Vodafone’s financial metrics appear to be slowly ticking up and it is making some progress in narrowing its performance gap to peers. Signs that it may be moving away from a discount-led convergence strategy in Germany are very positive

Organic EBITDA growth is highly flattered by one-off items and, as is frequently the case, even this headline EBITDA growth for FY20 is wiped out by currency depreciation in ‘Rest of World’ countries

This lack of real progress on EBITDA and FCF and the muted outlook for both exacerbates Vodafone’s tight leverage position. There seems very little prospect of it unsettling the O2/Virgin Media JV in the UK

Contents

Interpret results with caution

Some strategic and operational positives

Leverage remains very tight

UK— pulling back?

Shifting sands in pricing dynamics

Germany—where is the growth?

Italy—recovery remains elusive

Spain —recovery gains some (patchy) momentum

List of charts/tables

Figure 1: Organic EBITDA and service revenue growth

Figure 2: Vodafone mobile service revenue growth in the 'top 4' markets

Figure 3: Vodafone fixed service revenue growth in the 'top 4' markets

Figure 4: Organic EBITDA growth

Figure 5: RoW organic EBITDA growth and growth in Euro terms

Figure 6: Vodafone business mobile market shares

Figure 7: Mobile service revenue growth versus peers

Figure 8: German converged customer net adds (000)

Figure 9: UK operational and financial metrics

Figure 10: Vodafone mobile revenue and service revenue growth under IFRS 15

Figure 11: UK service revenue growth by operator

Figure 12: UK contract net additions (000)

Figure 13: Contract ARPU growth

Figure 14: ‘Sweet spot’ bundle with iPhone 6s/7/8/XR/11

Figure 15: SIM-only pricing by data allowance (GB)—direct distribution (£/month)

Figure 16: SIM-only unlimited data bundle pricing (£/month)

Figure 17: UK fixed performance

Figure 18: Discounts to out-of-contract customers offered by operators

Figure 19: Potential drag from out-of-contract bundle customers spinning down

Figure 20: Germany operational and financial metrics

Figure 21: Germany contract net additions (000)

Figure 22: Germany mobile service revenue growth by operator

Figure 23: German operator contract ARPU growth

Figure 24: Germany fixed performance

Figure 25: Italy operational and financial metrics

Figure 26: Italy service revenue growth by operator

Figure 27: Italy total subscriber net additions (000)

Figure 28: Italy fixed performance

Figure 29: Spain operational and financial metrics

Figure 30: Spain service revenue growth by operator

Figure 31: Spain contract net additions (000)

Figure 32: Spain fixed performance