Vodafone Group Public Q4 2025 Earnings Report

Vodafone Group Public EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.23
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Vodafone Group Public Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $22.07 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Vodafone Group Public Announcement Details

• Quarter: Q4 2025
• Date: 5/20/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 20, 2025
• Conference Call Time: 5:00AM ET

Vodafone Group Public (NASDAQ:VOD) Company provides telecommunication services in Europe and internationally. It offers mobile connectivity services comprising end-to-end services for mobile voice and data, messaging, device management, BYOx, and telecoms management, as well as professional and consulting services; and fixed line connectivity, such as fixed voice and data, broadband, software-defined networks, managed WAN, LAN, ethernet, and satellite; and financial services, as well as business and merchant services. The company also provides consumer Internet of Things (IoT) propositions, as well as security and insurance products; mobile services; logistics, fleet management, and smart metering services; WiFi; digital services comprising mobile application development, multi-access edge computing, worker insights, AI assistant, drone detection, visual inspection, and mixed reality, as well as Vodafone Analytics platform; and traditional IT hosting services, including colocation, managed hosting, security, hosting infrastructure, and flexible computing for government. In addition, it offers integrated business communication services, as well as fixed mobile convergence services; and carrier services, as well as IoT devices comprising managed tablets and integrated terminals. Further, it offers M-Pesa, an African mobile money platform to make payments and provide financial services; Vodafone Business multi-cloud platform; and productivity solutions, as well as operates digital cloud-based television platforms. It serves private and public sector customers in the manufacturing, retail, automotive, banking finance, healthcare, smart cities and public, agriculture, transport and logistics, and energy and utilities management industries. It offers its products and services through digital and physical channels. Vodafone Group Public Limited Company has a strategic partnership with Open Fiber. The company was incorporated in 1984 and is based in Newbury, the United Kingdom.

Vodafone Group Public Q4 2025 Earnings Call Transcript

Presentation

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Good morning, everyone, and thank you for joining us today. As you will have seen from our results, our performance in FY twenty five has been in line with expectations. But before we move to Q and A, I want to provide an update on what has driven the results, the actions we have taken, and the key priorities for FY twenty six and beyond. Two years ago, I set out a transformation agenda centered around three key pillars: customers, simplicity, and growth. Whilst we still have much more to do, two years on Vodafone today has changed.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

We have reshaped the structure of the group, simplified how we operate, and improved our customer experience. Therefore, only changing where we operate, but more crucially, how we operate. Looking closer at each of these three areas, we have right sized our portfolio with the sales of Spain and Italy and the merger of Vodafone and Three UK. We've also taken actions in a number of areas within our investments portfolio, including the further monetisation of Vantage towers and a simpler ownership structure in India. With these actions, we have reset our capital structure, strengthened our balance sheet and returned £2,000,000,000 to shareholders through buybacks, on top of £1,800,000,000 of dividends over the last year.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And the first tranche of the next £2,000,000,000 buyback programme is starting today. On customers, we have refocused the culture of Vodafone on delivering the seamless and consistent experience our customers expect. And we have changed. Just two examples: in The UK and Germany, we have achieved a number of best ever's on customer experience. In The UK, our market leading NPS has been driving the lowest ever levels of churn for both mobile and broadband.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And in Germany, where there is clearly more to do, we've made a real step change, delivering our best ever Net Promoter Scores and halving the gap to the incumbent in the market. At the same time, we are becoming a leaner organisation. We have actioned the planned 10,000 rule reductions, and the introduction of commercial models in our shared operations will now enable us to accelerate productivity and efficiency gains. Financially, we have delivered our transformation and the MDU transition within the adjusted free cash flow outlook communicated in May 23. As a result of the transformation done in the last two years, we are now well positioned to grow our adjusted free cash flow over the medium term, with two thirds of our adjusted free cash flow coming from growing while the remaining third is generated from Germany, which we are turning around.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Let me start with Germany. Over the last two years, we have faced a number of challenges, with the declining broadband base, the massive task of implementing the MDU transition, and more recently, heightened competition in mobile. Against this backdrop, we have been single mindedly focused on driving a structural reset of our operations, centred around delivering a better service to our customers. Two years on, with a new management team, investments in our networks and customer experience, and a company wide restructuring heading towards completion, we are looking at a number of positive trends in our structural leading indicators. Reversing the inertial decline in our customer satisfaction, we have now delivered our best Net Promoter Scores, with dramatic improvements across all products.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And whilst we are still far from where we want to be, we are already seeing the benefits in terms of increased loyalty. We will continue to invest in our operational transformation throughout FY '26. And whilst we expect market conditions to remain challenging, our results will benefit from our now stable customer base and from the growing contribution of the one on one customer base migrating onto our network. But whilst Germany is our priority market, we should not lose sight of the fact that two thirds of our adjusted free cash flow is generated across what we can call our growth footprint. In The UK, we have had a strong performance in FY '25, both in terms of KPIs and financials.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

We delivered strong EBITDA growth of 8% and are now the NPS leader in the market across both mobile and fixed, resulting in record low level of customer churn. Looking ahead, through our merger with three, which will complete soon, we will be uniquely positioned for EBITDA and adjusted free cash flow growth, as leaders on all dimensions in mobile and leading challenger in fixed broadband. As you know, we will also benefit from our integration with 700,000,000 annual cost and CapEx synergies and additional revenue synergies, for example, in FWA. Across Africa and Turkiye, have strong local positions in each market, and significant growth opportunities beyond core connectivity. We will continue to grow cash flows in euros through the cycle, alongside delivering good returns.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And finally, we should not forget our Vodafone Investments division and its operational infrastructure and innovation businesses. This provides a mix of dividend flows to us and the potential for value realisation when appropriate. And with that, I'll pass over to Luca to discuss our financials.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yeah, thank you very much, Margarita. So first off, I'm obviously pleased to report that we delivered our FY twenty five group guidance for both EBITDA and adjusted free cash flow. Looking forward then, our guidance for FY26, which is on a pre UK merger basis, is that we expect to deliver continued underlying growth, both for adjusted EBITDA and adjusted free cash flow. We expect adjusted EBITDA for the group to be between 11 and €11,300,000,000. Within this, we are targeting between 7.2 and 7,400,000,000.0 for Europe.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

We also expect to deliver an acceleration in group adjusted free cash flow growth to a range between 2.6 and €2,800,000,000. As far as The UK merger is concerned, we expect the pro form a FY 'twenty six impact to be around about €400,000,000 of EBITDA contribution and around about €200,000,000 of an adjusted free cash flow drag on a full year basis due to front loaded investments into the committed post merger network build out, integration investments, and interest payments on the debt of Free UK that we will consolidate post merger. And last, but certainly not least, I'm happy to say that our detailed work with Hutchison around the validation of our joint business plan for the merger in the last few months has reconfirmed our expectations from the time when we agreed the original deal. We still expect, as Margarita said, to reach a full run rate of £700,000,000 of annual cost and CapEx synergies by the fifth year, and free cash flow accretion of the merger by the fourth year. And with that, back to you, Margarita, to close us out.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Thank you, Luca. So to summarize, alongside delivering on our financial commitments in the last two years, Vodafone has changed. We can now look forward to a new market mix. Across two thirds of our portfolio, we have a solid growth track record, strong assets in good positions, and significant potential for further growth, with clear execution plans. Within this, The UK business, which will now represent a quarter of our service revenue, is well positioned for growth as we roll out our best in class five gs network and deliver our merger synergies.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Separately, in Germany, we will continue to drive our turnaround in what is fundamentally a good market, delivering better financial performance. This all adds up to good growth in adjusted free cash flow for FY 2026, and of course, stronger growth on a per share basis. But most importantly, puts us on a new growth trajectory for the years ahead. And with that, let me open to you all for questions.

[Operator]

Thank you, Margarita. As a reminder to analysts, please only pose one question to give everybody a chance to speak. Our first question this morning comes from Akhil Dattani at JPMorgan. Akhil, please go ahead.

[Akhil Dattani, Managing Director at JP Morgan]

Hi. Good morning, Marguerite and Luca. Thanks for taking the question. My question is really around the guidance and the German outlook. I guess first, if we look at the comments you've given us for Europe, you've guided to €7,200,000,000 to €7,400,000,000 of EBITDA.

[Akhil Dattani, Managing Director at JP Morgan]

And as you said, Margherita, most of your markets are now growing. So if I try and back out what that means, it would imply probably sort of a mid single digit decline for Germany. So I just wondered if you could help us understand, is that the right starting point for what you're thinking? And I guess more concretely, I'd love to understand is really how I could think about the pace and timing of that revenue recovery you talked about. You talked about significant improvements in NPS.

[Akhil Dattani, Managing Director at JP Morgan]

Maybe you could talk us through what you've done to get there. Maybe some comments on lines and lines, what you're assuming there. And finally, the big topic that people really seem focused on is German pricing. Do you see a need within your guidance to respond to what your peers are doing? Thanks a lot.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Thank you Akhil. I think you've done a catchall question which probably is anticipating some of the other questions we will get later. So maybe I suggest I take the pricing point first, and then Luca can build on the guidance. Market pricing in mobile is clearly a very important topic. After we we touched on it last time in February, we have seen a few positive moves in the market, but whilst it's fair to say there were some positive moves, definitely not as much as we would have liked, as you know, better than most.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And we've assumed in our guidance for reference, in our forecasts, that the environment now stays where we are. I think it's the appropriate set of expectations for financial reasons, which means that we will continue to see ARPU pressure in mobile within our numbers for the remainder of the year. This is coming mainly from the fact that whilst there were some positive moves, I think, as again, you know very well, particularly in the mid to high end of the market, the price points are still very aggressive, and therefore, we will continue to to have pressure from that. I can talk to what we are doing. And of course, I mean, I've majored on the most important step change in Germany for us earlier in my introduction, is the results on customer experience, because as I said just now, this is really something which we are single mindedly focused on.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

But we have also taken action in mobile, as you may have noticed, to reshape our propositions in the last few months. And in particular, we have now introduced new handset bundles with device financing, which is really important for us in terms of the range of proposition we have in the market. But just concluding on pricing before handing over to Luca on the moving parts of the guidance, I'd say that one thing is certain, which is, as I said in February, with all operators in Germany having big customer bases and big back books, the current situation is certainly damaging for each and every one of us. Luca.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yeah, thank you. So first of all, on the implied assumptions on the EBITDA evolution in Germany, I mean, are your numbers, obviously, I think we have done our best to provide a pretty clear range for Europe as a whole, and I would add a relatively narrow one. Within that, there can be puts and takes across all of the markets. So what I can talk about is more than the momentum that we see for the German EBITDA recovery. Obviously, as Margarita has said as well, there is going to be an unknown in all of that, and that's the further evolution of the market surrounding us.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

What I can say with confidence though, is that we are looking at a significant improvement of EBITDA as we move through the year. That is partially somewhat mechanical in nature, as you know, we are going to lose the year over year drag from the MDUs from the second quarter. On in parallel, we are progressing with the ramp up of the one on one migration. That was off to a slow start when we came together the last time, but I have to say, since then, it has picked up, so we have now a better line of sight, and I think can expect that from the second half year on, we will operate at the full run rate there, and therefore, this will, of course, be a big benefit to the second half performance. Outside of those mechanical impacts, we are obviously happy that we have now stabilized our commercial performance in broadband.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

We believe in the potential of our overarching transformation efforts for the German market. And I think as we progress through the year, this will more and more gradually add to the strength of our results in Germany.

[Akhil Dattani, Managing Director at JP Morgan]

Great. Thank you both very much. And just on the side, Luca, congratulations on your new role, best of luck for the future as well.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Thank you very much, but you will still be with me for a couple more occasions on this, but thank you.

[Operator]

Thank you. The next question comes from Emmett Kelly at Morgan Stanley. Emmett, please go ahead.

[Emmet Kelly, Analyst at Morgan Stanley]

Yes, thank you very much for taking the question. My question is on the customer experience and infrastructure in The UK market. So, Margarita, when you presented your strategy before, you mentioned that improving the customer experience is probably your number one aim going forward. The UK market seems to be the market where perhaps you're having amongst the greatest success. There's obviously a big push to develop infrastructure across Europe, especially you see this in Germany at the moment.

[Emmet Kelly, Analyst at Morgan Stanley]

Tying all these thoughts together, can you say a few words on what a customer can expect to see in The UK from the merger, in particular from a network perspective? This has clearly been a pain point in The UK. I know if I look at OpenSignal, the UK networks rank so far behind other developed markets. So can you maybe just say a few words on what's going to happen to the network as a frustrated UK network user. I do remember sitting in a presentation in the late 90s with the former CEO of one of the telco companies talked about bringing, for example, service to the tube in London, and that still is a pain point.

[Emmet Kelly, Analyst at Morgan Stanley]

So can you maybe just say how the Mergeco will progress on the network side? Thank you.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Sure, and maybe I will start with that and then broaden up to the more general point on customer experience, which I think is really, really important. The most important number on The UK for you and met today you find in as part of our guidance slide, we have given as much detail as possible around the merger. And there is one number you will like, which is 1,500,000,000.0 of CapEx invested in The UK market in this fiscal year. We are really excited and the teams are really ready to hit the ground running on the merger because it really gives us a unique opportunity. From an infrastructure perspective, you know everything about the 11,000,000,000 network plan, but let me say that from the very first year of operations, our customers across the country, and three customers of course, will see immediate benefits from just the simple fact that as we combine two networks, we will have more coverage and more capacity.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

We'll have to see exactly where you are on that roadmap, but we will start to see the impact straight away, and then as the year move on and the 11,000,000,000 get fully deployed, we will see even more benefits. In terms of what it means for us more broadly, it's really transformative because first of all, as a group, we expand our exposure to The UK, Twenty Five Percent of our service revenues will be in The UK. Second, in The UK, we will have a unique set of assets. If you look at it from whichever angle, in spectrum, in the network, in the customer bases, we will be really structurally positioned to drive EBITDA and free cash flow growth, even before you take into consideration the 700,000,000 of cost and CapEx synergies, which have now been fully detailed and validated into the agreed joint business plan, and on top of that revenue synergies, for example, from the network on FWA. So it's step change that cannot be underestimated for us in The UK, and it happens in a market where we have consistently outperformed, and as you mentioned, we now are firm leaders in customer satisfaction.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Yeah, we come from number three a few years ago. Now this leads me to the importance of customer experience and why we have done this journey, and you have heard me talking about this since two years ago really, when I thought we had unique opportunity on this front for two reasons. One is, as you've heard me say, telcos not good enough on customer experience, so that can be changed. But second, which is important for today, is it's the most important leading indicator for customer loyalty and therefore then our performance more broadly. We have seen how the recipe is working in The UK, but anywhere in the group, having happy and loyal customers is the number one priority that we have, and I need to tell you one of my biggest satisfactions in the last two years has been to see how the culture of the company has really rallied around giving our customers the service that they deserve and winning our customers trust every day.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

It has generated a lot of energy, and the other thing that is really important is there are no quick fixes for customer experience. It's long, hard work, which is why we are so happy after two years, and you asked what have you done, of investing in the network, investing in customer journey, investing in processes, to see that we have across Europe 5 Million less detractors. And obviously the most important place where we are working is Germany, where we are not done by any stretch of the imagination, but it's good to see the trajectory and the results I was mentioning earlier as a function of what we have invested in the market, and also seeing how this then translates, but I'm sure this can be another type of conversation on lower churn in areas such as fixed broadband. So very important leading indicator. You will always see it leading in our scorecards as well.

[Emmet Kelly, Analyst at Morgan Stanley]

Super, thank you very much.

[Operator]

The next question this morning comes from Andrew Lee at Goldman Sachs. Andrew, please go ahead.

[Andrew Lee, Managing Director at Goldman Sachs]

Good morning, Margherita and Luca. I just had I wanted to question the German recovery, just going following on from Achal's question and the improvement through FY 2026 specifically. Are you in a position yet where you can see strong potential to grow the X101 by underlying revenues and EBITDA in Germany in the third or fourth quarter of this year? And if not, why not? And the follow-up to that really is you highlighted broadband customers are flat at the moment in Germany.

[Andrew Lee, Managing Director at Goldman Sachs]

But with those ARPU pressures that you're assuming through FY 2026, if you can't grow in the second half of this year at some point, what needs to change for you to grow in FY 2027? And do you think either execution needs to continue to get better? Or do you think the growth is out of your hands? Thank you.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Thank you, Andrew. I may build on FY twenty twenty seven and what we need, but first Luca on the service revenue trajectory during the year.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yeah, I mean, as we have said, we expect to return to growth in service revenues during FY26. A major component of that will be the one on one contribution, obviously, and again, I think we had this conversation before, I would always argue that this is a commercial agreement, as you would also see other, you know, agreements in the wholesale space with MVNOs and others that contribute simply to the results. And so from that perspective, it's for me, really a bit hard to disentangle this from the overarching overarching performance of the country. The rest is essentially going to be a function of the competitive intensity in mobile, this plays a significant role. And in terms of the rest of the performance there, from a service revenue perspective, keep in mind, we have just talked and discussed about broadband, we're actually very happy that we have stabilized the base.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

This was a significant part of the underlying performance outside of the MDUs in FY twenty five. This is now stable ARPU, actually, also quite in a reasonable shape. But what you should not forget is that we have also a constant underlying TV drag, as I would call it, because TV has been for a while, even outside of the MDUs, in a structural decline, and I think that will continue into the midterm. So if you make the maths out of that, then you will obviously understand that one on one is an important contributor that will materially help to bring us back to growth.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Just going straight actually to the point Andrew you made around the x one and one growth rate. I think the final answer will very much depend on the the pricing conditions in mobile. And the jury is still out on that one. But let me say upfront that I think in the current market environment that we just discussed with Akhil, I think it is unlikely that X1N1, which I agree with Luca, shouldn't be taken in isolation. You could talk about Leica and others.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

So, but that's where we are. In terms of '27 then, so much better exit of course in Germany in '26. Overall results, much better than in '25, but in particular second half with a better exit as we go into '27 then. I mean, Luca could also give you lots of new moving parts because there will be more of one and one, there will be no more MDUs, there will be full annualisation at that point of the commercial investments that we have made, including the ANR, which as you know transitions through the years, or all sorts of mechanical support like this, but you are spot on on the fact that we count on also the improvement we are making structurally in the loyalty of our base, and in the fact that by then we will have had a full run rate or a fully stable base on all front to of course support us for the longer term in a growing Germany.

[Andrew Lee, Managing Director at Goldman Sachs]

Okay, I mean, won't spend the time now to debate the underlying, what constitutes underlying, but I guess that's what investors need to see, the kind of the growth in FY 2027. And it sounds like we need a supportive price environment to achieve that if you're assuming stable customer base into FY 2027 as a kind of basis case.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

I think everyone can make its judgments. I was really keen for this year to be quite specific on our expectations for Europe to allow you to centre, but beyond Europe and Germany. What I think is really important in the discussion today, and we may have a chance to pick it up later, is the guidance of the group growth just for FY '26, where the numbers are on the page and also for the midterm, but I leave that to other questions.

[Operator]

Thank you. The next question this morning comes from Joshua Mills at BNP Paribas Exam. Joshua, please go ahead.

[Joshua Mills, Executive Director - Sector Head & Telecoms Research at BNP Paribas]

Hi, guys. Hopefully, you can hear me. I wanted to just act slightly and move to the B2B segment. I think in the report, you call out some headwinds from The UK B2B market and specifically managed services and also some ARPU pressure in the mobile space. I wondered if you could give us a bit more color on what's happening there and maybe broaden the question into how you're seeing the B2B landscape more broadly across your different geographies and what you're assuming about the B2B growth in your FY twenty twenty six guidance?

[Joshua Mills, Executive Director - Sector Head & Telecoms Research at BNP Paribas]

And then perhaps just more specifically, could you remind us now what percentage of Vodafone Group service revenue and also group EBITDA is coming from the B2B segment? Thank you.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yep, I guess if you don't mind, I will take those questions. So first of all, we are actually very happy about the growth trajectory that we have achieved with our B2B business during FY25. You have seen that we have shown quarterly acceleration every quarter, as we had expected at the Q1 earnings call, we exited with 5.1% growth in Q4, and we continue to believe into that potential, and actually would expect this good growth at the group level to continue. Now, in terms of the market's performance, it was obviously differing by market. UK, we had a decline in the full year.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Q4 was actually positive, but for the full year, it was slightly negative, and there are a couple of reasons for that. One is that the same, actually, year over year price increase pressures apply to B2B that we also saw a bit in consumer, where essentially the annual price increases came in due to the lower inflation at lower rates. That has been weighing on the growth in B2B. From a go forward perspective, yes, we have outlined that we are losing a couple of pretty old, I have to say, and also relatively low margin managed services contracts in The UK. Otherwise, the kind of performance in The UK as elsewhere in Europe will clearly differ between a core connectivity business, which will be lower growth, and then additional support from our digital services business that we are investing into, where we have been adding additional agents, where we continue to build out our product portfolio, and where we're clearly expecting continued growth opportunities.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

So yes, UK will be challenged in FY26 from a B2B perspective, but in the broader sense, we continue to expect positive growth in B2B from a group perspective, and certainly see the strength of our portfolio, particular, in what we call beyond connectivity, as a strong underpinning of that, where we have much higher growth rates than in core.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Just maybe a quick build on this point of the digital services. I'd say the way the demand is moving, we have always had strong demand across Europe and Africa for digital services. The recent sort of geopolitical induced focus on sovereign technology services, on defense areas is also something that will be supportive for continued good digital services growth for us.

[Joshua Mills, Executive Director - Sector Head & Telecoms Research at BNP Paribas]

Thanks. Maybe just to follow-up if we could get a ballpark figure on the revenue and EBITDA exposure to the B2B segment? That'd be helpful.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yes, absolutely. So sorry for that. Yes, we're approaching 30%, we're still slightly below of that, but it's becoming, it's a decent piece of business for us, close to 30%. In terms of the EBITDA performance, the structural margins in the B2B business are slightly lower, because digital services comes with a lower EBITDA margin than core connectivity. However, and that's the more important point for me, and what I'm really excited about, Obviously, the capital intensity of this business is very low.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

We have an asset light business in this space. We're relying, in addition to some own capabilities, also on our strong strategic partnerships to bring the solution capabilities to the market. And this is actually from a returns and from a cash flow perspective, very positive for us. So this business is not only measured, in my eyes, at least from an EBITDA perspective, but in particular from a cash flow contribution perspective.

[Joshua Mills, Executive Director - Sector Head & Telecoms Research at BNP Paribas]

Great, thank you.

[Operator]

Thank you. The next question comes from Carl Murdock Smith at Citigroup. Carl, please go ahead.

[Carl Murdock-Smith, Head of European Telecoms Equity Research at Citigroup]

Hi, thanks very much for the question. And Margarita, as you were kind enough to tee it up, I'll step in and ask. So one of the highlights of today's guidance was the strength at a group level, largely due to Africa and Turkey. Kind of what gives you confidence of the medium term growth opportunity in those markets in euro terms? What has driven that step change in growth and cash flow generation?

[Carl Murdock-Smith, Head of European Telecoms Equity Research at Citigroup]

And what synergies are there across the group and what options might you consider in the medium term if investors continue to apply different weightings to a euro of free cash flow from Europe versus a euro of free cash flow from elsewhere in the group? Thank you.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

I would call out the fact that when I talk about 66% of cash flow generated within our current growth portfolio, It's not just Turkey and Africa, but it's going to be increasingly The UK and of course the consistent position of our other European markets for completeness. Now, if I look then at Turkey and Africa, and the reasons behind the performance that you have seen where we have demonstrated hard currency growth in all our geographies, I would say a two part answer. First is the discipline where you have high inflationary environment to grow revenue ahead of inflation and cost below inflation applied in the day to day execution in these markets. And this is a muscle I think we have trained quite well by now. But it's not just that.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

There are also two other aspects. One is the quality of our performance, and the second is the actual market potential per se. So if I maybe start from the market potential, I mean, it's visible to everyone that these are markets where connectivity has still potential to grow, the population is growing, data is growing, data is being monetized. But what is most attractive is that there are also what we would call non linear growth opportunities in these markets that we are exploiting. Again, about digital services, right?

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Whether you are talking about financial services, of course, for Africa, or whether you are talking about other digital services, for example, sovereign data centres in those territories are already making an impact. So there is a broad range of services where Vodafone in those markets is effectively the provider of choice that give us confidence on a multi year growth. And then on top of that, we are pleased with our execution in those geographies, whether you look at Turkey, whether you look at Egypt, whether you look at Africa more broadly. I mean, we discussed, I think a couple of calls ago about what is driving the growth in Turkey, for example. You will have seen we continue to build on our highest ever market share, we outperform market growth, and we have really clear execution plans and strong teams in place to make the most of this potential opportunity.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And then you closed with saying, okay, this is all well and good. I see the growth coming. But in all the calls, talk about Germany. And therefore, is there anything you want to change about that? And I think what you will see us doing is continuing to bring to life as we did in the results presentation today, that the group is covering a number of different geographies, Europe, Africa, Germany, other countries, The UK.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

That's what we are going to continue to work on driving performance. And ultimately we have a single goal, which is sustainable mid term adjusted free cash flow growth. We said back in March 23 that we had the goal to use the cash flow level of those days as a base to grow from. And I think we have proven in the last two years that we have executed on our financial guidance, and now it's time to go into the proper growth phase. Also, thank you to all these opportunities.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yeah, and perhaps just briefly, because you have mentioned synergies, actually, there are synergies both in terms of leveraging the scale of the group between the emerging markets and Europe. We're doing that already today on the procurement front, and we acquire RAN capabilities and so on, we leverage this. But there is also an exchange of best practices, which can be very fruitful. Like for example, in AI, we have capabilities here in Europe that we are leveraging also to help our emerging markets to quickly adopt those practices. On the flip side, in Turkey, for example, we have excellent digital nurturing skills.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

We have a great apps innovation there that we are also bringing to other European countries. So all of that just makes the combination so much stronger than the single parts alone.

[Carl Murdock-Smith, Head of European Telecoms Equity Research at Citigroup]

That's great. Thanks very much.

[Operator]

The next question this morning comes from Adam Foxrumley at HSBC. Adam, please go ahead.

[Adam Fox-Rumley, Director at HSBC]

Thanks very much. I'd like to ask a question on the share buyback, please. And I wondered if you could reflect a bit on the value that the buybacks bring to you and your shareholders at the moment. You've spent €2,000,000,000, you've got another €2,000,000,000 to go, it's a huge portion of the market cap. There's no reference to per share data in your presentation anywhere, so presentationally at least, you're not really linking that huge commitment to the narrative that you're trying to tell us.

[Adam Fox-Rumley, Director at HSBC]

The stock's got a 5% dividend yield, so it's not providing much valuation support. So I guess I'd just like to check, are you still certain this is the right allocation of capital and to that sustainability point, clearly given the free cash flow that you generate at the moment, the dividend that you've got looking into the medium term, €2,000,000,000 is unlikely to be the right number going forward. Thank you very much.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

I'll let Luca talk to the strategy around buybacks and returns more broadly, but there is one number Adam, that I think is really important, and your question is a really valid one. If you look at our adjusted free cash flow guidance for FY '20 '6, at the midpoint of the guidance, we are growing adjusted free cash flow per share by 17% year on year. And I completely agree with you that the per share element of these KPIs is really important.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

And I would agree, it's underappreciated, but when you ask about, you know, the capital allocation strategy more broadly, I think when we first talked about this when I was coming in around two years ago, we were single mindedly focused on a dividend that was back then considered as not properly covered by underlying cash flow, and with no kind of fantasy for growth for the future. We had in the meantime, two significant value creation events through the sales of Spain and Italy, at a point in time where, from our perspective, clearly, the share price levels did suggest that there was value in putting some of this capital to work by making sure that things like the ones that Margarita has talked about, and that is growing the free cash flow contribution on a per share basis could come to fruition. So in that sense, I think we have followed through on the commitment that we have given. We have rebased the dividend, but with an ambition to grow it over time, and we stick by that commitment. In terms of the capital returns through share buybacks, I think we're executing on them because we believe it is from a value perspective, a positive and accretive investment.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

And certainly, I'm still a believer in value accretion potential. That's why not only has Vodafone started a share buyback program today, I've also decided to buy back some more shares for my own personal account. And I think in that respect, it is for me a logical thing to do. Let's see what the future brings. The current program will probably take us roundabout through the end of the current fiscal year, and then we will reassess together as well, obviously, on the appropriate dividend levels.

[Adam Fox-Rumley, Director at HSBC]

Okay, thank you.

[Operator]

The next question this morning comes from James Ratzer at Newstrade. James, please go ahead.

[James Ratzer, Partner at New Street Research]

Yes. Good morning, Margherita and Luca. Yeah. Thank you very much indeed. So had a kind of bigger picture question, which I think a lot of people would like to understand your longer term financial outlook for the company.

[James Ratzer, Partner at New Street Research]

And I mean, I know there are a lot of moving parts in Vodafone at the moment, but when I look at your major peers, they also have a lot of moving parts and uncertainties and yet pretty much all of them provide detailed quantified three year financial targets. I mean, actually even one of your own largest businesses, Vodacom, provides three year quantified financial outlook. Now, I do see you're now stating some medium term free cash flow growth expectations, but that's fairly vague. So would Vodafone consider providing detailed three year financial guidance so we can get more visibility on your longer term outlook and if not, what's holding you back?

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

I think that James, you are coming from a very valid angle in terms of forgetting the numbers for a second, painting the picture of what we are targeting to achieve in the midterm, I think is going to be important. You know that we have gone through two years of significant transformation. And this is actually the first time that I can look forward and say we are where we wanted to be in terms of shape. And hopefully, that will also simplify everyone's life in terms of the numbers and the moving parts. We have the shape of the group that we want to have, which is why what you find in the presentation today is a clear outline of how this looks like, what are the growth opportunity, and why we have the confidence to now state that we are moving from the base to grow from of two years ago to proper growth.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

We will now go through The UK integration as soon as we close, we will start off very, very quickly, and we will bring this shape back to life in our results. I think you should expect to see more from us in the future in terms of talking to the vision in the mid to long term, but we first needed to get the building site closed, which is what we are doing now.

[James Ratzer, Partner at New Street Research]

So now the business is in the kind of right sized for all the big picture M and A, can we expect that maybe in the H1 guidance or the results you would actually be willing then to give some three year detailed, let's say revenue, EBITDA, free cash flow trends, I say, you know, the major peers in Europe and I say even Vodacom are doing the same?

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

In various different ways, but I would refrain for now to give guidance on guidance. It's definitely a consideration to give a more cohesive outlook. What's really important for us is now to move to this gradual sustainable free cash flow generation and give you the confidence of what are the moving parts for that.

[James Ratzer, Partner at New Street Research]

Okay. Think if at due course you can do it, think it would be appreciated by the market.

[James Ratzer, Partner at New Street Research]

Thank you.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Thank you for all it.

[Operator]

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

[David Wright, Managing Director at Bank of America]

Yes. Thanks, guys. And it's a question that might actually follow on a little bit from James. But just on The UK, a couple of clarifications. You've talked about EBITDA boost of €400,000,000, I think it is.

[David Wright, Managing Director at Bank of America]

In your original deal presentation, you talked about pre IFRS sixteen, three EBITDA of £612,000,000. So that's obviously looks like it's broadly halved. I suspect that's mostly handset accounting, but if you could clarify that for us, Luke Luca. You also mentioned, I think, your words earlier in the presentation that the free cash flow dilution you'd stated was including restructuring spend, but but I don't think it is, is it? Because your free cash guidance is x restructuring.

[David Wright, Managing Director at Bank of America]

So what's the restructuring spend we could expect on top of that? And I guess this just flows through to James' point really is your free cash flow guidance is before restructuring, which has been a significant amount for every one of the last and I might even say ten years. Telefonica more recently broke down their free cash flow into at in at the end of the day, what's distributable. And I just wondered if you could start giving us some visibility of free cash flow after restructuring given that is essentially what's distributable. I appreciate spectrum is a lot more commercial, but those dynamics would would really help us.

[David Wright, Managing Director at Bank of America]

And and just and and if I might just add, Margarita, why is the deal not closed yet? I kind of we all thought it should have done if there's just anything you can add there. Thank you.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Yes, maybe I'll take that. I'd say watch this space. I mean, we got the approvals from Ofcom and the CMA during the month of April. We have then been able to lock down the joint business plan, which is done, and we are now going through the customary closing adjustment. But watch this space.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yeah. So and then on the on the 400,000,000, yes, of course, this represents the EBITDA contribution under our preliminary view under the Vodafone accounting policies, and there are various puts and takes there, lease accounting, service accounting, and so on. I think it's probably better for the details than the puts and takes to be followed up on an IR call, but it's our best view of how the results would present themselves under our accounting policies. You're right, I've not been talking about restructuring, I've been talking more broadly about integration investments. That's not necessarily all restructuring.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

From a restructuring perspective, first of all, I think we had in FY twenty five, compared to the prior year, relatively calm year from a cash perspective, we were at round about $250,000,000, I believe, of restructuring expenses. There will be a moderate step up as we go into FY twenty six on the restructuring, not only from The UK, but also from the fact that in Germany, we still have to fully complete the second wave of our restructuring program that we have there. When you think about only the impact for The UK, it will be actually broadly neutral, because we also will, upon the closing benefit from the spectrum sale proceeds to VMO2. So the merger per se is from below the AFCF level, broadly neutral in FY twenty six.

[David Wright, Managing Director at Bank of America]

And the 500,000,000 restructuring guide, that still applies though, and we should probably assume that's quite heavily phased to the first couple of years, correct?

[Luka Mucic, Group CFO & Executive Director at Vodafone]

The 500,000,000 across five years, absolutely yes.

[David Wright, Managing Director at Bank of America]

Across five years?

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Yes.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Yes, but heavily phased

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

up front.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

It's phased up front.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

But in year one, to be clear, the 200,000,000 you see are the same at AFCF and full FCF level. There isn't any additional drag below the line.

[David Wright, Managing Director at Bank of America]

Okay, thank you so much.

[Operator]

The next question this morning comes from Otavio Adorisio at Bernstein. Otavio, please go ahead. Your line is open.

[Ottavio Adorisio, Senior Analyst at Bernstein Autonomous Llp]

Thanks and good morning, Marguerta. Good morning, Luca. My question is again on free cash flow. You provided a good breakdown on slide 23, where you showed Germany only 33% of your adjusted free cash flow. There is a mismatch between that number and the one one calculate when it does the operating free cash flow, EBITDA minus CapEx, where Germany is around 47%.

[Ottavio Adorisio, Senior Analyst at Bernstein Autonomous Llp]

So the question is that, do you book all the interest in a hard currency in Germany and the 20,000,000,000 of tax assets actually, it's 19,000,000,000 this quarter in Luxembourg, you cannot use for to offset again German taxes. And, again, on free cash flow, you booked you received around 307,000,000 from Vantage Towers this this year. Last time Vantage Towers was listed, was generating around 430,000,000 of cash. So if I do pro rata, it looks that you're over distributing of Vantage Towers. Are you over gearing the balance sheet like you do the Vodafone Seagull or it's just organically generated?

[Ottavio Adorisio, Senior Analyst at Bernstein Autonomous Llp]

Thank you.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

So maybe just an observation and then hand over to Luca for the detail. I suspect your numbers are from pre UK merger, Octavio, because even on EBITDA, that's not what you find in our results for FY '20 '5. But more broadly, Luca

[Luka Mucic, Group CFO & Executive Director at Vodafone]

I think I think you are probably referring to the slide that has the distribution of free cash flow generation across markets. That's a very simplified view, obviously. And so from that perspective, we should not kind of one to one try to reconcile this with the group numbers.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

But everything is attributed fairly. There is no extra interest or other things. It's EBITDA minus capex with then an attribution of interest across the markets irrespective of, if you want, technical elements. It's what you would expect to do. What is in there, just to be clear, is indeed the Vodafone investments dividends, of course, and all the dividends that the group received, because it's a breakdown of free cash flow.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

It's not a breakdown of EBITDA. So the full perimeter, including the Vodafone investment division, which is 9% in the slides comes into play.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

And there, maybe if I can just add then on the Vantage towers results, actually, this is underpinned by performance of Vantage towers, which has been growing both revenues as well as profits quite reliably. And if I should add, can add that, obviously has their own investments as well, which includes InVID, for example, which is doing very well, and will actually provide a special dividend in FY 'twenty six that will provide support as well. So in that respect, this is just a reflection of the strong performance of Vantage towers that allows us to distribute dividends, not only to us, by the way, but also to our co shareholders from consortium.

[Ottavio Adorisio, Senior Analyst at Bernstein Autonomous Llp]

So you would expect to extract around 300,000,000 of dividends from Vantage going forward annually?

[Luka Mucic, Group CFO & Executive Director at Vodafone]

There's no reason to not expect the same dividend levels from Vantage.

[Ottavio Adorisio, Senior Analyst at Bernstein Autonomous Llp]

Perfect. Thank you.

[Operator]

The next question comes from Polo Tang at UBS. Polo, please go ahead.

[Polo Tang, Managing Director at UBS Group]

Morning. Thanks for taking the question. It's on Germany, but specifically fiber and MDUs. Can you maybe talk through what impact your fiber upgrades are having in terms of your German broadband net adds and NPS? And can you give an update in terms of how the OXG joint venture is doing in terms of upgrading the footprint of 7,000,000 MDU homes?

[Polo Tang, Managing Director at UBS Group]

Do you think you need to upgrade the remaining 19,000,000 homes in your cable footprint to fiber? Just related to this point about MDUs, Deutsche Telekom last week on its call highlighted it now has access to 5,700,000 MDU homes. So are you seeing any signs of increased competition in the MDU space? And longer term, do you think that there will be one or two fibre infrastructures in each MDU longer term?

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Sure, I'll start from, if you want, the impact of fibre in our numbers, in our customer satisfaction. There is no impact of fibre on that. You know that we have just opened our sales footprint to wholesale agreements that do include fibre, for example, from Deutsche Telekom and Deutsche Glaswasser, because we want to give our customers in the DSL area access to fibre, which is why today we effectively offer gigabit products to three out of four of German households. And this is our strategy, I would say pretty much everywhere. You see we have the same approach in in The UK.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Now, these connections are immaterial at the moment. We are talking about single digit gross adds in a quarter. So the results that you see in our numbers and the results in terms of customer satisfaction are actually a product of quite significant churn reduction in our cable estate, because obviously this is the very vast majority of our customers. In a market which now we should all recognise in Germany doesn't have much growth in terms of penetration anymore. It's plateauing.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Stabilisation of our customer base in the last couple of quarters has come from churn reduction. And we are very pleased to see now our cable churn, where we also have, by the way, the highest ever NPS Vodafone has recorded for cable. Our cable churn is now very much in line with what you would expect. It's actually below, for example, the fixed broadband churn that we have in The UK, which is growing strongly. And this churn reduction is a function of the fact that we have really changed the customer experience.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

You have seen us and you've heard us talking about network investment over the last couple of years, improve customer base management and processes. And also, we have done a lot of work on legacy routers, which are now less than 15% across the whole customer base of Vodafone. As an outcome of all this, we have had best in test results, as you have seen on the network across all networks in fixed broadband in Germany. A third just recently, a third less network complaints from our customers and this best ever NPS. So this is the sort of structural customer experience transformation that I see as a leading indicator of performance and that we will continue to drive.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

In that space, adding what I said before, which is on top of a better service to our customers, also a wider footprint in which we can sell gigabit product is going to allow us to be a one stop shop for the customers across fixed mobile and TV. And this is a very clear objective for us. Now, you asked where are we on fibre and then what's going on in the MDUs? So maybe just covering these aspects. So in terms of our own fibre build, you have seen in these results that OXG has been running late compared to the original plan.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

The majority of the build was to be done with geodesia, which obviously had some issues in the last twelve months, but we have taken action. We now have 29 different building companies working across 22 cities in Germany. As of today, we're reaching 200,000 households and our sort of cruising speed of now is 100,000 per quarter, but we are looking forward to an acceleration and our orders are already been issued for 2 millions. And I think it's really important. There will always be competition in the MDUs.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

There was competition in the MDUs before, that's not new, but we really want to leverage the economic benefit that we have in working in the MDUs and the strong partnerships that, as you will have seen, have carried us through the transition of the TV law for of course a good business case, I would say also from fibre in those areas. So these are the areas of focus for us. It's continuing to fibrise in nutshell, if I had to summarise same strategy as before. We'll continue to fibrise our cable network that satisfies our customer needs and is now getting very good satisfaction. We will continue to overbuild ourselves in the MDUs because there is a strong economic case for that.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

And then in the other areas of the country where today we resell DSL, we will grow with fiber together with the fiber builders there. That's the same strategy.

[Operator]

We have time for one last question today, which comes from Robert Grindle at Deutsche Numis. Robert, please go ahead.

[Robert Grindle, Analyst at Deutsche Bank]

Hi there. Thank you for the question. Alongside all the changes at Vodafone, the world has changed a fair bit too since we last met. You mentioned the opportunity on sovereign data as a result of geopolitical change. Perhaps German stimulus plans are good news there too.

[Robert Grindle, Analyst at Deutsche Bank]

On the less helpful helpful side, are you expecting any impact on the trade tariffs on equipment pricing or equipment availability at this stage? Maybe we shouldn't be worried about CapEx though as mobile data in Q4 is growing at less than half the rate of a year ago. Is this more Wi Fi offload or lower growth in demand? Thanks.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Mhmm. Perhaps I can I can cover quickly the CapEx question and general cost question here, where I believe we are pretty well covered overall? We have mostly multi year agreements with fixed terms, which essentially put the owners of any tariff driven changes on our partners and suppliers. So from that perspective, I think we are as well covered as one can be. I would add perhaps to all of that also the strong balance sheet position that we're in now.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

Also from a financial inflow perspective, I think we are now substantially deleveraged. We have very long maturity of our outstanding debt, which is very helpful. We had sit on 16,000,000,000 of liquidity, which gives us a lot of optionality in that respect as well. So while obviously, we are monitoring the situations carefully, I think on the costs and CapEx side, are well covered. And from a financial stability perspective, we're also very, very well covered.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Yes, I would say for the general sort of tariff and macro, I mean, you know, where we stand relatively insulated from these dynamics. On the mobile data front, let me add Robert, that it's not necessarily a bad thing what we are describing. It really depends on where and how data grows, and I think some of the reshaping of the group in Europe that we have done in the last couple of years is also impacting the volumes of data growth because there have been markets that add very, very low prices for what were essentially unlimited offers becoming the standards that are not part of the group anymore. So I think don't always see it negatively.

[Robert Grindle, Analyst at Deutsche Bank]

Thank you.

[Operator]

Thank you. This was question, and I would now like to hand back to Margarita for any closing remarks.

[Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone]

Thank you, Vanessa, and thank you, everyone, for your time again today. See you in July.

[Luka Mucic, Group CFO & Executive Director at Vodafone]

See you then. Bye bye.

Participants

Analysts

• Margherita Della Valle, Group Chief Executive & Executive Director at Vodafone
• Luka Mucic, Group CFO & Executive Director at Vodafone
• Akhil Dattani, Managing Director at JP Morgan
• Emmet Kelly, Analyst at Morgan Stanley
• Andrew Lee, Managing Director at Goldman Sachs
• Joshua Mills, Executive Director - Sector Head & Telecoms Research at BNP Paribas
• Carl Murdock-Smith, Head of European Telecoms Equity Research at Citigroup
• Adam Fox-Rumley, Director at HSBC
• James Ratzer, Partner at New Street Research
• David Wright, Managing Director at Bank of America
• Ottavio Adorisio, Senior Analyst at Bernstein Autonomous Llp
• Polo Tang, Managing Director at UBS Group
• Robert Grindle, Analyst at Deutsche Bank