Vodafone Group (VOD) Q2 2023 Earnings Call Transcript

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Nicholas Read

Good morning, everyone, and thank you for joining us for our H1 results. Before Margherita and I have a chance to answer your questions, I thought I'd just touch on 4 key points from the presentation.

Firstly, in the first half, we delivered a resilient financial performance. You saw that our group service revenue remain constant at 2.5%, although we experienced a slowdown in Europe, offset by a stronger performance in Turkey and Africa.

EBITDA moderately declined at EUR 7.2 billion when we take into account the significant one-off adjustment of TI settlement in Italy last year. The underlying decline was due to the performance in Germany. We remain confident in delivering our full year adjusted EBITDA within our original guidance range, although higher energy costs in the second half means that we will be towards the lower end.

We're also confirming our interim dividend at EUR 0.045, in line with our annual commitment of a minimum of EUR 0.09.

Second, we're making good progress on our shorter-term operational and portfolio priorities, which include, obviously, significant improvements in IT and networks within Germany, alongside an improved commercial momentum, establishing the joint venture in Germany for our fiber-to-the-home build. And then last week, we obviously went out with our Towers transaction, which achieved our 3 strategic objectives at an attractive price of 26x EBITDA.

Third, given the current macroeconomic environment we face, we have taken a series of group-wide actions, predominantly in 2 areas. First of all, pricing. We've executed very systematically across our European footprint. 11 markets out of 12 had pricing actions, 7 have a CPI or inflation linked formula.

In terms of cost, we've obviously made a lot of progress over the last 3, 4 years, and Margherita's leadership across the business, and we want to continue that. So we came out with a new target of additional EUR 1 billion over the next 3.5 years, and that will be achieved through streamlining simplification of the group moving forward.

And fourth, while our short-term focus remains very much on dealing with the current conditions with the right level of urgency required, we also want to make sure that we remain focused on the long-term growth potential of the company and investing appropriately behind that.

Our European consumer business, which represents about half of the business, we highlight in the presentation the formula that we have done in the U.K., which is part of our overall European proposition road map and has led to very significant growth in the U.K. business.