition because with the significant incremental drag In particular in Q2 and Q3 we would expect a lower level of growth to then step up again, once we get the additional support in B2B from the one on one onboarding, plus of course continued operational discipline that we're exerting quite well. The growth that you've seen in Q1 is first of all based on absolutely us continuing to follow through on the investment priorities that we have outlined. So we are investing in our B2B transformation and Spark with full year investments of an incremental 250. million euros we also continue to invest in the additional customer experience and brand investments that we have outlined at full year earnings that has seen already a step up of 150 million last year and we have added another 100 million to that and so there is this the portion for q1 that we have earmarked is part of this where are we doing better than last year Of course, the energy headwinds that were quite significant in half year one of FY24 still, they are dissipating or have dissipated now, so we have the benefits from that. In general, OPEX has been quite flat, which is good, which of course is a place that we want to Make sure we keep in it. We continue to, of course, also progress our savings agenda in terms of opportunities for operational leverage. There is, as I said, some phasing in the year-over-year increase because last year in Q1, we had actually a little bit of a higher OPEX phasing, and that was not the case this year. So all in all, we are very confident given this start in our full year guidance, but you should expect in particular in Q2 a step down because of the MDU impact, of course, hitting us on the bottom line as well.

Okay. Thank you very much.

Thank you, Andrea. Our next question this morning comes from James Fratzer at New Street. James, please go ahead.

Yes, thank you. And good morning, Margarita and Luca. Thank you for taking the question. I could ask another few questions on Germany, but I will try something completely different. And we'll ask a question actually about India, please. So, yeah, so I think it's a few years since we had a question on that. But you've just done a successful placing of your Indus shares. which raised 1.7 billion euros. I think that's covered almost the entirety of the collateralized loan that you had in the Indian holding company. The Vodafone Idea shares that you hold today currently have a market value of around 3 billion euros. And arguably, that's actually now a real share price because the company's actually been able to raise genuine cash from external investors at that kind of level. Now, I understand you're still on about a 10-month lockup. on your holding there, but it looks like you've got a positive net equity value sitting in India of close to 3 billion euros at the moment. So the question is like, could we dare to dream that maybe you can finally get some cash out of India or are there still potential kind of political legal issues still going on that might prevent you ever getting the cash out? Thank you.

Thank you, James. I need to say I'm toying with the idea of allowing you a second question, maybe on Germany, because my answer to this is actually quite simple. Very pleased on the execution on Indus. As you said, it has substantially repaid the loan, which was outstanding. So that's very good. But it's really premature. to talk about value creation in India, given the environment in the market. So early to tell, I would say, is the answer.

But I suppose, could I just check on that? Let's say, hypothetically, you could sell at the current value. What I really wanted to check is you don't see any legal or political impediments. You know, there's obviously the longstanding CGT case. I think that has now completed. I just wanted to check if there weren't any other potential impediments we should be aware of.

There isn't anything specific that you can't already, let's say, read in all the disclosures of the annual report and the like, but it's still India. So there is always a degree of uncertainty, uncertainty in the overall environment and on the telco market. So I wouldn't think any upside at this stage.

Got it. Well, maybe I could take you up on your invitation, but it's a rare moment when we're allowed a second question. So I'll keep it very quick, but it is on German broadband.

You pushed back on India once.

Sorry, go on. Thank you. So it was just when you actually do your customer surveys and you're actually out speaking to customers in Germany, of those customers who are leaving you and you're saying it is because of price reasons and the overhang from the price rise, where are these customers actually going to? Because your pricing, and I think David raised the issue, is already pretty competitive even with the price rise. So where do you actually see them switching to?

It's very varied, but if your question underlying is, are they going to fiber? The answer is no at this stage. This is not material as we discussed in the market. Then it really depends, but I would say you would find probably a fair reflection of the relative market shares in the market.

Okay, now it's interesting, if that's a fair reflection and they're going to Deutsche Telekom, then presumably they're switching to an even more expensive product than your current offer today.

I think it really depends on what they need, what they are using it for, and what triggered or did the price increase somehow, how can I say, highlighted for the individuals. Again, let me just point to the fact that although we don't like the net ads number, it's still a very, very, very small fraction of the customer base we are talking about, especially in the circumstances of a price increase, which was very substantial. So I wouldn't overplay it. I think it will phase out. We are seeing it moderating already today. And so I think it's genuinely, having seen many of these executions before, it's the memory of what happened that is still playing out.

Got it. Thank you.

Thank you, James. The next question this morning comes from Polo Tang at UBS. Polo, please go ahead.

Good morning. Thank you for taking the question. I have a question on Germany, but it's a slightly different question. Can you maybe give us an update in terms of where you are with the one-on-one NRA? So have you finalized your agreement and can you maybe give us your latest thoughts in terms of how quickly these one-on-one NRA revenues could scale? And if you're onboarding 11 million subscribers or more from one-on-one onto your mobile network, Is there a risk that your network capacity or network quality will be affected either for your existing Vodafone customers or the new one-on-one customers coming on board? Thanks. Yeah.

I will maybe take the network question and then ask Luca to compliment on the phasing of the revenues. uh on the network question as you can imagine as we were going through the business case for this partnership we have absolutely considered the fact that we were bringing a substantial base on board which is also why we have this year some incremental capex to serve these customers appropriately as well as our base. I was mentioning earlier about the improvements that we actually see in our network performance across fixed and mobile, and you can rest assured that it's a key priority for us. to be what would the rating say externally on mobile at very good level and keep improving year after year. So this is not a concern. In terms of timelines, we are going through technical testing now. So the networks is ready or is being ready, let's say, with this. It's a small number of customers for now in a friendly user environment. But the testing has started and on the revenue front,

Yeah, I think you can assume that it will take us about a year to move to the full capacity and to full run rate. So from the second half year of our fiscal year 26, we should be ramped up fully. And until then, it will be a gradual move because, as you said, it's a large number of customers. You cannot do that all in one go.

But can I just check if the contract has been finalized?

The final fully fledged hundreds of pages contract, not yet. Obviously we are working on the back of a committed head of terms, but lots of details and still fine tuning.

Any rough view in terms of timelines for that final signing?

Nothing specific except from the fact that you should expect the revenue to start become material in the second quarter.

We have time for one more question this morning from Emmett Kelly at Morgan Stanley. Emmett, please go ahead.

Yes, good morning everyone. It's Emmett at Morgan Stanley. Thanks for taking the question. I'm actually going to follow James's lead and maybe step back in time towards another business that's maybe fallen a little bit out of focus, which is your business in Turkey. After the sale of Spain and Italy, this business is now, it's a bigger part of the group. It looks like it's roughly 7% of group service revenues. And you highlighted in your presentation that you know, quite encouraging the revenues are up, I think roughly 25% in Euro terms as opposed to local currency terms. Can you maybe just give us a very quick update on what's happening in Turkey? How are you faring versus competitors there? Are you still raising prices? And is there maybe some signs of kind of stability in that market and that business as we look at it as analysts? Thank you.

Yes. The most important KPI in Turkey, Emmet, is that we are now also growing cash flow ahead of where we were before the devaluation in Eurotourism. And it's the execution we have talked about many, many, many times here. This is the reflection of a very good performance operationally in the markets. You can see it if you look at our market shares, as well as the continued discipline pricing execution as we were managing through the devaluation and the very high level of inflation in the market. I need to say that the team has done a stellar job in making sure we could keep up with inflation on the top line whilst at the same time reducing costs, sorry, increasing costs at levels which were clearly below inflation, which then has led us to, across the cycle, get this type of profile. But maybe, Luca, you can comment on Egypt, which is also following the same route, just for completeness.

Yeah, I mean, in general, we are managing these emerging markets all in the same way. At the end of the day, the clear target for management is to, through the cycle, return We have hard currency growth across all metrics, including profits and cash flow. Egypt is now at the stage where it's growing also at a sizable level above inflation. And there are a number of important growth drivers here. that are also going to be very conducive to outsized growth in profits. Mainly the fact that also in Egypt, our financial services business with our Vodafone Cash app, following what we have successfully been driving with M-Pesa and also Vodapay in South Africa is picking up greatly. So we have very, very high returns. growth rates now already approaching 9 million of users on a business that was only started basically a few years ago and has every opportunity to grow in an outsized fashion, obviously with a much different level of capital intensity than the traditional core connectivity business in this space. So this is very positive. Actually, in Turkey, there are also a few specifics that set this market apart, including, for example, the opportunity to do really well in ICT services, because we have a regulatory environment that requires data residency in country. You're not exposed to the same level of global hyperscaler. competition. Therefore, the telcos actually have sizable data center operations to support managed services and outsourcing support for companies. And that's also driving a very interesting and decent growth opportunity in B2B. So all of this makes us really excited about those markets for their specific reasons. And I think in Turkey, we are poised for continued growth and definitely also in hard currency.

Super. Thank you very much both.

Thank you, Ahmed. We've brought you a bit in a world tour.

Thank you, Ahmed. That was the last question. And I would now like to hand back to Margarita for any closing remarks.

Thank you. And thank you everyone for joining us today. I think it's been a great conversation because I see the attention shifting. We are changing Vodafone. We have talked a lot about the changes we were making on the inorganic front. We are now focused on growth market with good local scale. So it's great that we are talking much more about the more important, but sometimes less visible, big transformation that we are doing internally. We have seen more of the results on that in May when we are talking about customer satisfaction increasing across Europe, simplification through 7,000 role reductions, and then the acceleration in B2B. I'm sure we will give you a more comprehensive update in November. But whilst we are not yet satisfied, as I said, around the Germany performance from a commercial perspective, This is clearly a year of transition. We are taking actions that are going to set us well for the future growth. And in the meantime, of course, we are in line with our guidance for this year, which despite the MDUs is already a guidance of growth. So looking forward to our next conversations, more Germany, more operations. Thank you very much.

Thank you. Thanks, folks.