Vodafone Group PLC (VOD) 2018 Q4 法說會逐字稿

Good morning.

Welcome.

Thank you for coming to today's year-end presentation for Vodafone.

Before getting into the presentation, I have to ask for a couple of minutes to comment about the other announcement that we made this morning.

In October, I will step down as CEO of Vodafone after 10 years, and I will be succeeded by Nick Read, who is well known to all of you.

Nick Read, himself, will be succeeded by Margherita Della Valle, who is probably also well known to most of you.

It's a -- of course, a difficult decision to step down from a company where you have been CEO for 10 years, on the board for 14 and inside or near for more than 20, but this is the right decision.

Vodafone is getting -- as I said to the journalists, we are in a new chapter of our book of history.

We will be, in October, starting to write the new paragraphs of the new chapter, a converged chapter, a chapter with India, being in a different space, Digital Vodafone starting to get traction, transformation of the company.

It's a very healthy thing that you have a team, which is dedicated for the next 5 years and beyond, really beyond, Nick, to make these things happen.

And I have to say, I'm very happy that the board, after due process, has selected Nick.

Nick is a tremendous person.

He's been 17 years with the company.

He has worked -- actually, not many people know, more time not in finance than in finance, that is not to say that finance is a bad thing, but he has done a lot of jobs.

I have to say he's also not only broad and deep.

He has an incredible resilience.

He is the only person on this planet who has been able to report to me for 12 years in a row.

And nobody else in my life really managed to tolerate me for that long.

And I think he will do very well.

And Margherita, Margherita was one of the original employees of OmniTel before Vodafone Italy, employee #30.

We agreed yesterday because we don't remember exactly.

And I have to say, she's not just super bright and very, very deep person on everything, which is analytical and, therefore, financial, but also she's an innovator, a quiet innovator.

She has introduced automation.

She has introduced, more recently, artificial intelligence -- even Harvard Business School has written a case on it.

And she's a tremendous leader of people.

So I think this is another great moment of leadership for Vodafone in how we handle these things.

Now let's move.

There will be an appropriate time to comment when we get to Q1 and AGM.

Now let's move to results.

Okay.

This has been a pretty exceptional year.

I would say a pretty exceptional year from both the strategic point of view and the operational point of view, and a year also of very good financial delivery.

I'm very pleased with the strategic progress.

Of course, Liberty, Germany, Eastern Europe.

India, we have reshaped India completely not just with the first transaction, but also the second one, the Indus-Infratel one.

And we have continued our development of organic broadband in Europe.

So strategically, a great year.

Operationally, a fantastic year in terms of NGN connections, a record number of converged customers.

Third consecutive year of EBITDA margin expansion.

I was talking to somebody at the coffee.

We are pleased, Nick and I, that not only 3 years ago, somebody was criticizing the Vodafone model, and we are proposing other models.

And actually, we said we can deliver improvement in margin.

We will.

It's not going to be a crazy number that some people were saying.

It's going to be a solid 3 -- 350 basis points we have here.

And of course, Digital Vodafone is giving a great promise for the future for that to continue.

Market outlook.

Very good market of solid and good market in Germany, in the cluster, in AMAP.

A little bit more challenging in Italy and Spain and, I guess, we'll talk about it there.

But overall, we are happy that today, we can report that we have exceeded our guidance, both the original -- the original, actually, are at the high end and the upgrade of that guidance, we are above it.

And we are confirming 2% dividend per share growth.

Now operating highlights of the year.

1% -- 1.6% service revenue growth.

This is after taking out a bunch of things that, we think, don't -- we want you to look at organic.

Essentially, we continue with the same formula as for the last 3 years.

Very good networks.

So leading network on both mobile and fixed.

94% coverage in mobile, 65% homes passed with NGN, which is enabling us to continue to be very solid in the market.

Strong growth of data.

Ex India, 63%.

Our bundling strategy with bigger bundles and more -- and richer bundles is working and is supported well by the network.

And to continue to grow very nicely in fixed NGN.

We are, again, the fastest-growing NGN provider in Europe, not just at NGN level, but also converged offers, 800,000 increase in the year.

I'll speak a bit about Enterprise.

I'm pleased to report that we have, unlike many competitors, growth in Enterprise, but not just growth in revenue, also growth in profitability, which is important.

And finally, we continue, of course, to invest in our Net Promoter Score and customer excellence program to maintain NPS leadership, which is structurally important for the future.

The operating momentum, I would call it robust.

As you can see from the left part of the chart, we had a good performance in mobile, the red -- the light red part of the chart.

A little bit weaker in Italy and in Spain, but still in the range of where it should be.

And a good performance in fixed, particularly in Italy, 100,000 additions, particularly in the U.K. For the first time, big contributor to this performance, 66,000.

Spain, weak, negative 16.

But I would say, if you look at the red bubble below the bars, 40 basis points of growth in Europe versus 30 the previous quarter.

So I can say, overall, we are continuing on the same trajectory.

And AMAP, AMAP, we have some complexity in comparing numbers because of some disconnect.

There were some rules, some regulations in Egypt and in Vodacom.

But again, if you look at the bottom circle, 7.8% growth versus 6.8%.

So not only it's the same, it's actually a little bit improving.

So I would say commercially, a robust performance across the piece.

Looking at the key markets.

Let me start from the 4 large Europeans.

First, in Net Promoter score everywhere other than in the U.K., but in the U.K., we are first in Enterprise, which is 50% of the business.

Stable competitive environment in Germany.

In Germany, we have made 212 contract net adds in the quarter.

We are pleased that this comes from more direct channels, which, we think, is, quite frankly, the future given where we are going with digital telco.

But also from the GigaCube product, which is a fixed-wireless replacement type of product, which is going very well.

And also, the 80,000 -- or 79,000 net adds in fixed line are coming at the high end of the speed.

So the 200 megabit per second range, which is, again, where we are strong in Germany.

As a result, we have growth of 1.8%.

It's a bit taken down by some MVNO drag on a year-over-year.

But as you see, the EBITDA performance is very good, 8.3%.

There's a bit of SIM-only there.

There's a lot of work on cost.

But you see the difference between revenue growth and EBITDA growth in Germany is becoming quite satisfactory.

Italy is a bit more intense.

Pricing environment, as you all know, below the line, continues to be aggressive.

We have taken more activity above the line.

We do very well in fixed line, 11% growth there.

And as I said, we had 100,000 additions on NGN.

However, competition on mobile has taken growth down a bit, 70 basis points, but still 5 -- 4.6% EBITDA growth.

Excellent cost management and excellent restructuring of Italy.

U.K., again, this is another stable environment from a pricing point of view.

We are now fastest-growing fixed broadband provider in the U.K., which we told you we would be there.

Now we are there.

On mobile, we have 99% 4G coverage.

And we are getting, again, a good feedback on quality.

So now will be the time to start releveraging on the mobile part of the business.

And we continue the restructuring of Enterprise.

We have 1.4% growth in U.K., so happy to be back into growth.

1.4% growth in EBITDA.

And again, a lot of work has been done on cost to continue the positive trend.

And finally, Spain, a more intense, very competitive, strange market.

Top end, very good.

We can increase price.

We are very kind of head-to-head with Telefónica, but, frankly, doing well.

In the mid and in low end, more challenged.

More challenged in the mid-end by Orange and then low end by MÁSMÓVIL.

And I have to say, competitive pressure here has led us also to have some loss in fixed broadband.

So what are we going to do?

We have announced last Friday, we are changing our pricing policy, vis-à-vis the Orange and the Orange brands.

So now we're going to be more head to head and matching.

And we are going to use the second brand, Lowi, in a more competitive way at the low end with -- against MÁSMÓVIL.

Having said that, still 5% EBITDA growth.

Again, another situation where we have done pretty good job, I think, on cost.

In AMAP, I would say not much to comment on South Africa because it's known -- continues to be first, continues to have a huge gap in NPS between the -- between them and the second and third provider, 5% growth of revenue, 5% growth of EBITDA.

The big bundles, the data bundles are the core of what we do.

And we still -- we have told you many times, it's the way that we have to monetize data and retain customers at the same time.

So I would say good performance.

Turkey and Egypt are different countries, but similar stories.

Stable from a competitive point of view, from a price point of view.

And we have, more or less, the same recipe.

We acquire customers.

And we are very strong on data.

And as a result, as you can see from the slide, we have mid- to high-teens growth in revenues, which is nice, and very, very healthy EBITDA growth.

Now it's good because we are growing more than inflation, so we are catching back some of the currency and some of the pressures that we have from the economic environment.

But I would say, Turkey and Egypt, pretty good.

And now India.

India, I would say, intense competition is probably a euphemism.

We had minus 86%, something like that.

Data price decline in India year-over-year.

And minus 40%, only minus 40% voice decline in India year-over-year.

So it's a very, very competitive and intense market.

We have put 90% of our resources in our leadership circles.

And we have some good news.

We've got 10 million customers in the last quarter.

We start, again, getting more 4G and data customers.

But of course, there is a price to pay to such a competitive environment, minus 20% revenue.

Lot of it is also MTRs, by the way, and 35% EBITDA.

So what are we doing in India?

I'm very pleased to say that we have -- we are progressing very well with our new partner within what we can do before completion.

We have appointed the management team, identified the structure below.

We have agreed the branding policy and the branding infrastructure architecture, so that we can start the -- as soon as we get the approval.

The approvals are expected essentially in June or towards the end of June.

But we are ready to go.

And again, that's the most important thing to do.

Then we will concentrate our money in the leadership circles and try to consolidate.

Of course, India now is a very concentrated market.

It's a 3-players market.

So any positive movement on price would immediately completely lift back the situation.

And then I have -- before handing over to Nick, I have a new slide.

This is what we call the fifth OpCo -- the fifth European OpCo.

We never talk about the cluster, but the reality is that the European cluster, ex-Netherlands, if you put it together, is like Spain.

It's as big as Spain.

It's EUR 4.6 billion of revenue.

It's made by a variety of countries.

But what I want to draw your attention on is that without much noise, actually, all the bars, with one exception in the European cluster, are actually green.

And some of them are even double-digit green.

So we are growing EBITDA very nicely in those markets.

And we're growing revenues in a nice way.

It's a very good application of the digital life model.

In many cases, it's easier to do in smaller countries, and we're very pleased with the progress that Ahmed and his team are doing.

Romania is a bit of a different case.

Because of some applications of roaming, Romania is very low priced.

And lot of Romanians' SIMs travel a lot in Europe.

And of course, there's IoT cost that come back as a charge.

Now for Vodafone, it's almost like a wash because what we lose there, we make somewhere else.

For our competitors, less so.

But of course, we will work on that as well because we don't like to see that.

Overall, cluster, very healthy.

And finally, one word on Ziggo.

The year -- the whole year has been still in the negative.

But the last quarter was actually, particularly, a breakeven.

We're even happy that we are now selling more and more converged packages there.

We have a high number of our homes who are now in the converged situation and that will allow us to mimic more the KPN strategy and compete with low-cost providers, unlimited providers in a more effective way.

So overall, I would say, the EU cluster, the fifth OpCo is performing also very well this year.

And I would say, with that, I will turn to Nick for the detailed financial review.

Thank you, Vittorio.

Good morning, everyone.

So it's a very proud moment for me to have the opportunity to lead the group after Vittorio and take it into its next phase of growth going forward.

So I'd like to take the opportunity, I know it's a little early, but to personally thank Vittorio, not only for transforming Vodafone into the great company it is today, but actually being a great mentor to me over those 12 years.

I'd also like to congratulate Margherita.

She will be an outstanding CFO for the group and has been a joy to work with.

So this is the last time I get to do the inspiring part of the presentation.

So I think, on Slide 11, as highlighted by Vittorio already, our financial performance in the year was strong and as we translate that modest organic service revenue growth into strong EBIT and free cash flow growth.

In absolute terms, our fiscal year revenues declined, primarily due to the deconsolidation of Vodafone Netherlands and a drag from FX.

On an organic growth basis, we grew 1.6%, or 2.6%, excluding the impact of regulation and the interruption of handset financing in the U.K. Adjusting organic, EBITDA grew 11.8% or 7.9% on an underlying basis, which removes the impact of handset financing, large settlements in Germany and the U.K. and the drag from roaming regulation.

As a result, our EBITDA margin expanded by 190 basis points to 31.6% or by 130 basis points on an underlying basis.

D&A declined year-over-year, partly reflecting a longer assumed life for our German cable assets, further amplifying EBIT, which increased by 47% organically.

Free cash flow, pre-spectrum and restructuring, was EUR 5.4 billion compared to EUR 4.1 billion in the prior year driven by higher EBITDA growth and lower capital credits or outflows following the final payment for Project Spring in the prior year.

Overall, we exceeded our raised guidance of around 10% organic adjusted EBITDA growth and above EUR 5 billion of free cash flow pre-spectrum.

Given this performance, the board has approved a 2% increase in dividend for the year to EUR 0.1507, consistent with our intention to grow the dividend per share annually.

As you are aware, each year, there are a number of noncash items that distort our reported earnings, which is why we also present an adjusted view.

The bridge on Slide 12 shows the walk from adjusted EBIT to reported earnings.

I do not intend to go through the bridge in detail, as these items are clearly explained in the press release.

Additionally, I will cover, later in the presentation, our actual interest cost and cash taxes paid.

However, let me draw your attention to 3 of the most material items.

Firstly, given the size of our Luxembourg tax assets, over 2 -- EUR 26 billion, small changes in assumption, such as interest or tax rates, can often lead to a meaningful noncash P&L impact.

This year, we have a EUR 1.9 billion further writeup of the deferred tax asset given higher interest rates.

On an underlying basis, the group's effective tax rate for the year was 20.6%, down from 25.4% last year.

This lower rate is primarily due to a change in the country mix of group's profits, a lower corporation tax in Italy and the successful closure of tax audits in Germany.

Looking forward, we have lowered our medium-term tax rate guidance to low- to mid-20s from mid-20s previously.

Secondly, profit for the period included a net write down of EUR 2.2 billion in India.

This was principally driven by a fall in the value of Idea share price during the year, which is a key reference point for our accounting on a fair value basis required until completion.

And finally, it's important to remember that our reported share count is inflated by the mandatory convertible that we issued at the time of the VodafoneZiggo merger.

We have completed the buyback of the first tranche, and it is our intention to buy back the second tranche in early 2019, which is already reflected in our Liberty transaction funding plan.

Turning now to service revenue growth on Slide 13.

As the chart on the left shows, adjusting for European regulation and U.K. handset financing, we have delivered consistent growth in the mid-2s over the past 5 quarters.

In Q4, we reported 1.4% growth, excluding the benefit the legal settlement in Germany.

This reflected an improvement in AMAP to 7.8% and a slightly weaker underlying performance in Europe due to lower German wholesale revenues.

Looking ahead to Q1, we expect a slowdown in reported service revenue growth by over 100 basis points on our current accounting basis.

This reflects circa 80 basis points driven by 2- to 3-month delay in our planned repricing in Italy following the move from 28 days to solar billing, together with the lapping of price changes in the prior year, circa 30 basis points higher handset financing in the U.K. and, finally, some impact from the repricing of our pricing plans in Spain.

The Italy drag is a Q1-only impact, but we expect a negative impact from the new entrant and competitive responses from Q2 onwards.

Regarding Spain, you will have noticed that we've repositioned our headline prices on the main Vodafone brand last week to better align with our main competitors.

We will also respond against MÁSMÓVIL using targeted below-the-line initiatives to improve our net core position during the year, principally through our second brand, Lowi.

These commercial actions will lead to a decline in our service revenues in Spain and EBITDA in H1, but should deliver improved commercial momentum and more balanced long-term competitive position.

However, when looking at the rest of the group, as Vittorio has already covered, we are broadly pleased with the good momentum we carry into FY '19 and particularly happy to see the U.K. back in growth.

On Slide 14, you can see the contribution of our 3 growth drivers to our overall service revenue growth in the year and a number of drags, which weigh on our reported performance.

At the bottom of the slide, you can see our expectation for the coming year.

Excluding regulation, European consumer mobile service revenue grew, given our more-for-more commercial actions.

In AMAP, data revenue grew strongly as we monetized strong traffic growth.

In fixed and convergence, we maintained our good momentum.

And we are, once again, Europe's fastest-growing broadband provider, adding 1.1 million new broadband customers.

And in Enterprise, we continue to outperform decline in incumbent peers, thanks to profitable fixed line market share gains, our exposure to fast-growing emerging markets and further account penetration, which more than offset pricing pressure in European mobile.

With the new entrant in Italy and the repricing effects in Spain, we expect to turn negative in European consumer mobile revenues this year.

However, we expect to maintain good momentum in fixed and in Enterprise.

On the right-hand side of the chart, the drag from regulation should reduce next year, as we lap EU roaming regulation.

Handset financing drags in the U.K. will increase.

And within wholesale, we expect a reduced drag from carrier, particularly offset by an increased drag from lower MVNO revenues in Germany and the U.K.

Moving now to Slide 15.

You can see the breakdown of our EBITDA growth in the year.

We achieved a very high flow-through from revenue growth to direct margin, despite higher wholesale broadband costs.

This was further supported by a second consecutive year of lower net operating cost given our Fit for Growth program.

As I've already highlighted, we also benefited from U.K. handset financing and legal settlement.

This was particularly offset by EU roaming regulation.

In FY '19, we expect to reduce absolute organic operating cost for the third year in a row.

This is despite investing up to EUR 100 million to accelerate our Digital Vodafone program.

As you can see on Slide 16, this focus on cost has helped to deliver a third consecutive year in which group has expanded EBITDA margins, which reached 31.6% or 30.8% on an underlying basis.

At the bottom of the slide, you can see that the number of markets growing EBITDA faster than revenues has increased from the 12 in FY '14 to 20 to date, demonstrating the broad-based nature of the underlying improvement.

The opportunity for further margin improvements remain substantial, enabled by the transformation of our business model as a result of the Digital Vodafone program.

Our new LRP plans have improvements for virtually all of our markets over the next 3 years.

With regard to our current year, you should expect the EBITDA growth to be more H2-weighted, as we lap easier comps in Italy and Spain.

Vittorio will talk of the transformational impact, which Digital Vodafone will have on our customer experience and commercial execution.

I will primarily focus on the scale of all levers, which we have identified to continue to reduce net operating cost over the medium term.

The program is built around 3 key areas: customer management, technology management and operations.

Our current cash operating cost around these areas is around EUR 8 billion.

I will illustrate some examples under each area.

On the left, you can see our AI-powered chatbot TOBi, which is currently active in 5 markets.

Although still at modest scale, as we undertake A/B testing, taking the U.K. as an example, the quality of interaction, so far, is encouraging with 90% customer satisfaction at a cost far cheaper than an FTE equivalent.

In technology, we've introduced new smart CapEx methodology to network capacity planning based on big data analytics, which enables us to understand our profitability, both by customer and by each cell site.

As a result, we saved EUR 170 million of CapEx in FY '19 planning.

In operations, we already have around 200 bots live in our Vodafone shared service centers, performing back-office functions, capable of delivering the work of up to 3 FTEs per bot.

We expect to scale this to 600 by year-end.

Moving on to CapEx on Slide 18.

The chart covers our top 5 markets, which make up approximately 65% of the local CapEx spend.

You can see 3 areas of growth.

Firstly, given our momentum in fixed, success-based CPE CapEx continues to rise in the mix.

Secondly, we are investing in the upgrading of our cable infrastructure to DOCSIS 3.1, to deliver higher speeds.

And finally, we continue to transform our IT infrastructure to improve customers' experience and create a more agile business.

Investments in mobile capability and coverage are broadly stable, as we develop 4G+ ahead of 5G.

Finally, capacity and maintenance CapEx declined given efficiency programs discussed.

Overall, our capital intensity was 15.7% in the year, 40 basis points lower than last year and within our unchanged mid-teens guidance range.

As a reminder, this guidance excludes material incremental fiber build opportunities, such as the announced Gigabit Investment Plan in Germany, which will ramp up during the fiscal year.

We have no other investment opportunities identified at this time.

Moving to spectrum on Slide 19.

During the year, we invested EUR 1.1 billion in spectrum, similar to our long-run average, renewing our 2G position in Italy and staged payments for the U.K. 5G spectrum auction, which we subsequently won the largest share at 3.4.

Over the next 2 years, we expect spectrum cost will exceed the long-run average, as auctions take place for 5G in the 3.5 to 3.7-gigahertz range as well as 700 band.

It is important to note that we have much greater range of spectrum choices than in the past, thanks to greater flexibility of 4G and 5G technologies, which support carrier aggregation.

In addition, we are actively planning our refarming strategies for 2G and 3G for each market.

These factors provide alternative options if auction conditions become unreasonable.

As a result, despite the near-term concentration of auction activity, we believe the long-term average annual cash cost of spectrum will remain in line with the historical average, which, in itself, is some way above our normalized annual spectrum amortization charge of below EUR 1 billion.

Moving on to Slide 20.

Our free cash flow pre-spectrum increased by EUR 1.3 billion year-over-year to EUR 5.4 billion.

This improved performance was principally driven by higher EBITDA, lower capital additions and lower capital creditor outflows, which were unusually high last year due to the final Project Spring payments.

These benefits were partly offset by a greater working capital outflow, reflecting the reversal of the EUR 0.5 billion of U.K. handset financing benefit to EBITDA.

Cash interest expenses were slightly lower than last year, reflecting the loan interest received from VodafoneZiggo and lower bond interest driven by our refinancing activities last year.

In FY '19, we expect cash interest to be around EUR 800 million, excluding the cost of any financing we may choose to raise in advance of the acquisition of Liberty Global's assets.

Cash tax was EUR 1 billion, EUR 0.3 billion higher than last year, principally driven by nonrecurring tax rebates in the prior year.

For FY '19, we expect cash tax to increase to around EUR 1.1 billion.

Importantly, free cash flow after spectrum and restructuring cost was EUR 4 billion, fully covering our cash dividend payment of EUR 3.9 billion.

Turning to Slide 21.

The graph on the left provides a multiyear view of the free cash flow target component of the management LTIP.

Given India was excluded from the 2017 LTIP schemes onwards, we have excluded it from the schemes for comparability.

The black bars on the left chart show the group target, excluding India, have risen consistently over time.

At the same time, even when adjusting for the drag of Project Spring, the blue bars, you can see continuous growth.

The red circles above the chart show we exceeded our targets in both 2014 and '15, and we remain on track to achieve our 2016 and '17 targets.

On the right, you can see our new LTIP targets for 2018, which does not include any contribution from the proposed acquisition of Liberty Global's cable assets in Germany and CEE.

The midpoint of the 3-year free cash flow target has increased to EUR 17 billion from EUR 16.6 billion previously.

Based on our FY '18 dividend payout of EUR 4 billion, and including the long-term average spectrum cost of EUR 1.2 billion per annum, you can see the dividend is comfortably covered by free cash flow on the basis of an on-target achievement of the LTIP.

Moving to our balance sheet on Slide 22.

We reported closing net debt for EUR 31.5 billion compared to EUR 31.2 billion last year with leverage of 2.1x as expected.

During the year, we generated EUR 5.4 billion of free cash flow pre-spectrum and received net proceeds of EUR 1.2 billion from the sale of Qatar and our Vodafone share placing.

This was offset by our dividend payment of EUR 3.9 billion, spectrum purchase of EUR 1.1 billion and our share buyback program for the first tranche of the 2016 mandatory convertible of EUR 1.6 billion.

During the year, we maintained an average life-of-bond debt of nearly 10 years with a net cost of debt of 2.5%.

As per our announcement last week, we intend to increase our target leverage range to 2.5 to 3x and be at the upper end of the range following the completion of the Liberty Global transaction.

We will also intend to secure EUR 5 billion to EUR 7 billion of equity credit through issuing hybrids and around EUR 3 billion of 3-year mandatory convertible bonds prior to completion.

After our recent engagement with the credit rating agencies, we believe we are likely to get a split BBB+, BBB rating, a solid investment grade.

Net debt in India of EUR 7.7 billion is not included in the group's consolidated net debt position given the upcoming merger with Idea and the creation of the JV.

I would like to comment in more detail on the pro forma leverage position of our India JV, which is illustrated on the left-hand side on Slide 23.

At the end of March, Idea's net debt included in accrued interest was EUR 6.9 billion.

Under the merger formula, this means that Vodafone India will contribute debt of EUR 7.2 billion.

Therefore, we will need to inject up to EUR 1 billion of additional cash into India prior to completion, as we announced in January.

Progress on tower disposals reduces the JV's pro forma leverage by around EUR 2 billion, helping us to fund spectrum liberalization and tower exit fees.

This leads the JV's pro forma net debt at around EUR 13 billion with a pro forma leverage of 7.7x on an LTM basis, or 4.7x after taking into account full run rate OpEx synergies of EUR 1.1 billion.

Following the exit of the smaller players, we would expect ARPUs to improve in the medium term.

A 10% recovery in ARPUs would reduce leverage to well below 4x.

And as you can see on the right-hand side, we are now concluded on our company name and brand, Vodafone Idea, selected our top management team and detailed our integration plan with the focus on fast start to synergy realization.

Finally, looking ahead to guidance for FY '19.

We expect underlying EBITDA growth of 1% to 5%, which is equivalent to an adjusted EBITDA range of EUR 14.15 billion to EUR 14.65 billion on a current accounting basis on a guidance FX.

The waterfall chart on Slide 24 explains the basis of the guidance, which adjusts for the noncash impact of EBITDA of U.K. handset financing, the large settlement and the nonorganic impacts of Qatar disposal and lower India recharges post the expected completion of the JV.

A guidance range captures various possible scenarios in Italy as well as the usual swing factors related to competitive intensity in our major markets and the potential for macro instability of our emerging markets.

We continue to expect our midterm capital expenditure to remain within a mid-teens envelope as a percentage of sales, excluding the Gigabit Investment Plan in Germany.

Our free cash flow before spectrum of at least EUR 5.2 billion includes a range of -- sorry, a drag approximately EUR 0.2 billion from the Gigabit Investment Plan, together with the drags from the sale of Qatar and lower India recharges.

Finally, during the year, we will start reporting our results on an S 15 accounting basis as well as the existing basis.

Under S 15, we will expect our organic service revenue growth will be slightly higher and our absolute adjusted EBITDA will be slightly lower, primarily due to the elimination of the impact of the U.K. handset financing with no impact to free cash flow.

And with that, I will hand back to Vittorio on strategy and execution.

So update on the strategy and execution.

Let me first start from strategic capital allocation.

If you look at what we said, we wanted to do the 3 geographic areas of the world.

We said we wanted to be converged leader in Europe.

In -- with the Liberty transaction, we are adding 17 million households.

And we clearly are becoming the biggest infrastructure owner in Europe.

We were already there in mobile.

Now we will become that also in fixed.

We have been -- we said we wanted to be data leader in Africa, but wanted to have a simplified structure.

It has been a good year of transactions between rationalizing and simplifying the relationship between Safaricom, Vodafone and Vodacom with the deals we have announced during the year, the Tanzania IPO and the sale of Qatar, which was a little bit out of the strategy at this point.

And then the third statement we made said we want to be a scaled leader in India.

I am pleased to say that the merger of Idea and Vodafone India is on track.

And as I said before, we agreed everything.

Don't forget, $10 million of synergies will start coming to us as soon as we can complete.

We completed the -- we had a standalone tower sale for EUR 1 billion.

And I have to say, it was very important also to get the Indus-Infratel deal not just to make the main transaction happen, but also because this gives not only synergies, again, but also a monetizable asset, which can help making India self-supportive.

So from a strategic point of view, I think we did what we said we would do, and I'm very pleased that everything was in time -- on time with today.

Where does this lead?

This is a slide we already showed last week with Liberty.

It's pro forma, clearly, for that.

But if you look at where we were, let me say, after Verizon and where we are today, we will be at 35% fixed line revenue in Europe, which is quite remarkable, seeing where we started from.

More importantly, we have 53% of our footprint -- of our NGN footprint on net, being it on net or on strategic partnership, which makes the business much more profitable, much more resilient for the future.

And we'll have almost 80% of our EBITDA mix coming from Europe.

So I think we'll be a more fixed converged, more infrastructure owner, more focused Europe player in the next leg of the journey.

And to give you an idea of the impact of the Unitymedia/UPC deal, on the left side, this is a familiar chart, the number of phones that we'll now be able to serve through our partnership and our own network has gone up to 60 million.

But if you add also the opportunity of NGN resale that we have, either negotiated or obtained from a regulator point of view, we have almost 70% footprint in Europe.

This enables us to compete effectively in every market on convergence in consumer and in Enterprise, which is why probably some of our competitors are not very happy about this deal.

On the right hand of the chart, you see the situation before and after.

Before, we were kind of the core #2 in -- or we are, we are core #2 in terms of homes passed.

After the deal, we will be the clear #1 in Europe with 4 million homes.

Clearly, a nice position to be, and we will become the leader in NGN infrastructure.

But we didn't do just deals.

We did a lot of organic activity.

I will not comment on the whole chart because practically, now, in every country of Vodafone, we have converged and fixed services.

CityFibre in the U.K. We have 7 cities have been announced.

One million homes have been targeted and 0.5 million are already identified, so that is being rolled out.

There's a bit of movement in the discussion with BT on other stuff.

But to be honest, it's not enough.

It's just managing our movement, not yet what we need to really have them in a -- in the right place.

But we will continue and we're engaged in the discussion.

Germany Gigabit Plan, EUR 2 billion.

We have 29 business parks now being built.

We have -- we are starting the DOCSIS 3.1 in July upgrade.

And this is very important because this puts together KDG, Unity and this plan, and you get 25 million homes with gigabit speed.

And you get essentially 2/3 of the German government plan happening 3 years before their target, which is -- we are fine, which is why we are finding -- I don't know if you follow the press -- that the reactions actually to our deal are with one exception, mostly positive from everybody who has an interest in the development of Gigabit in Germany.

And in Italy, Open Fiber, we agreed -- we are 2.7 million or 2.1 million, depending on what you look at in homes passed.

They have -- or marketable.

They are now running between 25,000 now more 35,000 connections per -- or deployments per week, so they are getting up to speed.

And we signed the second phase of the agreement.

But as you can see also from the flags, there's activity everywhere, whether it's Siro in Ireland, whether it's Portugal or DOCSIS 3.1 in Spain.

So it's not just M&A.

This is really an acceleration of our transformation.

And the results are here in terms of execution, the 1.3 million becomes 1.1 million in Europe.

But as you can see from the chart, Vodafone is now the fastest, biggest growing fixed line provider in Europe.

And we are 50% bigger than the next player, which is the guy with 0.7 written below us.

The last quarter was particularly good, 514,000 NGN connections.

It's very important to note that 35% of our connections now are converged and 2/3 are NGN.

So again, we are building a base for the future, which is growing very healthy.

Think that in the next -- any forecast you look at, the next years, you have 50 million more households being connected to NGN in Europe or upgrading to NGN in Europe.

So potential for Vodafone, with this kind of asset base, super strong.

Now this was the first of our 3 engines for growth.

The second is clearly mobile data.

Mobile data keeps doing well.

I will not talk to -- a lot about the NPS program and the CXX program.

I have to say, we maintained a network level -- mobile network level, clear gap versus #3 and some gap leadership or core leadership versus the other player in the market.

This is a prerequisite for delivering high quality.

And high quality, which is going to be very important also if you think about MVNOs and new entrants and these things.

High quality as measured not by the customers, but by us is in the central block.

92% of data sessions are video quality in Vodafone, which is very pleasing.

I had to ask Johan to check a number of times the 34 basis points of dropped call in Europe because I never saw in my career, and I have to say congratulations to Johan and my technology team, 34 to 0 -- sorry, 34 basis points of drop is really an amazing result.

But most importantly, only 3% of our 4G sites are purely fully utilized in the busy hour.

Why is that?

Because we bought spectrum.

Because we are deploying spectrum very well, we still have not a huge amount of carrier aggregation deployed.

I think we are in the 30%, 35%, so we still have room to grow.

We have still more carrier to light up.

But this gives us the ability to continue to grow, as you see on the green part of the slide, to continue to grow 60% at per user level.

So those investors, those analysts who say, "Oh, but you guys will have -- you cannot continue to give more data to have everybody grow." The answer is we can because we deploy our spectrum and our CapEx in an effective way.

And as a result, our network cost went up only 2% in the last 2 years compared to a traffic that goes up 60%, 70% per year.

This is very important because it also sets the basis and the expectation for 5G.

Now this is a busy chart, but please bear with me.

On the left part, we made -- we wanted you to make -- to be aware of the comparison of 4G versus 5G.

4G took around, I would say, 3, 4 years -- 3 years, really, to go from standard to first city deployment.

But then it took another 6 -- or 5 or 6 to get to 50% penetration.

We think that 5G will not follow a very different pattern.

It's now probably a couple of years, 2 to 3 years to see the first cities.

For us, we have Milan -- we have other places where we are deploying.

But then, it will take time to get to 50% penetration because of handsets, because of -- and in the meantime, we can do an excellent job with the 4G and 4.5G capability that I showed you before.

And the right hand of the chart indicates that in the dense urban area, we will deploy 5G.

Of course, we will follow also what competition does.

So we have to respond.

But the intent is to deploy 5G in dense urban area.

And here, we will have, most of the cases, fiber, and then 4.5 will be for the rest of the countries.

And then, of course, the red blob, we'll start covering the white and the blue, and we will deploy more of 5G.

Now an important point, which is in the note, microwave technology, as we have been saying, quite frankly, for probably 5 or 6 years, including to the ones of you who were not really believers, actually, has improved a lot.

And now the latency of microwave hops is down to below 1 millisecond.

Actually, it can go as low as 0.05 with E-band.

So it's not really true that even in dense area, you really need fiber everywhere.

So if you have it, it's a good thing to have.

But with latencies of 0.25 milliseconds and even 0.005, we will be able to serve in a very flexible way.

And of course, if you have fiber at good conditions, why not?

But if you don't have fiber at good conditions, microwave would be very effective.

And this is important because we wanted to reassure you that our mid-teens capital expenditures guidance is consistent with this vision.

So technology is supporting that we stay where we are now.

Of course, we are a little bit right of 15 if you include CPEs and everything else and a little bit left of 15 if you don't.

But that's why we have comfort with our medium-term guidance.

In terms of applications, apart from cost, clearly, IoT and fixed wireless are the 2 applications that everybody is talking about.

With 5G cost, it will go down.

I already said it many times.

Fixed wireless, we are less convinced.

We think it's a more selective type of deployment.

In certain parts, in certain countries, it will make sense to do it.

In others, it won't.

IoT, instead, is a real opportunity.

The market grows at 11%, as you can see on the top part of the bar, for the industrial part or the Enterprise part.

Vodafone grows at 14%.

We now can serve IoT in 180 countries in the world, which is thanks to our partner market organization.

68 million SIMs, the vast -- the biggest sector by far is automotive.

Our ambition here is to have 30% to 35% market share.

We have -- in the countries where we operate, which equates to probably 6, 7, 8 of the total market.

But it is a very heavy -- a very important asset that we have.

We have deployed narrowband IoT in 9 of these markets.

And we will -- we'll be planning to deploy it everywhere.

Consumer IoT is following.

Again here, the numbers are expecting something like an 11% growth.

It's early days.

We just announced that we are partnering with Samsung for the inside-the-home IoT applications.

And outside V by Vodafone will be extended today.

It's about -- it's present in 4 markets.

By the end of the year, we'll be in, I don't know, 11, 12, something like that.

But of course, it's a longer-term potential.

The top part is money today.

The bottom part is a lot of money, possibly even more money a little bit longer over time.

And finally.

Enterprise, third area of strategy for us.

As I said before, we are pleased to report that Enterprise is doing well.

It's -- if you take away the regulation impact, it's a 2-ish type of performance.

Clearly, it's driven by IoT, the previous thing that I discussed.

It's also driven by the fact that emerging markets in Enterprise Vodafone is the supplier of choice and is doing well and is growing very well and also that we have low exposure to legacy voice revenue, unlike others.

The thing of this here, for Vodafone very important, is being working on margins.

We have a new leader in Enterprise business, and he has focused a lot on the profitability of Enterprise.

And we managed to increase profitability by 170 basis points, which is not little in a year.

I do believe it's needed now because market -- as all markets are competitive, you tend to give too much sometimes to customers.

And so we have done a very, very thorough review of the profitability of the accounts.

We have decided to optimize margin so cost allocated to each account and how much we are willing to put on services is now much tighter and in a very, very, very disciplined way managed.

And of course, we're also working on closing legacy platforms and legacy networks in the U.K., which contribute to the margin.

So a nice story, which shows up on the right hand of the chart when you compare to our competitors.

And again, here, I would not make names also because it's apples and oranges, not everybody has the same footprint and everything.

But as best as we can, we are the only ones growing and some of the others are declining pretty fast.

Why is that?

Apart from the fact that we are Vodafone and we are good, I would say 2 things, if I'm honest.

The excellent setup of Vodafone globally, which Nick Jeffery who now runs the U.K. historically established, we have a higher NPS, higher recognition of our sales capability and quite frankly, we are faster and quicker and better at managing multicountry and complicated -- more complicated customers who like us.

And then second, we have great ability to serve internationally through a vast but very agile activity in metro, without too much legacy from the past.

These, I would say, are the critical skills that have made us a little bit unique in the enterprise space.

So I would say positive news on Enterprise as well.

Before closing, one word on our programs.

Our horizontal programs.

We have -- I will not spend too much time talking about the CXX program.

After Spring, we have done a big push.

We've made a big push into customer satisfaction.

As you can see, over the 3 years, we have consistently maintained or improved the gap versus the others.

This is important not because we -- of course, not obsessed with gaps, but because this is what really is the basis, I do believe is the basis, for the future transformation that is just about to start.

So we have better scores, better gaps.

We are very happy now.

Now the real game now is digital.

And digital, in particular, for the digital aspects of customer satisfaction is very important.

So digital is not just to reduce cost, which is very important, but it's also to improve the relationship with the customers and take advantage of the changed external environment, where we have to say we still invest billions and billions; and take the opportunity to have, at the same time, a better experience at a much lower cost and potentially also higher loyalty, and therefore, higher revenues.

The examples on the page are real examples.

In Italy, we have now almost 90% application of the My Vodafone app.

This means that every month, we have 10 contacts per customer as opposed to 3 visits in the store per year.

And this gives a tremendous opportunity to do much more marketing, much more than the old above the line, below the line, much more direct.

We will be -- and we are in-sourcing platforms and activities because we believe that this is a critical skill for the future and also critical skill to make sure that the relatively large amount of money that we invest in advertising and commercial cost is well invested.

We also will acquire more on digital.

Good example from Czech, where we went from 6% to 25%.

And I think there is a link between that and the great profit performance of Czech Republic.

Bundles and AI days, the market in South Africa is the kingdom of that.

We power 200 million bundles only on data, 500 million in total, through that AI.

And again, that increase is also efficiency of your spending, but also revenues.

And finally, Nick mentioned TOBi and the chatbot.

This is, I think, the next big transformation.

I'm very glad that Margherita, who has got some training on the EUR 3 billion of operations, now will put her eyes also on the remaining EUR 5 billion of commercial spending because this really -- this is a real example.

In Italy, today, we manage 800,000 interactions per month through the chatbot, TOBi.

And we have 70%, 7-0, resolution right now.

It will not be the same everywhere because Italy is a prepaid market, so it's easier to have a good resolution rate, and in other markets, it's less easy.

But this is really, at the same time, what the customers want but also saving a lot of money.

And I'm confident that with Nick and Margherita's attention, all these KPIs will go north.

We will report on this.

We will continue to report -- they will continue to report, actually.

They will continue to report on these.

But I like to indicate 35% of campaigns now are enabled by Big Data, which will allow big savings and much more efficiency.

I am happy with the Vodafone penetration, which it is a bit higher in Europe, but I would like to get in the 70s and 80s pretty soon.

And as Nick said, the chatbots have just been introduced, but the goal is to go to 60% pretty quickly.

And again, the Italian example is there.

So we'll continue to report on this, but I think CXX customer experience is nicely now going into digital, and digital will be the core program for the transformation of the company in the next few years.

And finally, to conclude, let me sum up.

As I said, exceptional year of transformation.

We will become the leading next-generation infrastructure owner in Europe.

I'm glad the way both joint ventures will go in India.

India will be self-supporting and very, very solid.

Proud of the achievement in fixed line.

I have to say, again, third conservative year of EBITDA margin expansion, which is exactly what we promised 3 years ago.

And digital Vodafone becoming really a big transformation plan for the whole company.

In terms of dividends, we have announced a 2% increase.

And Nick gave you the guidance, 1% to 5% EBITDA; and free cash flow, pre-spectrum, at least EUR 5.2 billion.

With that, thank you for attention.

I think we should move to Q&A.

Going to have a lot of questions to answer.

It's Jonathan Dann from RBC in the blue suit.

I've got 2 questions.

One is on the LTIP.

If we dissect Slide 21, it sort of implies that year plus 1 and year plus 2, we would start to expect the sort of substantial increase in free cash flow.

Could you just walk through whether that's revenue, OpEx, CapEx driving that?

And then my second question is more existential.

It seems very easy to disrupt in broadband, so you know yourself, in the U.K., MÁSMÓVIL Spain, whereas it would seem to me that 5G has greater barriers to entry.

So I mean, how do you see the pricing environment and competitive landscape in, say, the consumer broadband market?

Yes.

Why don't you take the LTIP while I am...

Yes.

I mean, I would say on the LTIP, what I was really trying to highlight is there's good progression, I would say pretty much EBITDA-driven.

so it's sort of core-performance driven.

You need to bear in mind here, we were doing organic service revenue of 1.6% this year.

A good proportion of that had high margin because it's monetizing data.

So we build a network, we monetize it.

And also, we have now an extensive on-net footprint, which has high margins.

So those 2 factors go through to our bottom line.

And then on top of that, we have digital.

And digital will start ramping up.

So it's a bit of an investment year next year, it's been a bit of an investment year this year, but then it starts to really contribute going forward in terms of transforming that business model.

Yes.

And on the existential question, is it easier to be an attacker and disruptor or not.

Let me say, of course, you have a point, but of course, you have to put it in context.

So is it easier to attack in fixed line from behind?

Yes, but we don't do it exactly in the same way everywhere.

So you might be influenced by the U.K., where we have literally 0 legacies.

So yes there, to build scale over time, you need to be more aggressive.

But if you look, for example, at Italy, our pricing is, if anything, more cautious than the pricing of others.

If you look at Spain until Friday, actually, we were at a premium in certain segments.

Now at a premium versus Orange, not versus Telefónica.

If you look at Germany, the cable pricing is more or less has always been the same, and we're not -- so yes, it is in a way easier because you don't have old, high-level revenues, but we are not really being particularly aggressive across the board.

5G will be different, 5G will be more complicated, and that's why MVNO's are nervous.

That's why MVNOs are nervous, because they know that there will be a surge in traffic which will be very high.

There will be technical requirements in terms of latency and quality of service which will be higher.

And it will not be easy as an MVNO to really kind of do that.

Of course, some of them will be there, others are less comfortable.

Capacity management and quality management will be more important over time.

But it's already a little bit of case in 4G.

And I have to say, even in 4G, you see a -- it is a little bit more complicated.

Not for serving Netflix, of course.

Netflix is -- yes.

So shall we?

Yes.

Let's go there.

Robert?

Oh, yes.

Okay.

Yes.

San Dhillon here from Exane.

Two questions.

Firstly, on digitalization.

Nick, you mentioned that there were investments this year and in FY '19 in preparation for the benefits of digitalization.

Could you quantify kind of the scale of those investments and how much are nonrecurring?

And secondly, on service revenue growth progression.

As we kind of go into the 2Q and the second half of the year and you revert to normalization in Italy, so to speak, are you still expecting the underlying organic service revenue growth to be between that 2% and 2.5% percentage that you have been delivering?

So I would say, on the first one, in terms of digital, I would say that the costs this year have not been so great, so in FY '18.

I'd say FY '19, we'll put in investments to the tune of up to about EUR 100 million that we think we can do and still lower absolute operating cost while we do that.

So a little bit to Vittorio's theme of investing in that business continuously, Fit for Growth gives us capacity to then reinvest in the business.

I'd say on service revenues, sort of trajectory rather than break down by quarter, which of course, we're not going to do, what I would say is we're growing, if you like, the headline 1.4% in Q4 and 2.4% underlying.

If you look at the 1.4%, I'm really calling out the fact that we're going to slow up in Q1 80 basis points.

It's really a bit of a one-off in Italy for timing on the repricing.

Then the question is Q2 onwards, what's going to happen from a competitive dynamic with Iliad coming into the market?

And frankly, there are a lot of different scenarios, a lot of different potential pricing plans.

We have to see what they are.

So I don't think we're in a position to give an outlook.

We'll just have to see.

I think we're very well prepared.

At Spain will be a small impact in going negative into Q1, and then let's see how we evolve.

I think the second half will be more positive for Spain, given those investments that we're doing in the first half.

Yes.

Robert?

Where?

Here.

This?

Yes.

Okay.

Okay.

You're not Robert.

You don't look like Robert.

Not Robert.

So 2 questions, please.

Firstly, I guess, just a big picture question around the EBITDA growth that you've delivered last year and as we look to this year.

So I guess tying up a few of the things we've talked about.

If we look at the underlying EBITDA growth in March '18 it's about 8%, adjusting for oneoffs and everything else.

The midpoint is 3% this year, obviously, there's going to be an Italian impact, you've assumed that.

But I guess, can you walk us through what are the other moving parts that we should think about?

I guess top line cost cutting, digitalization.

What are the things that kind of explain that slower growth?

And I guess with that, one of the things I'm quite interested in is the -- in the H2 EBITDA that you generated, the margins were up nicely, but actually, OpEx didn't improve in your market in terms of OpEx cuts.

They were very good in H1, not so much in H2.

So maybe it's commercial investments, too.

It's just the general message around that.

And then the second one is just on spectrum...

I think you're up to 3. Carry on.

Yes, sorry.

And the -- my second one is really around spectrum, which is, you made an interesting point about maybe being able to refarm spectrum and not necessarily having to compete so aggressively for future auctions.

I guess what I was trying to tie together is if you were to look at the volume of auctions coming up, we could probably be thinking of EUR 5 billion to EUR 5.5 billion of spend in the next 2 years.

I understand the point about maybe not needing to buy so much, but I guess what I'm trying to understand is how much of it is important just to future-proof?

Because I guess there's not a lot of visibility around future 5G demand.

Is it really strategic as you think about safe to not bid for that auction?

So let me rattle through your list.

So just in terms of EBITDA growth, the 7.9% down to midpoint of 3%, the biggest swing factor is Italy because Italy contributed to growth this year and is obviously going to be negative next year.

So that's the sort of bigger shift down.

There's a degree in Spain.

And the main degree of Spain, we need to invest in Spain.

We'll reposition pricing, but we'll also invest below the line.

That will involve some selective subsidies, et cetera, to basically compete with MÁSMÓVIL, not in a overtly aggressive way.

That's not -- we're just saying, in retention, in reaction, we want to be able to complete.

So there's an investment going in there.

I would say these are the 2 main movements.

The rest of the profile looks, I would say, pretty similar to what we've been delivering.

To your point of H2 operating cost.

Yes, they did not reduce.

We could have had a reduction, but actually, we felt with the performance we were doing, now was the moment to invest in the business.

And there were a number of markets that we felt -- on the commercial cost, we felt we had really strong momentum in a number, we wanted to invest behind that momentum to give us more growth in FY '19 and before.

And just in terms of spectrum, I suppose the big one on the refarming opportunity is low band.

And sort of do we need to participate?

And to what extent we need to participate?

More around 700, given the low band that we already have in some of our countries.

That's not to say that we're not going to.

Clearly, we have to evaluate, we have to see the pricing, but the pricing has to be, if you like, a compelling price point for us.

And so we're doing a strategic review in each of the markets to see where the opportunity is.

Yes?

Yes, it's Maurice from Barclays.

So a question on your next-generation access.

I mean, you referred to it as being in a super-strong position, fastest-growing of your European peers, et cetera.

I guess the question relates to the pace of growth going forward.

There are many who doubted Open Fiber's business plan, there are many who doubted whether CityFibre, alternative fiber investments in the U.K. would take place, there seems to -- on commentary on BT, they're moving slowly regarding, giving you the right wholesale terms.

So you seem to have some tailwinds to fixed line growth in that respect.

Do you think net adds can actually accelerate going forward, given the greater footprint in Italy?

I think Open Fiber is talking about 2.5 million net adds, I think.

in terms of homes passed this year.

Should be lots of money coming in from infrastructure funds on U.K. fiber.

Can we see accelerating growth in fixed line?

Well, let me give you the broader answer, and then maybe, Nick, you can talk more about the expectations.

The broader answer is there's no doubt that new-generation networks are coming.

They are coming either because incumbents are investing in them or because we -- and now I say we upgrade cable to DOCSIS 3.1 or because private equity is investing on a regional basis.

And the beauty of the Vodafone strategy is that we always said we are going to be capital-smart.

We're going to use the 3 models, can do ourself: We can buy, we can work with incumbents or we can work with local companies to do it.

Now there's no doubt that this will happen.

This will imply that a lot of people will upgrade, as I told you in my speech, and then there will be an opportunity to acquire customers from incumbents.

Incumbents have the problem of having high prices for old products, products that don't deliver.

If I look at how much I pay in my home.

I mean, honestly, every month, many forget, but every month I say, "Why am I getting this for this price?" So it's a tremendous opportunity for us when we are -- prove to be right strategy and the right assets going ahead.

You want to be more specific on...

No.

I mean, the only thing I would say is I think we covered this when we had our sort of Open Office down in Italy.

Where we were focused on fixed, was that we're in a window at the moment where people are moving off slow-speed DSL, whatever products and moving on to Class B gigaspeed which we can offer.

And so it is a little bit of a landgrab moment, I mean, to your point.

And if other incumbents, et cetera, are not rolling out a product that can really compete with our infrastructure, we have an advantage.

I think there's a balance between not overpromotion and reducing ARPUs and the level of growth.

But you clearly see in our quarterly performance the momentum we have as a business, and we're taking share.

Yes.

Difficult to choose.

Let's move a little bit here, John and James.

And then here, Polo and then Jay.

And then we can go there.

Yes, okay.

Yes, I see you.

Robert?

I'm sorry.

They all call themselves Robert.

Right.

If I may, just one question to do with India.

So if we set aside the fact that you're just about to kick off a major self-help program when you merged with Idea, can you help us consider whether the markets and you would have been at the bottom now, and you would be slowly but surely recovering, now that all the bloodletting seems to have sort of run its course?

Yes.

It's very hard to call the bottom of the market, especially when pricing is not in your hands, hands of 3 different people.

I would say, for sure, we are very well positioned for a recovery on the market when it happens.

In the meantime, as I said, we have EUR 10 billion of synergies that we need to get.

So the whole work that we have been doing with the -- as much as we can, because you cannot completely do things.

The clean team is to first set up the plan for getting the synergies in terms of network synergies, most of them; and in terms of commercial planning for the joint brand.

And then clearly, be responsive to all price moves of the competitors.

For the time being, we have never triggered a single pricing down, it's either Jio or the other guys.

We follow and we defend our base.

It's going to be an incredibly elastic situation because a 10% increase of pricing, which sounds like after the collapse, it's nothing, actually can contribute immensely to the bottom line.

Can I call it now?

I don't know.

I mean, it depends.

Well, I mean, you have an effect on the base which of course will be there, but keep in mind that our 22% decline, 1/2 of it is MTRs.

So also that, at some point, we'll lap.

So is this enough to call it the bottom?

Probably not.

But we are clearly being closer to the moment of the bottom than 1 year ago.

Yes.

I mean, I think it is also fair to say that since, what, early January, prepaid market has been pretty stable.

Yes.

I mean, obviously, there's new postpaid pricing going into market, but prepaid has...

Yes.

Which is inevitable.

Then when you have prepaid, very low, why would you take a contract?

I mean, up to a point.

So is this the end of it?

I cannot say.

And for sure, it is not for me to say.

But clearly, we're getting into a 3-players market.

That's the story.

James?

James.

And then we move here to Polo, okay?

James?

Is your name James?

It's Polo Tang at UBS.

Just have 2 questions.

So the first question is really a clarification in terms of cost savings.

So I'm just really trying to get an understanding in terms of how big the opportunity is left.

You've obviously called out lower OpEx for this year.

Is there a lot more to go for -- from next year onwards?

So any commentary around that would be very helpful.

And then second question is really just for Vittorio.

So this 10 years as CEO, what's the achievement that you're most proud of?

And how do you view your legacy?

I vote that you do yours first because it's more interesting.

Sure.

Listen, in theory, it's not today.

In theory, it's AGM, it's Q1 in the moment.

But let me say, first thoughts, the real achievement that I think is lasting in life is the people you leave behind.

And not just the people, Margherita and Nick, but people who are sitting here on the first row, and they are the 200 there behind.

It's a real lasting legacy.

And I think, for investors, this is also the most important thing: A company that displays leadership succession, good management practices and solid management structure in the long term.

I might not sometimes hit the peak, but we never really be in big trouble.

So to me, that's the most important thing.

Then if you look back, I'm very proud of this big transformation.

So I got -- I remember in my early tenure days, people saying, "Vodafone is doomed.

You are only mobile, the worlds can't converge and you guys don't have content." And so now the content guys, I think they are hiding somewhere now because it's probably not a great investment.

But we have transformed the company into a different beast.

We have distributed a lot of money, made divestments for EUR 115 billion.

I gave EUR 120 billion to shareholders.

But we invested in EUR 150 billion between CapEx, spectrum and acquisition.

So I think we managed a pretty massive transformation in an effective way.

But if you ask me what really remain, and for me, it's people, the quality of the people.

And on cost.

(inaudible) Much more exciting.

Well, it's -- yes.

What I would summarize is that Fit for Growth has really gone through 3 phases.

First phase was around things like ramping up shared service centers.

So that was a lot of activities moving out of Europe into our captives, our own shared service centers, and getting the benefits from that.

We have things like procurement, we centralized all our procurement, adding categories too.

So if you like, being a true global company in terms of size and scale and advantages.

So the second phase was then starting to get into standards, like network standards, IT standards, how do we buy IT more efficiently?

What's insourced versus outsourced?

So if you like, more around the productivity phase, and we've been driving that.

The third phase we're about to go into, digital goes up.

So we haven't really had digital advantage.

So if you look at it previously, sort of 2/3 of the benefits were in the OpCos, 1/3 in the group-led activities.

Now it's moving more into 1/3 will be across-the-group digital; 1/3 is in the OpCos; and then 1/3 is group-led, further initiatives that we're doing.

So the profile constantly changes.

It's my way of really saying this is a multiyear ambition of how we're really reshaping the cost base and the operating model.

Don't see it as we are flashing and burning cost in areas and then we run out of room.

We are reengineering, in a considered way, our business.

Yes.

Dhananjay?

Two questions related to network quality and capacity.

So firstly, in the near term, you've closed the gap versus the incumbents as it pertains to quality across your core markets, and yet -- and this just might be an issue in terms of how you account for this, they seem to be outperforming you in terms of relative market share momentum.

Firstly, how accurate is that observation?

And how do you intend to address that?

And mid- to long term, I mean, there's 300 megahertz at a minimum of reasonable spectrum coming to market on 5G, which implies a massive expansion in capacity across networks, even for the smallest-scale operators.

To what extent should we be concerned about the deflationary pressures these will exert on pricing?

So I'm not talking about unit repricing, I'm talking about your real like-for-like ARPUs that customer pay.

Well, on your first observation, I think, is directionally right.

On consumer mobile, we have probably a little bit underperformed here and there.

I think it's part of the other side of the story versus convergence.

Of course, we are focusing a lot on that.

We will need to do a little bit of a better job on customer base management.

However, we also hate when some old customers are squeezed, if I might use it, or the customer bases are managed in ways that we think, in the long term, don't create big value.

I mean, the 28 days example in Italy is very telling.

We adhere to the law in a strictest possible way, our competitors didn't.

But now of course, we're going to have some financial cost coming from that.

Is that right?

I don't think it is.

It work well -- better for us in the longer term, probably.

But of course there are these things that unfortunately make some differences.

On spectrum, yes, what you say is right, but don't forget, again, that still will be more and more converged.

There will be more and more on not just the pure.

I give a Netflix, kind of Netflix on a phone type of experience, but we will give more.

So my impression is that it's more what Nick has said.

I think we are getting to a point where we will spend probably less than what people think on spectrum.

We'll use spectrum in a more efficient way.

Does this mean that governments probably will start making less money on spectrum?

I think over time, this will the case.

But jury's out.

Let's see.

Could just do one build on the -- or from a -- so I think what you said on the spectrum side would be more valid if we had not done Spring.

So I think opening up that sort of two-tier quality, because in the end, 5G is coming on top of a 4G infrastructure.

And so in the end, as Vittorio showed in his chart, you're building on that 4G quality.

So if you're a second-tier quality player, you're already behind before then you start densifying on top.

So it doesn't necessarily mean, yes, that suddenly, there's a quality gap change.

Yes.

James.

Yes.

James Ratzer, New Street Research.

Well first, Vittorio, congratulations on what you've achieved over the past decade.

And Nick and Margherita, congratulations, you two, and good luck for the future.

So kind of 2 specific questions.

One just on digitalization, which has been a big kind of topic for this morning.

i mean, as that ramps up and accelerates, how do we think about kind of personnel cost in particular going forward?

I mean, BT announced last year a major restructuring program, restructuring costs involved with that.

I mean, you've been spending around EUR 250 million per annum on restructuring.

Is that something that goes up as the pace of digitalization increases?

And then the second question was around the kind of dilemma between microwave versus cable and fixed wireless.

And you were talking quite positively there about microwave backhaul, at the same time, you're investing significant amount in cable.

And I think to date, have been more skeptical around the fixed-wireless-broadband business model.

How do those statements around microwave sit alongside kind of the other comments around cable and fixed, wireless?

Is that not a potential threat.

Shall I take the second one?

Okay.

You take the first.

So I would say on digital first, I mean, the first thing I would say is the focus of that transformation is not about cost cutting and headcount reduction, it's about giving a fantastic customer experience.

And let's face it, telecoms as an industry is not known for giving outstanding service.

So we really want to differentiate on that business.

We've got a fantastic quality of network, whether it's mobile, whether it's fixed.

And now we want to put that great service layer on top.

At the same time, you get efficiencies.

Yes, fine, we get efficiencies and we will work those efficiencies.

But we've been working efficiencies for all these years.

To your point of restructuring, I anticipate FY '19, similar level of restructuring cost, EUR 200 million.

We've factored that in our thinking sort of as a -- sort of long-term average.

Yes.

On the second point, let me clarify what I really mean.

One thing is the backhauling story.

So do you need fiber to backhaul back from sites that will be more and more loaded with data?

And the answer is not necessarily.

With progress of microwave, we -- and the problem with microwave was always the hops.

The more hops you have, the more you have latency.

You accumulate the latency, the service becomes bad.

With the new microwave, latency on the hops is actually really reduced.

So as long as you can have straight-shooting with microwave, we will depend less, not more, on fiber in the future, which is good.

That does not mean that if a motorway company or a CityFibre ring has, "Hey, I have a CityFibre ring, do you want to use it?" We'll not use it.

But it's another make, smart-capital type of deployment decision that Johan and his people will have models.

And again, with a lots of analytics and lot of analysis, we just decide which one is the best.

Different story, let's talk about last-mile access and fixed wireless into the homes.

Now what I said is, while there is some story about this being appealing in the U.S., we haven't found that the density of most situations in Europe, with -- together with the low price of getting fiber or an NGN access in most places make this solution viable in most of our situations.

In other words, when you pay EUR 80 versus EUR 16 or EUR 17 or EUR 20 or EUR 25, clearly, the room to have radio deployment is more limited because people say, "I get another one." Plus, we have the density thing that is very important that creates more of an issue in places like this.

That does not mean, again, in some situations, more rural, more kind of spread, we might actually look because the cost of building fiber becomes higher and higher with the distance, the meters of distance.

And the density is lower, so wireless might make sense.

But I'm saying it's 2 completely different things.

One is backhauling, the other one is access to the nodes.

Was I right, Johan?

Yes, thank you.

I always look at him because when he talk about E-bands, multi-bands, these things.

I think we need to come to this side.

It's Andrew Lee from Goldman Sachs.

Just wanted to echo everyone else's congratulations and best of luck for the future for all of you.

I had question on returns, first of all.

So you sold well, you streamlined your business, you bought the position of convergence, as you laid out in your presentation.

And you are growing faster than your peers.

Your returns are below the cost of capital.

And so now you're set up, it seems, for the future.

What's the opportunity to get those returns above the cost of capital?

How quickly can you do that?

And what are the key obstacles to that?

And then just a second question on B2B and barriers to entry have cropped up a lot in the questions you've had so far.

But just wondered on your views on the changing barriers to entry in B2B.

Do you think the barriers to entry are coming down as ICT becomes a bigger chunk of the pie and as cloud maybe gives the access, great scope for competitors?

Any comments you have on that...

The what is coming down?

I didn't get the word.

The barriers to entry.

Yes.

So is it easier for new players to come in the ICT campus?

Barriers.

Okay.

So first of all, let me say I would love to say that return on capital will grow immensely now.

But I think it's your answer, not mine, that matters here.

Well, I mean, I think you've seen a focus on EBIT over the last couple of years.

And that was one of the changes I made.

That's on saying, "Okay, look, we're going to drive EBIT." We've put it into our bonus schemes, so we changed from EBITDA to EBIT.

I know you all love EBITDA, but we're very focused on improving returns.

I think over the last 2 years, we have started improved returns.

And I think you can see it in the numbers here.

What I would say is what effectively, moving forward, gives you faith that returns will improve, is we've done some big transformational steps on reshaping the group.

India, obviously, the Liberty transaction.

Off the back of that, leverage stands at 3x.

It's going to be a very organic-focused execution over the next 3 years.

We need to drive the top line, we've talked about all the opportunities we have with the assets that we have to drive that top line.

We're going to stay very, very disciplined around cost, lowering cost through digital.

And you've heard it, whether it's spectrum or whether it's CapEx, we're really driving the optimization.

And there's is more science in how we are deploying CapEx.

And I think there are opportunities.

So if you get EBITDA growing and holding your CapEx down with spectrum and amortization, you're going to get returns moving in the right direction.

Yes.

On B2B.

I think on B2B, I want to be very clear and honest with analysts and investors because it's very important that B2B does not -- and cloud does not become the next content thing.

The answer to your question is yes and no at the same time.

So yes, we think there is an opportunity coming from cloudification, and there is an opportunity if we leverage on the assets that we have, which is why I made comment about the assets that we have.

If we leverage on the assets that we have, we have reasons to believe Vodafone can continue to grow, even when others are actually going backward.

And it's easy to say why because they have legacy services, which were, let's face it, overpriced versus the technology possibilities of today.

We didn't.

If we deploy, in an intelligent way, communication services on top of cloud in a smart way with the right salesperson, the right international footprint, it's an opportunity for Vodafone.

But I want also to say we have to be very honest in saying it's a bit like with content.

We need to do what we're good at.

So can we be better at cloud, at hardcore cloud, than Microsoft?

Than Google?

Than Amazon?

The answer is no.

Therefore, we will need to partner and work with them.

Therefore, our opportunity will be exactly what I said, the integration of communication services on cloud services, which would be mostly given by others, and we will integrate with them.

If then, telcos start thinking, "Oh, I'm going to go into cloud," it's a huge market.

You look at this kind of reports from industry specialists.

It's EUR 30 billion, EUR 40 billion, EUR 50 billion, then you inevitably have to retrench at some point because it's too big.

So again, another area where I think Vodafone is deploying the right strategy, playing where we are strong and cooperating with others where they have better assets.

And just to build, that's in a CapEx-light execution.

Just in case you were...

Yes, which is exactly, yes.

Yes.

Because otherwise, you can spend all the money.

It's like in content.

You can spend all the money that you want in the world of cloud without really being competitive.

Emmet?

And then we come back because Robert -- can you make sure the guy with the beard has the microphone?

(inaudible) Otherwise, he will think I have something against him.

You've been very patient.

Please go ahead.

Okay.

It's Emmet Kelly at Morgan Stanley.

Just two questions, please.

First question is on Slide 23, where you highlighted pro forma leverage of 8x on the Indian JV with Idea.

And Nick, can you just say a few words on what makes you so confident that the JV can support the leverage during the 3- to 4-year integration period?

Maybe just say a few words about the long-term plans for your stake in the enlarged Bharti Infratel group?

And then second question, again, Nick.

If you look at Vodafone over the last 10 years under Vittorio, he's definitely left his stamp on the portfolio, the network and cost cutting.

Just any early thoughts you have on what stamp you would like to leave on the company as you enter the position of CEO?

In particular, maybe any opportunities you see for the sector because the sector looks quite unloved by the stock market at the moment.

And where you see the greatest opportunities going forward.

Emmet, this is the earliest question on legacy that I've (inaudible).

It's not even started.

No pressure, then.

Right.

I mean, just on leverage, what I'd say is, obviously, we've had a chance to form a team, obviously, within the right boundaries, if you like, to look at all of the integration plans, synergy potentials, et cetera.

We're very positive on the synergy opportunities and where there can be some fast starts.

So network rationalization, duplication of sites, I think we can have some really quick wins on that.

Procurement, I think we can have some quick wins.

So there's a number of areas.

I think the team are very positive about how we can make an impact quickly.

What I would say is I did put on that chart a dotted line.

80% is to the government on future spectrum payments.

You would like to think that both the government and banks, associated, want a healthy, 3-player market going forward.

And therefore, I'd like to think that they will all work with us to make sure it's a good, rational market.

So what I'd say is good synergies, brand's doing well, spectrum, network, and then the profile of the debt is at normal bank covenant debt, if you like.

In terms of the stake.

Well, as you know, we have dropped down agreements effectively with Birla going forward.

So he can increase his stake so we can equalize.

And therefore, there is optionality for us.

I think that's the best way of saying it.

I mean, the India market has great long-term potential, it's had a very difficult time.

I know we've said that in the past.

We've had highs, we've had lows, let's see how it develops.

But I would call it optionality for us.

I was really pleased with the transaction that we did for Indus Towers.

I think converting what was an illiquid stake into a liquid stake, with again, optionality to sell down our position while still effectively having a good degree of control of the asset.

And then finally, I think it's a bit too early to say what my legacy will be.

I just think we have a fantastic foundation, and Vittorio talked about the next chapter for Vodafone.

Vodafone has always been a fantastic business and always been transforming.

And I think we've done some big things over the last 5, 10 years in terms of transformation.

It's a great foundation now to go forward.

We've collected some fantastic assets.

We've got a great team.

And I really think that probably the one thing, if we look back 3, 5 years from now, being a real digital telco, where others might talk about it, the speed at which we are moving, I think, is really impressive.

And we want to keep that speed, and if anything, accelerate.

I think we over to you.

And then I will come back this side, Robert, then here, Stephen.

It's Robert from Deutsche Bank.

The real Robert.

The real Robert.

Two questions for me.

One on tax, actually.

One of your competitors has flagged higher cash tax because of IFRS over the next couple of years.

Is your guidance tax IFRS 15 free, Nick, already, so you've got some wiggle room there.

Does it even affect Vodafone?

And then secondly, coming back to 5G.

I took onboard your reassuring comments on the fiber and the microwave.

On the re-using the grid, the cell site grid, I assume your comments are based on using full-fat 5G at the higher frequencies, and that you can achieve that within your CapEx guidance rather than some refarming plan.

This is a proper 5G 3.5 gigahertz that you can reflect in your guidance?

The second answer is yes.

And the first one is?

And the first one is -- so we have a slightly -- whether it's unique, a different profile in the U.K. We carry a lot of capital allowances.

And so where it might be an issue for others, having S-15 with a higher profitability, effectively, it's not an issue for us.

So we don't have any sort of cash tax impact over the next couple of years.

Let's go back here, and then we move this side.

Yes.

It's Stephen Howard at HSBC.

I wanted to ask you about tech-lash, the backlash that's underway against the OTT players and formed a central part of your address in Barcelona a few months ago.

So first, a general question.

What are the opportunities here that might be available to Vodafone, and indeed, the broader industry, now that the tech giants are coming under a lot of scrutiny?

And then as a follow-up to that, it's a subset of the above.

Can we talk about privacy?

What do you think Vodafone's track record is on privacy?

And is that something that you can leverage to your advantage?

Or alternatively, do you think that there are potential pitfalls in that direction?

Yes.

Both very good questions.

And actually, it's one single question, really.

So tech-lash, what is the opportunity for Vodafone?

I think our opportunity is really on identity and security.

These are the 2 things that, historically, Vodafone -- and I would say all telcos have been good at, and that customers value.

And they are the things where the business model of the OTT, no matter how much they adjust and they have all the measures that we are receiving these days with VR and so on, it's intrinsically difficult for them to do it because their business, most of the times, not Netflix, but the others, is based on advertising and on monetizing something about ourselves.

So that is where we can have, I think, the biggest opportunity, which means that we potentially have -- and we are looking at it, but this is really for Nick to talk about it in the future, also, the potential advertising opportunity.

Do we have a way to sell our data in a healthier way or to manage our data in a healthier way, contribute them to data sets of third parties in a way that is more consistent with what legislation and customers feel?

Again, here, I -- the jury is out, and I give it to the future meetings to discuss.

Privacy is linked, quite frankly, to identity and security.

So I believe -- first of all, I believe that we are more sensitive than the average person in the street to privacy so we should be careful in not overemphasizing.

I always ask, when I go around our operating companies, I always ask to our guys, who has stopped using Google Maps?

And by the way, who has stopped using Google Maps in this room?

Because Google knows where you go and how many beers you take at the pub at night because they can link the pub to the location to the time you stay there and divide your body mass, which they get from someone else, by the -- whatever, and your salary and then say, "Stephen, you got 3 beers last night." I don't think anybody has stopped using that.

And I don't think anybody has really stopped Facebook.

And if I have to choose between receiving advertising which is relevant to me and advertising that is relevant instead, to Nick, I prefer the ones which is relevant to me.

So we have to be careful in thinking that the whole world will move.

But for sure, we have something in identity and security that we can give, and we working on that.

By the way, our secure net product is already EUR 160 million in revenues, something like that, yes.

So there is something that we have been building quietly and we will leverage on.

And on GDPR and so on, Rosemary is here.

If you are interested, you can ask her later.

We have a compliance program, like every company.

We are working very hard to make it safe.

And I cannot say we are completely safe, but I think we are as good as one can be in complying with it.

That's the word because you never know what happens 0.5 hours from now.

Last one?

Who wants to get the last one?

Well, the second-last one.

The last to Nick Delfas.

The last to Nick Delfas.

First, you.

Yes.

I'll be brief.

It's Guy Peddy from Macquarie.

This is probably a question for Nick as much as anything.

Looking at your EBITDA range, there's basically a EUR 0.5 billion delta between the top and the bottom.

And we seem to have focused on all the negatives this morning.

So -- like Italy and Spain, where there are potential headwinds coming.

What are the positives that you are looking at?

Or which particular geographies have you got where you see that you might be able to deliver towards the higher end of your EBITDA range, rather than talking constantly about the bottom end of the range?

I think if you were talking to all the CEOs of the markets, they all feel like they will contributing to the top end of the range.

So how we've set targets is that we push more stretch targets to each individual operating company, and then we take a view of the level of like combined risk at the group level.

And you sort of basically get a feel for what we think is an acceptable.

So what I'd say they're all targeting stretches.

I would say the top end is more to do with how does Italy play out?

Does Spain, through its repricing and actions, have a stronger second half?

And so we've already got good plans, for instance, the U.K., Nick's in the front row here, contributing more, Germany continuing to contribute.

And so I would say most of the portfolio is performing well.

It's just more about where those 2 markets, how favorable or otherwise, they come out.

Nick.

Nick Delfas from Redburn.

So I'm afraid it's quite a boring 2 questions for me.

One question is just on Spain.

Could you be a little bit more specific?

We should expect, I guess, some kind of reinvestment in Spain in H1.

And therefore, presumably, profits might go backwards.

EBITDA might go backwards.

Just want to...

The answer is yes.

Yes.

Yes.

And then secondly, on South Africa, which we haven't spoken about at all.

There seem to be quite a wide range of regulatory pressures on bundle pricing.

Could you talk a little bit more about how you will respond to that?

And what the impacts could be?

Yes.

Bundle regulation has come up.

We're feeling that there are a number of items.

Actually it's sort of -- it was a lot more extreme and has moderated.

That's not to say that there aren't important changes coming.

I'm not too sure we're looking at them being a big hit, if you like, to the service revenue performance.

I think there are things that we can put in place to moderate.

So no big impacts.

Okay.

All right.

You want the last, last one?

I'm looking somebody who has not -- behind.

Yes.

Whatever.

Anybody behind who is always disadvantage.

It's Georgios at Citi.

I've got 2 questions.

The first one on Italy.

It's probably 2 years too early to ask this question.

But there's been talk of NetCore and Open Fiber getting together.

And I know there's a lot of things in between but you have some contractual agreements.

I was wondering first to get your perspective of what you think about a combination?

Secondly, do your contractual agreements mean you'll get a seat on the table when the negotiations start?

And my second question is on EBIT.

There was an earlier question about being a key target and return on capital unemployed.

There was a reduction I believe in the amortization this year?

I just wanted to know if this, you believe, is aligned with the way Liberty is amortizing its own cable network so I want to understand what the performance of this.

There's a very simple answer to the -- I called it out in my presentation, which was in Germany, we basically felt that the cable assets.

We have very conservative accounting on lives of assets.

And we've got to the point where that cable asset had a lot longer useful life than we were amortizing so we had to reset it.

So that had a benefit in the fiscal year.

Yes.

And thank you for allowing me to conclude the session with the question on Italy.

Listen, on Italy first of all, we'll not comment on what's going on at Telecom Italia because it is not our business.

Our loyalty is to the Open Fiber project.

So yes.

We have a commitment there.

But as soon as they deploy in areas where we are, we will move to them our lines.

So we are completely committed to that, we are committed to Open Fiber.

I met the CEO last week, we are -- they are on track to deploy and we will continue to work with them.

And that's message number one.

Message number two, in case that there is a spinoff of network from Telecom Italia, first of all, we have to see whether it's a true spinoff or just a legal separation.

Legal separation, as we have here function even worse in the U.K., it is really not -- doesn't make any difference.

If it is a true, true separation with different shareholders, it's a different thing.

But at that point, Open Fiber, we'll start talking to them.

And whether it's possible to separate the network from Telecom Italia, I don't know.

Maybe the fiber network, yes.

Could the fiber network of Telecom Italia go together with Open Fiber?

That will be fantastic for us.

Any other combination, we will have to look and sit at the table as you say.

And if you like it good, otherwise we will go to the antitrust table.

But our main loyalty is to Open Fiber, and we will work with them until something changes in Telecom Italia.

I thank you all very much.

It's always been a pleasure to interact with.

We have one more interaction over phone for Q1.

But let me tell you, I really enjoyed working with you, hearing your questions, being challenged.

Been a great pleasure.

So thank you.

You have an important role in the market.

And please keep doing it very well as you are.

Thank you.