Vodafone Group Public Limited Company Q3 FY2025 earnings call

• Results: Group traded in line with full-year guidance. U.K. had record net promoter scores and net additions. Germany's MDU transition nearly complete, broadband base stabilized.
• Portfolio reshaping: Completed sale of Vodafone Italy, proceeds used for debt reduction and share buyback. U.K. merger with Three expected to close, enabling integration to capture cost synergies and build U.K.'s best network. Near completion of portfolio transformation with strong positions in all markets.

Overall, the group performed well with service revenue accelerating to 5.2% this quarter and EBITDAaL growing by 2.2%. Key segments: U.K. and Africa saw acceleration in trends; Turkey delivered over 50% growth in euro terms. Germany was impacted by the MDU TV law change but the gigabit broadband base stabilized. The sale of Vodafone Italy for €8B was completed, and the U.K. merger with Three is expected to close soon, with the combined businesses representing around 70% of group revenue.

• Continue to prioritize turnaround of Germany and growth in other markets. U.K. merger to complete, contributing ~70% of group revenue. EBITDA guidance reiterated, with Germany's second half impacted by mobile market conditions and one-offs but ambition to grow in Germany this year.
• Midterm free cash flow: Dividends from associates important, but risks exist. Adjusted free cash flow expected at €2.4B in FY '25, will reassess after U.K. merger.

• Risks to dividends from associates like Vantage Towers and VodafoneZiggo. Germany's mobile market challenges, delays in B2B, one-off items affecting financial recovery. Macro pressures and competition in Germany impacting performance.

Q: Robert Grindle asked about Germany's performance in Q4, changes in H2, and evolution into next year.

A: Margherita Della Valle and Luka Mucic discussed Germany's market challenges, improved leadership team, and need for time for financial performance to improve. Ambition to grow in Germany this year.

Q: Polo Tang asked about midterm free cash flow risks to dividends from associates.

A: Luka Mucic discussed confidence in Vantage Towers' dividend trajectory, and VodafoneZiggo's distribution strategy, expecting midterm free cash flow growth.

Q: James Ratzer asked about cash returns and balance between investment and leverage.

A: Luka Mucic discussed capital allocation, share buybacks, and reassessing situation after U.K. merger completion.

Q: Andrew Lee followed up on Germany's swing factors and U.K. merger accounting.

A: Margherita Della Valle and Luka Mucic discussed mobile competition, U.K. merger parameters, and accounting policy alignment.

Q: Adam Fox-Rumley asked about Germany's service revenue decline and B2B growth.

A: Luka Mucic and Margherita Della Valle discussed B2B challenges, delays, and investments in digital services.

Q: Akhil Dattani asked about Germany's service revenue recovery and growth ambition.

A: Margherita Della Valle and Luka Mucic discussed service revenue components, investments in brand, customer experience, and B2B.

Q: David Wright asked about Germany's market structure and U.K. accounting differences.

A: Margherita Della Valle and Luka Mucic discussed Germany's market structure and U.K. accounting differentials.

Q: Joshua Mills asked about Germany's market rationality and EBITDA guidance.

A: Margherita Della Valle and Luka Mucic discussed market structure, EBITDA components, and investments.

Q: Emmet Kelly asked about Turkey's business outlook.

A: Margherita Della Valle and Luka Mucic discussed Turkey's strong performance, market shares, loyalty programs, and growth opportunities in other markets like Egypt.