Vodafone Group(US:VOD)2023-11-14 14:00Financial Data and Key Metrics Changes - The company reported a return to service revenue growth in Germany, supported by commercial model reengineering and broader broadband price actions [25] - Free cash flow for FY 2024 is guided to be around €3.3 billion, with a reduction expected due to the sale of Spain [33][94] - The company is currently around 70% hedged from an energy cost perspective, with expectations to increase this to about 80% soon [21] Business Line Data and Key Metrics Changes - The company has seen a broad-based improvement in service revenue in Q2, with 14 out of 17 markets growing [25] - In Germany, disconnections have been low single digits, and the company expects improvements in broadband volume trends moving forward [13][16] - The company added €100 million under its OpEx program, which is aimed at enhancing customer experience initiatives [19] Market Data and Key Metrics Changes - The company announced its exit from the Spanish market due to its fragmented structure and challenging conditions [5][50] - In Italy, the company continues to explore consolidation opportunities, as the market remains competitive with no players delivering returns above the cost of capital [56][82] Company Strategy and Development Direction - The company is focusing on operational excellence and simplifying its business model to enhance customer experience and drive growth [4][30] - A significant agreement with Accenture was announced to accelerate transformation efforts [4] - The company is prioritizing investments in markets with sustainable structures and sufficient scale to drive returns above the cost of capital [2][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to EBITDA growth in the UK, with expectations of a €200 million relief from energy headwinds in the second half of the year [39][64] - The company is focused on improving customer trust and experience, reallocating €150 million towards customer experience initiatives [89] - Management acknowledged the challenges in the Spanish market and emphasized the need for consolidation in competitive markets like Italy [50][56] Other Important Information - The company is committed to maintaining a strong balance sheet, with a net debt-to-EBITDA ratio of around 2.5 times [11] - The company is exploring options for capital allocation following the sale of Spain, with a review expected in the first half of 2024 [29] Q&A Session Summary Question: Capital allocation priorities for the group - Management indicated that capital allocation will be reviewed after the sale of Spain, focusing on markets with growth opportunities [28][29] Question: German commercial trends and broadband declines - Management expressed confidence in improving broadband volume trends in Germany, despite some expected disconnections due to price increases [13][16] Question: EBITDA growth phasing and energy headwinds - Management confirmed that energy was a €300 million drag on EBITDA in the first half, but expects a relief of €200 million in the second half [38][64] Question: Fiber build and joint ventures - Management stated that they are comfortable with current capital investments and will continue to evolve both fiber and cable networks [68] Question: Working capital swings and cash flow generation - Management acknowledged the increasing swings in working capital and emphasized a focus on sustainable cash flow generation [76][78]