Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vodafone Group PLC (VOD, Financial) reported a 3.8% growth in Group EBITDAaL for the first half, driven by strong performance in the UK, other European markets, and Turkey.
- The company has successfully completed the formation of a new management team in Germany, focusing on business, consumer, and IT sectors.
- Vodafone Group PLC (VOD) is delivering gigabit-capable broadband to 75% of German households, enhancing its market position.
- The company has seen strong growth in digital services, with an 18% increase, and continues to expand its capabilities and product set.
- Vodafone Group PLC (VOD) has made significant progress in simplifying its business, with over 80% of its role reduction program actioned and communicated.
Negative Points
- Service revenue trends slowed in Q2, particularly impacted by the MDU transition in Germany.
- The German market remains challenging, with ongoing competitive pressures and a need for further commercial investments.
- Vodafone Group PLC (VOD) anticipates a broadly similar performance in Germany for Q3, with improvements expected only in Q4.
- The UK market remains highly competitive, particularly in the B2B sector, where service revenue is still in decline.
- The company faces potential challenges from aggressive pricing strategies by competitors in the German mobile market.
Q & A Highlights
Q: Can you provide insights into the trajectory of broadband net adds, service revenues, and EBITDA in Germany over the next few quarters?
A: Margherita Della Valle, CEO, explained that Vodafone has seen an improvement in net adds performance in fixed broadband, with cable net adds only marginally negative. The company has expanded its footprint to include fiber wholesale, allowing access to 30 million households. Luka Mucic, CFO, added that Q2 marked the bottom of a U-shape recovery in Germany, with improvements expected in Q4 as the MDU transition impact fades and 1&1 contributions increase.
Q: How do you see the service revenue trajectory for the rest of the group, particularly in Vodacom UK and Turkey?
A: Luka Mucic, CFO, stated that the group expects slightly better growth in the second half of the year. The UK is expected to continue improving, with consumer business performing well. Africa, particularly South Africa, should see higher growth, while Turkey continues to perform strongly, although growth rates may moderate.
Q: What are Vodafone's strategic priorities moving forward, considering the reshaping of the group?
A: Margherita Della Valle, CEO, emphasized the focus on creating long-term growth to drive returns, with an emphasis on customer satisfaction, simplicity, and growth. The reshaping of the group is nearly complete, with a focus on operating in growth markets with good local scale. The overarching objective is to improve return on capital over time.
Q: Can you discuss the competitive intensity in the UK market, particularly in B2B, and the factors affecting UK EBITDA growth?
A: Margherita Della Valle, CEO, noted that the UK is a competitive market, but Vodafone competes effectively with strong customer engagement and satisfaction. Luka Mucic, CFO, mentioned that UK EBITDA growth in the first half was aided by energy cost benefits and OpEx phasing, but growth is expected to moderate in the second half.
Q: What is the outlook for Vodafone's joint ventures, particularly regarding towers and potential further sell-downs?
A: Margherita Della Valle, CEO, stated that Vodafone is content with the current 50-50 position in Vantage Towers, with no immediate plans for further sell-downs. However, there is potential for increased dividends from Vantage Towers as the business continues to develop.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
