Vodafone - Earnings Call - Q1 2024 Pre Recorded

Transcript

Speaker 0

Hi, Margarita. Thank you for joining us today.

Speaker 1

Hello, Lina. Nice to see you. How has

Speaker 0

your first three months been as CEO, and what have you been focusing on?

Speaker 1

I would say it's been much longer than just three months. Since December, I've had plenty of time to review all aspects of our business, and I've started from our customers and what they tell us they want from Vodafone. It was clear to me, I would like to say from the beginning, that Vodafone had to change the way we serve our customers, both consumers and businesses. And I've captured all this in the action plan that we have shared also externally since May around customers, simplicity and growth. So if I take the three priorities in turn, starting from the customers, the priority for us has to be to deliver the simple, seamless, reliable service that our customers expect, which is why we are refocusing all our markets on customers' objectives around satisfaction.

We have shared targets for all our market to reduce the number of detractors in our customer base by 30% this year and each market is now running customer experience boards on a weekly basis to address all the issues that cause detraction. And of course, this has also been reflected in our incentives this year.

Speaker 0

And turning to simplicity, what would you focus on here?

Speaker 1

In order to become simpler for our customers, first and foremost, we need to become a simpler business ourselves. And this is why in the last few months, we have taken action to simplify our governance, the way we operate between the group center and the market and simplifying our processes. And we have a number of plans around that. As we simplify the way we work, obviously, this has impacts on headcounts. And in May, I announced an 11,000 jobs reductions over the next three years.

As of today, we have already taken action to implement a third of the 11,000 and the last initiative was in the group center where we have now completed our actions for the year. But of course more broadly on simplicity, I think there is much more to be done and it will remain an ongoing priority for the coming years.

Speaker 0

And for growth?

Speaker 1

On growth, some of the actions we have undertaken in the last few months are starting to bear fruit, and we now have Europe back to growth. But it's fair to say that, probably the standout news in the quarters were coming specifically from The UK, where we have announced a merger between Vodafone UK and Tri UK, which will be a great support for our growth going forward.

Speaker 0

How would you assess our performance in the first quarter? And where has the action plan started to make the most difference?

Speaker 1

It was good to see service revenue growth accelerating in the quarter supported by Vodafone business and by Europe, as we have just mentioned. It was a broad based growth with nearly all markets and all segments improving quarter on quarter, driven by a mix of commercial performance as well as targeted pricing actions starting to have an impact across the group. I'd say the standout for me was the performance of Vodafone business. We knew we were seeing a significant pickup of demand for digital services, and we also knew we would have the support now coming through of the European recovery funds in Europe. But it still was great to see us reaching the fastest growth in the last five years and in some markets approaching double digit growth in B2B revenues.

In Africa, we continue to be the leading connectivity provider in all of our markets, but we're obviously also being supported in our acceleration by our financial services business. And it's nice now to see this getting traction beyond South Africa also into Egypt where we are seeing strong growth.

Speaker 0

So can you tell me what

Speaker 1

are the next steps in your action plan? Much more needs to be done as we know and my focus is going to be on really setting the right ambition for the group and maintaining pace in delivering the changes that we need to do. And as you know, the focus is going to be on customers delivering the simple service that they should expect from us. On simplicity, we have more to do to simplify the way we operate to become more effective and the focus this year will be on the commercialization of our shared operations. And finally, on growth, importantly, I would call out three areas for the next few months.

Number one, in The UK, we now need to go through the approval process of our merger with TRI, and that will keep us busy. Number two, Germany, we need to improve our commercial effectiveness in Germany. And number three, Vodafone business, how do we capitalize and build further on the acceleration of growth that we are seeing. Ultimately, all this should come together in demonstrating that sustainable growth in Europe is actually possible once we operate with the right structure and with the right competitiveness.

Speaker 0

So looking forward, what can we expect for the rest of the financial year? And are we on track to meet our targets?

Speaker 1

Our target is now to maintain Europe in growth for the remainder of the year. We also expect to see Vodafone business accelerating further. And finally, as we get towards the back end of the year, you will see the first impacts of the all important migration of housing associations in Germany, and we are preparing for that. For the full year, we have reconfirmed our guidance both in terms of EBITDA and free cash flow.

Speaker 0

Thank you for your time today, Margarita.

Speaker 1

Thank you, Lina, and look forward to see everyone soon.