Vodafone Group Public Limited Company (VOD) Earnings Call Transcript

Good afternoon, everyone, and welcome to the VodafoneThree Investor Briefing. It's great to have so many of you here with us today in London, and a very warm welcome to everyone joining us online too. I'm Kelly Barlow, Strategy and Portfolio Director at VodafoneThree, and I have the pleasure of being your host for this afternoon's briefing. The VodafoneThree leadership team and I are excited to be here to share with you our strategy, our ambition for growth and our plan is to build the U.K.'s best network. Over the course of the afternoon, you'll hear about the fast start we've made in our first year our ambitious network rate plans to connect every community in every corner of the U.K. The exciting growth opportunities we see across both consumer and business and how all of this ties into delivering significant long-term value creation. For those of you here in person, we have a number of demo worries that bring the story life. Colleagues from across the business will show you examples of our work in action from our recently launched propositions to the ways we're looking to enhance our customers' journeys. So make sure you use your time in the break, that's at about 03:30 speak to them. And if you're joining us online, don't worry, we haven't forgotten about you. Alongside the main webcast, you'll have access to additional content through the portal, including case studies and video explainers. Throughout the afternoon, we'll have a number of mini Q&A sessions with our network, consumer and business directors. Now during those many Q&A sessions, we'll only be able for questions from the room. But at the end of the presentation, I'll be joined by the leadership team for a more fulsome Q&A session. If you're joining online, you'll be able to submit questions via Slido throughout the event, which I will read out for the team during the main Q&A. We'd ask that you limit yourself to 1 question at a time to ensure everyone's got the opportunity to participate. And if you haven't already done so, there's a downloadable version of today's slide pack accessible on the event site or the Vodafone Investor Relations site. And for those in the room, the current slide number will be displayed on the side screens throughout the afternoon, making it easy to follow along in your pack. So before we begin, I'd just like to cover a few quick housekeeping note to help everyone feel comfortable. Firstly, please take a quick second to silence your mobile phones. The toilets are located upstairs on the mezzanine level and are clearly signposted. And finally, in the unlikely event of an emergency, the fire access is marked clearly at the front and back of the room. Now without further ado, let's invite our first speaker to the stage to tell us more about why VodafoneThree is such an exciting part of the group growth story. Please welcome CEO of European markets, Ahmed Essam.

Good afternoon, everyone. Great to be here. Before I start, I wanted to pass on Margherita's apologies for not being able to join us today. She had pre-intended to be here but was asked to join the U.K. Prime Minister and German Chancellor in Germany as part of the U.K., Germany technology corridor initiative. She knows that you are in excellent hands with the VodafoneThree team this afternoon and send her best wishes for a productive and insightful session. So today is an exciting day for Vodafone. We're setting out for the first time in detail our strategy and growth ambitions for the U.K. We're issuing new bold targets, and we're outlining the clear execution plan we have in place. We created VodafoneThree because we saw a clear opportunity to transform the U.K. market to create the scale to invest to deliver a step change in network quality and customer experience and to build a strong business capable of delivering good returns and sustainable long-term value. And we've made a strong start. We're seeing tangible benefits for customers. The integration is progressing at pace and our commercial momentum has accelerated. As a result, we now have even better confidence in the opportunity ahead. That's why we chose to take full ownership earlier this year and why VodafoneThree is set to become an increasingly important contributor to Vodafone's growth ambitions. So before Max and his team take you through the U.K. plans in more detail, let me recap from a group perspective. Why change was needed why the merger was the right strategic course. Why we are confident in VodafoneThree today and why we chose to move to full ownership? Before turning specifically to the U.K., I want to briefly step back and place VodafoneThree in the context of Vodafone's wider transformation. At our fiscal year '26 results, we said Vodafone is entering a new chapter, a business that is simpler, stronger and growing. Simpler because we've reshaped our portfolio and focused on markets and segments where we can win, stronger because we've reset the fundamentals, customer experience, productivity and capital discipline, through our customer simplicity and growth strategy. And now Vodafone is growing. We have attractive opportunities across Europe, Africa and B2B underpinning our ambition to deliver double-digit organic free cash flow growth in the medium term. VodafoneThree is an important part of that growth story. In fact, it's one of the clearest examples of our transformation strategy and action. Because when we reviewed the portfolio back in 2023, the U.K. stood out as one of the markets where structural change was needed. And to understand why we are so confident VodafoneThree today, it's worth reminding ourselves of the challenges we faced. As Margherita has consistently said since becoming CEO of Vodafone needed to change. We needed to change both where we operate and how we operate. Our strategy was based on a simple principle. Vodafone should focus on good markets with sustainable structures where we have scale, strong positions and the ability to earn return above our local cost of capital. There were 4 markets where we believe structural action was required. The U.K. has always been an important market for Vodafone. It's our home market. It's one of Europe's largest telecoms markets. And it's a market where Vodafone has strong customer and brand positions. But the market structure was not sustainable. Vodafone U.K. and Three U.K. were both subscale. Returns were well below the cost of capital. And that limited the ability of both businesses to invest and compete. And the impact was clear. limited investment affected our customer experience. And the market was not delivering its full potential for consumers, for businesses and for the country. Organic action alone could not address the structural challenge. We need a greater scale, and we needed a market structure that supports investment, competition and attractive returns. The merger was designed to solve that challenge by bringing Vodafone and Three together, we created a scaled operator with the assets and resources to invest for the long term. We made a clear commitment to invest GBP 11 billion over 10 years to build the U.K.'s best and most advanced 5G stand-alone network. This will create better outcomes for customers for the country and for competition. For customers, our merger means a significantly better network experience, through greater coverage, reliability and performance. For the country, it means one of Europe's leading 5G platforms supporting productivity, innovation and economic growth. And for competition, it means that scale operator capable of challenging the 2 established converged players and strengthening competition. Our merger also marks an important milestone case in the shift towards a more investment-led approach to market structure, an approach that recognizes the importance of scale in building a next-generation network that customers and businesses deserve. The strategic rationale was clear. When we announced the transaction. And as you will hear today, the evidence from our execution strongly reinforces that rationale. VodafoneThree now brings together 4 powerful drivers for value creation. It starts with network leadership. VodafoneThree has more network assets than any other operator in the U.K. a fully funded GBP 11 billion investment program and a road map to building the U.K.'s best 5G stand-alone network. A strong foundation for differentiation. And that creates a meaningful commercial advantage. VodafoneThree has the U.K.'s largest mobile customer base. It has a clear multi-brand strategy, an increasingly differentiated proposition portfolio, and leadership positions in customer experience. Together, these trends enable us to serve a broad range of customers more effectively. But we're not limited to mobile. VodafoneThree is the fastest-growing broadband provider. It has a significant opportunity in convergence -- it has a significant opportunity in convergence, including Vodafone TV. More broadly, in consumer, we can monetize network quality through propositions such as super mobile. And in business, it is well placed to respond to growing demand for secure, resilient and intelligent connectivity. A larger, more efficient business, significant savings opportunities. And now it's fully all business, the ability to leverage Vodafone Group's global scale, capabilities and expertise even more effectively. Finally, all of this translates into improved returns. Together, this creates a clear path to stronger cash generation. This is why we see VodafoneThree as much more than an integration of 2 businesses. It is one of the most exciting growth and value creation opportunities in the Vodafone portfolio. And that brings me to our decision to take full ownership. The ownership was always envisaged as part of the original transaction framework with a clear pathway towards 100% ownership over time. What changed was the opportunity and the confidence to move earlier. Over the past year, the business has made a very fast start. Integration has progressed rapidly and ahead of schedule. Management has delivered against all its commitments, and we're already seeing tangible benefits for customers, translating into good commercial momentum. That gave us much greater visibility and confidence around the long-term value creation opportunity. Against this backdrop, 2 specific factors allowed us to accelerate our move to full ownership. The first was valuation. We were able to acquire full control at an attractive value compared to the GBP 16.5 billion embedded within the original put and call framework. Second was balance sheet capacity. When we first agreed the merger, we were still working hard to shape the Vodafone's portfolio, which we did successfully by the sale of our operations in Italy and Spain. The acquisition added just under 0.5 turn of our group leverage while keeping us comfortably within our target change. And of course, there is an additional benefit that we're particularly pleased about. Full ownership simplifies governance. It gives the business full and easy access to Vodafone Group's scale and capabilities. And it allows Vodafone shareholders to capture all the future cash flow growth and synergies. When we announced the merger, we committed to delivering GBP 700 million of annual cost and CapEx synergies by fiscal year '23. Today, as you will have all read this morning, we're increasing that ambition to GBP 1 billion by fiscal year 2032. That reflects the progress already made, the clear line of sight we now have on execution and the additional opportunities created by full ownership. Darren will take you through those in more detail later in the day. Overall, we believe this was the right opportunity at the right moment at an attractive valuation. Let me conclude by coming back to Vodafone Group. We have set a clear ambition to deliver double-digit adjusted free cash flow growth over the medium term. And VodafoneThree will be an important contributor to that ambition. The business now combines a scale position in 1 of Europe's largest telecoms markets a leadership position in customer experience and network commitment that will reach 99.96% 5G stand-alone population coverage, the highest of any other operator -- it has significant opportunities to grow and will deliver an upgraded target of GBP 1 billion of annual cost savings by fiscal year 2032. Today is about sharing with you how the team will build the U.K.'s best network, how we will turn network quality and to differentiate customer propositions, how we will grow in broadband convergence and business. how we will deliver the integration and synergy plan and above all, how this will deliver a better experience and greater value for customers across the U.K. ultimately translating into earnings, cash flow, returns and long-term value for shareholders. I'm very pleased with the start VodafoneThree has made, and I'm confident in the opportunity ahead. And today, especially, is a very important day for me because it's a moment of pride for myself, for the team, we have taken this from an idea to a transaction, to CMA, to an approval to an integration to the moment we are in today, and I want to thank you for sharing this moment with us. So with that, let me hand over to Max and the VodafoneThree team, and thank you very much.

Good afternoon, everyone. Thanks again for joining us. It is great to see you all. 16 months ago now, we launched VodafoneThree and welcome everyone to a new era of connectivity for the U.K. VodafoneThree, a new scaled operator, one which is to set a new benchmark for mobile connectivity to deliver the U.K.'s best network, a world-class 5G stand-alone network a network to be proud of and one that the country needs to realize its digital ambitions. Ahmed mentioned the fast start we have made. And whilst we are very proud of our progress to date, the team and I are super clear. Now is not the time for Victory Labs. We have a lot to do. Today, we're going to demonstrate the clarity of our plan, and the confidence we have in delivering it. Throughout the afternoon, you're going to hear from a committed leadership team. Andrea will outline how we're building the U.K.'s best network the assets we have, the plans and the progress to date. Rob will then cover how we're accelerating our leadership position in consumer, how we will monetize network quality and drive converged growth. Nick will explain similar themes in business, monetizing network quality for private sector and public sector, driving fixed and digital service growth. And finally, Darren will talk about the delivery of synergies, breaking down for you our new upgraded financial target. We're going to have time for Q&A in the [indiscernible] throughout the afternoon, please do take the opportunity to visit the demo areas as they will help bring everything we talk about this afternoon to life. But it all starts with this. Our mission, purpose, our goals a simple strategy slide, one which I use internally and externally every day, and everyone in VodafoneThree is working towards. Our mission and purpose is simple. To connect every community in every corner of the U.K. by building the U.K.'s best network. We have a network commitment, yes, and we are leveraging this as much as we can internally. It is truly motivating for all of our teams to be working in such a clear mission and purpose that will make such a difference to all 4 nations of the United Kingdom. And our Brit is personally so motivating to be working on something that is so important, both this generation and the next. Our goals are simple, too. We aim to be the best. Number one, network. 99.96% 5G stand-alone population coverage, no one else has such a plan. And it's front-loaded in its delivery, 90% by the end of year 3, 99% by the end of the year 5, 99.96% by year 8. And that 0.96% doesn't sound like a lot, but it's very important. It's actually 2.5x the size of Wales in geographic coverage. Number one, for customers. This means delivering the best customer experience whether that be lowest churn, best NPS, fewer [indiscernible] complaints, it's all of the above. And we will not take our eye off the market as many mergers do. We need to capitalize on opportunities such as fixed growth protect our scale in mobile through our multi-brand strategy, whilst at the same time, monetizing network quality. And arguably the hardest goal and the most important, number 1 for people. Our people deliver the plans, the initiatives, our people deliver the synergies. We're integrating quickly and effectively building a best place to work. leveraging the best of both legacy businesses to create a better, leaner organization that attracts and nurtures the best talent. And how do we do it? With pace a customer-first mindset and acting as one team. Arguably, the most important words you'd hear today, apart from the upgraded GBP 1 billion target. We're going really fast, delivering benefits to customers as quickly as possible, delivering near-term synergies and crucially delivering the operational milestones to unlock future synergies, especially in networks and IT. But pace is only part of the story. It's also about operating with a customer-first mindset. Every change we make to unlock cost efficiency is also an opportunity to improve customer experience. We're no longer 2 businesses, we think, act, celebrate, learn with humility as 1 team. And finally, the critical output of all of that translates into GBP 1 billion of sustainable incremental annual value. That number is evidence that we have greater confidence. We are building a strong track record of milestone delivery. Before we talk about the progress to date, let's quickly discuss the landscape we are in, starting with mobile. For many years, the U.K. mobile market has been falling behind international peers on network quality. And at the same time, prices have fallen with increased competition. Yet quality now is becoming even more important than ever to customers. Our research shows 50% of customers will consider switching if network quality were better, and 43% of people believe where they live, leaves them behind when it comes to digital connectivity. Customers now expect fast, reliable, secure connectivity wherever they are. For VodafoneThree, the opportunity is clear. We have more assets than us, the strongest spectrum holding in the country. This enables us to deliver a faster network than anyone else, and that means we can and will deliver the best quality mobile network. Monetizing network quality has been a challenge for the industry. It isn't new. We saw quality premiums in 4G launch and 5G launch, but over time, those premiums have been traded way. We have a clear plan on how to monetize network quality. We're leading the way through innovations like Vodafone Super mobile, a completely new mobile category for customers. But our plan also includes how to position for -- mobile across our multi-brand portfolio in consumer and monetizing quality effectively across all of our segments in consumer in business and in wholesale. And for wholesale, none of our current customers sell 5G Plus today but it will be available as an add-on for an appropriate fee. Focusing on customer experience is critical, too. Removing friction, simplifying operations lowering churn supports both mobile revenue and margin and ultimately drives up the likelihood that customers will buy more from us, which brings me -- fixed the clearest growth opportunity for VodafoneThree. In consumer, we start with relatively low fixed share today of 5%. Therefore, we have significant headroom for growth. We have a strong proposition the largest fiber footprint in the U.K. alongside a fixed wireless access product that is cheaper than copper with better margins. Together, they allow us to offer fast broadband to 28 million homes and premises more than anyone else. We then have the largest mobile customer base to cross-sell into. It's this combination that results in being the fastest-growing home broadband provider today. There's a lot of competition in the infrastructure market. I'm sure it will lead to consolidation. But as it stands, we VodafoneThree, our attractive partner, and we're well positioned for growth. It's also worth noting that consumer broadband is one of the clearest examples of where Vodafone Group helps us with route to procurement scale benefits and with content partnerships for the recent Vodafone TV launch. For business opportunity is equally exciting. As organizations digitalize, connectivity is becoming increasingly strategic and network quality is crucial. On top, of more predictable performance, customers are demanding greater security, resilience and sovereign capabilities, particularly across critical industries and public sector. That's where the super mobile portfolio for business comes into play. Building on the local slicing we launched early this year, we can now offer SLAs on both national and critical and dedicated critical business slices. This is exactly the type of opportunity that simply did not exist before we had the scale and capabilities of VodafoneThree. In business, we're the biggest in mobile, but only have 13% share of fixed, also plenty of room for growth. We're the second largest fixed network for businesses in the U.K. Complementing that, we have our partners and fixed wireless access proposition makes us credible and well paced in business fixed. Customers include household names such as Amazon, Scottish Power and Standard Chartered Bank. And there's one final factor shaping the market, the regulatory environment in which we operate. For our industry, this creates both opportunity and risk. The merger of Vodafone and Three marked a turning point in U.K. regulation with both the CMA and Ofcom recognizing that 3 scaled operators would deliver better outcomes for the country, customers, competition and shareholders, but there's still more we can do. Across the industry, there's broad alignment on 3 priorities as part of the mobile market review. First, planning reform so we can upgrade and deploy network infrastructure quicker. Reform of net neutrality rules enabling greater service differentiation and innovation, energy reform recognizing the role telecommunications networks play as critical national infrastructure and ensuring operators can invest efficiently in resilient connectivity. Alongside those priorities, it's important that competition remains both effective and sustainable. It means avoiding market distortions, ensuring a level playing field and maintaining investment incentives needed to deliver world-class digital infrastructure for the U.K. Ultimately, it isn't just important for the telco industry. It's important for the long-term health of the U.K. The key takeaway is that the direction of travel is positive. Conversations have been constructive. There is increasing alignment across industry and a broad recognition of need to support sustainable investments. We now await the legislation that will provide the framework to turn consensus into action. Our first year, we've made a fast start. On network, we've moved at pace with our network build. We optimized our spectrum holding quickly, delivering better 4G speeds for Three and smarty customers. Roaming was enabled across both networks in over 10,000 sites. We selected our network partners in record time, locking in the unit costs we need to deliver the plan. And we hit all our year 1 targets for network upgrades, which means faster speeds for our customers. As we talk today, we are exactly on track for our SMA commitments. These network improvements, alongside best practice sharing and customer service have delivered meaningful improvements in customer experience. Churn, for example, on Three is down 3 points year-on-year. Vodafone has market-leading mobile churn. Three has climbed to be 1 of the best in the Ofcom complaints table alongside Vodafone. And Vodafone has also strengthened its lead as the best in the U.K. for MPS. We're not taking an eye off the market opportunity either. We delivered a record year for home broadband growth. And we moved at pace through integration, 3 levels of management in place by Christmas, the fourth level was completed by the end of the summer. Property plans have been communicated and execution is underway. Taken together, that puts us ahead of plans for people related synergies and reinforces our confidence in the broader integration program, a fast start, indeed. The financial results of 4.5% EBITDA growth with only a small benefit of synergies in the year. Yes, too, this is the really critical year for delivery. In many ways, we describe it, this is the year where we break the back of our plan. FY '27 is the first year we will see material synergies of over GBP 100 million being delivered. The majority of which are in sales and marketing, procurement, people and retail-related costs. All of which are delivered or are on track. In networks, we will more than double the pace of our site upgrade program this year. It's challenging, but going well. And Andrea will talk about that more. Reaching this level of delivery is exactly what we need to achieve the full network integration plan and then realize the network synergies in year 5. This is also the year where we launched new market-leading propositions that includes Vodafone Super Mobile designed to monetize the network and offer customers a completely new category of mobile connectivity. In fixed, we are leveraging our fiber footprint and fixed wireless access. We've announced the upcoming launch of enhanced Pro broadband together with whole home WiFi and parental controls with speeds up to 8 gigabits a second. And just last week, we launched Vodafone TV, filling a gap in our broadband portfolio. We know many customers like to buy broadband and TV together. So this helps us grow our fixed share. We're focused on making it easier and simpler for customers to interact with us focused on fundamentals, removing customer friction in journeys, tackling root causes of complaints, ensuring right first time IT digital delivery. This year, we will continue to roll out our single converged app, the just started rollout the [indiscernible] promise and AI-enabled service capabilities. And finally, retail. We delivered the IT and digital capabilities to enable multi-brand in stores, which not only supports customer experience but is also the key enabler for retail synergies. We are clearly on track in the rollout of multibrand stores and the corresponding retail consolidation program, which will complete next fiscal year. In summary, the merger was the catalyst the industry needed. We're in a much stronger position in the market than we were as 2 separate businesses. Year 1 was about building strong foundations. We delivered immediate network and customer experience improvements while maintaining good commercial momentum. Year 2 is about acceleration, unlocking the full potential of our network breaking the back of our plan. network delivery doubles, retail consolidation on track accelerating. We're ahead of plan on the organization side, we are well positioned for growth in both consumer and business fixed. Now we start to differentiate with our new propositions and monetize the network. We're 16 months into the integration. Our confidence in delivery has increased, resulting in a course upgraded targets. We have the right assets, we have the right strategy. And I have a brilliant team. With that, I will hand over to one of them, Andrea.

Thank you, Max. Building the U.K.'s best network is VodafoneThree's ambition and mission. It's the foundation for delivering the best customer experience, new market-leading products and services. and enabling us to create long-term value from our industry-leading GBP 11 billion private investment program. Let me start with giving you an overview of what I will cover today. There are 4 main areas. First, we start from a position of strength with more network assets than any other operator and a clearly funded regulated rollout plan. Second, we moved quickly to bring meaningful improvements to our customers from day 1. Third, our next phase of this journey covering 99.96% of the U.K. population with 5G stand-alone. As we consolidate and upgrade the IT and the metric platforms. And finally, how we will deliver a world-class connectivity experience for all of our customers. Let me start with what we got from the merger. We have more network assets than any other operator in the U.K. That starts with our site footprint. As you can see, significantly more cell sites than our competitors. That scale gives us the flexibility to design the strongest possible network footprint retaining sites that add the greatest coverage and capacity, while simplifying where the networks overlap. We will remove duplication and consolidate overlapping sites. In time, we will have a more efficient and effective footprint of around 26,000 sites. That still leaves us with more sites than anyone else. But importantly, as we rationalize these overlapping sites, those savings help to fund the next phase of [indiscernible]. We also have a very clear spectrum advantage. We hold around 20% more spectrum than any other U.K. operator, including more than half of the U.K. C-band spectrum holding. That enables us to deploy C-band spectrum at scale, delivering what matters most to customers greater capacity and faster speeds. Faster speed is data quality. Combined with the scale of our network and backed by GBP 11 billion investment, these assets give us a truly unique advantage and forms the foundation of our strategy. We have a clear and ambitious plan to build the U.K.'s best network, connecting every community in every corner of the U.K. Our 5G stand-alone network will significantly increase network capacity, improve speeds, reliability and performance across the entire country. But this program goes beyond just the radio network itself. It also modernizes the core and IT infrastructure. Our ambition is simple, to build the U.K.'s first AI-ready metric. An intelligent and autonomous network that can dynamically adapt improving network performance and helping us bring capabilities to the market more quickly. We have clear milestones throughout the entire journey. We made very specific site and spectrum deployment commitments to the regulator. We promised to deliver coverage, capacity and performance outcomes. And importantly, we're already demonstrating delivery against them. We've exceeded our target plan in year 1, which I'll come to in a second. Over the next year, we will accelerate the rollout by upgrading twice as many sites as we did in year 1. These upgrades are in addition to the 10,000 sites we enabled multi-operator core network technology in year 1. [indiscernible], OMCN was designed to bring immediate benefits to the customers by allowing them to connect automatically to the best available coverage VodafoneThree signal at no extra cost. The site upgrades that have been committed to the CMA, the Competition Market Authority go much further. They involve modernizing the underlying infrastructure, deploying new industry-leading equipment and integrating the spectrum, the foundation of our 5G stand-alone network. We've already begun to offer our customers the capabilities that will truly differentiate this network. Dedicated national network slices for consumers and businesses through Vodafone Super mobile and super mobile for business, the U.K.'s first national business-only 5G plus slice. Super mobile provides customers access to our fast track with up to 4x faster speed and a minimum speed guarantee of 50 megabits per second, no 1 else is offering this. Next year, we will follow this up with dedicated national vertical slices for blue light organizations providing priority connectivity to first responders and critical public services. By 2029, we will have delivered 65% more network capacity than Vodafone and Three would have achieved separately. Alongside almost 90% of 5G stand-alone population coverage. By 2030, 99% of the population will have access to 5G stand-alone providing the platform for the next generation of digital services and experiences. And by 2034, our network will be 2.5x today's capacity. Think about the scale of that, it's quite an incredible thing to be able to say, 2.5x the capacity today. Average speeds will be up to 5x faster and the separate networks would have offered. And we will have delivered our plan 99.96% 5G SA coverage -- population coverage by 2034. As Max has told you already, that's 0.98% matters as it means nearly 700,000 people across 48,000 square kilometers of the U.K.'s most remote areas. We are the only operator committing to go that far. And importantly, it's a network design, not just for today's demand, but for the next decades to come. We moved the pace to bring immediate customer benefits. Within just 2 weeks from the merger approval by deploying previously unused 18 megahertz spectrum across to the 3 sites, we increased capacity reduce congestion and delivered up to 40% improvement in 4G speeds to 7 million of our 3 customers. After just 1 month, we started enabling multi-operator core network technology across the network. And as I said a moment ago, MOCN is now live in over 10,000 sites across the U.K. that's enabled us to eliminate more than 16,500 square kilometers of not spots. These are just some early examples of how using the combined scale and assets of VodafoneThree along with innovative technology to improve coverage, increase capacity and enhance network performance. And as you'll see on the next slide, these improvements are already reflected in our key network KPIs. So where are the customers seeing these improvements? Let's start with coverage. Slide 21 shows the improvement from our baseline to the latest reported position. Coverage continues and will continue to improve as we roll out upgrades, deploy the additional spectrum and integrate more sites into the combined network grid. We're also seeing significant improvements in speed. On Vodafone, average 5G download speeds have increased by 82%. That's according to Ookla reaching 313 megabits per second, fast enough to load a 1-gigabyte file in just 30 seconds. Network latency is also improving, which means more responsive applications, better performance and smoother experiences for activities like gaming. Adding more capacity to the networks enables us to meet the growing demands of our customers. The rate at which Vodafone data consumption is growing has almost doubled. On Three, it's nearly tripled, yet notwithstanding this increase in demand, we are serving that demand with speeds that continually improve. So we've talked about what we've already achieved. Now let's talk on what's next. As I mentioned, the goal is to create 1 single densified network of around 26,000 sites. Through our long-term partnerships, including Beacon with Virgin Media O2 and MBNL, the joint venture between EE and Three, we're able to make the most efficient use of our infrastructure. The result will be a denser network grade. That will help us eliminate areas of weak services and create a more seamless experience with fewer coverage spots, stronger signals and more consistent experience across the country. The important thing here is that investment pays for itself. By delivering the savings from the network rationalization and simplification, we unlock those funds to deploy and invest back into the upgrade program. But sites are only part of the story. We're upgrading every layer of the network architecture. That starts from moving from 2 separate radio access networks to a single rated network, built using the latest technology from Ericsson and Nokia, including massive MIMO antennas. Massive MIMO antennas allow each site to handle far more traffic more efficiently. For customers, that means higher capacity faster speeds, particularly in the busy areas where networks are under the greatest strain. It's just one of the key technologies behind high-performing 5G networks. 5G networks provides us with a much efficient foundation as we support growing data traffic with evidence pointing to 90% greater energy efficient than 4G network. Without these technologies, future demand simply becomes much harder to support sustainably. We're also upgrading our transport and backhaul infrastructure and delivering intelligent voice and data metrics to support our entire user base. We're building 1 of U.K.'s biggest data core networks with a capacity of 9 terabits per second. It will deliver scalable capacity so we can support the growing needs of our customers, not only in the medium term, but also in the long term. Taken together, these upgrades will improve performance and provide the flexibility needed to support services such as network slicing and advanced 5G applications. So what I hope you take away from this is that we're using this moment to modernize the entire network and build something fundamentally market-leading and future proof. And this principle doesn't only apply for the network. It also applies for our IT transformation. This is one of the largest transformation programs happening anywhere in Vodafone. We're taking 2 businesses, 2 technology estates thousands of underlying systems and moving them towards a single set of platforms, processes and operations. And we've already made a great start. In under just 1 year, we've brought together Vodafone and Three systems to serve both sets of customers, laying foundation for a single business. And just last month, we supported the launch of new commercial propositions such as super mobile. We've enabled our multi-brand operations. So contact centers and retail channels can sell to and serve all customers, allowing them to seamlessly move across the entire VodafoneThree portfolio. The next phase is about scale migration. By autumn 2027, all consumer customers will be supported by a single platform. In 2028, enterprise customers will follow. Internally, we'll bring HR functions, finance and procurement onto a single platform. The foundations for this are already in place with Microsoft the tenant organization implemented for a unified employee experience. Ultimately, by the end of 2028, we will have decommissioned Three's legacy IT stack. This all matters because simplification is what allows us to move faster launch products more quickly, reduce complexity and cost to serve and ultimately deliver benefits of the merger. So moving on to AI. Our AI strategy has 3 pits: first, network for AI. We've designed our network to support the most demanding AI use cases. As AI usage grows, demand for connectivity, capacity and ultra-low latency will increase significantly. That's why we're upgrading every layer of the network from the radio access network, transport infrastructure through to the core. This will create the capacity needed to support the most data-intensive AI applications. The second pillar is embedding AI directly into the layers of the network itself. We are deploying AI-ready RAN radio access network equipment into our network as well as other enablers which will provide a platform for dynamic network management in the future. And finally, we will use AI to boost productivity and efficiency automating and helping our teams make faster, better, more intelligent decisions. We are already bringing some of these use cases to life. AI, for example, will enable us to dynamically manage the energy consumed by our network. You will see a demo in the breakout area. Through software and machine learning, we can adjust the radio power based on real-time live traffic, improving energy efficiency. And we're already deploying a genetic AI tools to support our rollout program. My field engineers today can use AI to assess build quality in real time while also identifying health and safety risks. In summary, we will create a more intelligent network a more efficient operations and an overall better customer experience. When we talk about delivering an unparalleled network experience, we're really talking about the end state of everything I've shown you today, a single AI-ready network with combined mobile broadband and global connectivity assets into one seamless customer experience. That's what we're building towards today. We will provide the best connectivity experience possible, wherever customers are and however they choose to connect. It starts with the mobile metric but extends much further. Through our partnerships in broadband, we have the largest gigabit footprint in the U.K. with over 24 million marketable households within reach of wireless. This asset-light model means our approach is less capital intensive, lower risks and enables wide reach. and it's supported by Vodafone's global connectivity assets, including subsea cables. Increasingly, it will extend beyond traditional terrestrial metrics through satellite technologies designed to help us deliver connectivity in the hardest-to-reach location. That's an incredibly powerful combination, reliable, trusted, connectivity that's increasingly ubiquitous from the seabed to the start. So let me leave you with 4 key messages. First, we start from a position of strength. We have more network assets than any other operator and a fully funded investment program and a clear path to build the U.K.'s best network. Second, we've moved quickly. Customers are already seeing the benefit through better coverage, faster speeds and improved performance. Third, we're delivering one of the most ambitious network and IT transformation program anywhere in Europe, creating a 5G stand-alone AI-ready platform for the future. And finally, it's all focused on 1 single outcome, delivering the best experience for customers and creating the foundation for future growth and innovation. And with that, I'd like to welcome Kelly back on stage, so I can take a few questions on networks. Thank you.

Thank you, Andrea. It's really impressive to see the progress we've already made and the clear road map we have in place to build the U.K.'s best network. As mentioned, we'll be taking questions from the room for this session. For those of you joining online, please continue to submit your questions via sliding and we'll bring those into the discussion during the main leadership team Q&A later this afternoon. [Operator Instructions]

It's Robert Grindle from Deutsche Bank. I'd just like to ask about the network sharing you do in the U.K. You're clearly expanding your upgrading our network very quickly. Does that slow you down at all? And do you mitigate the fact that you've got a partner in a large part of the country?

Before we agreed the merger -- before the merger went through, we renegotiated our terms of active network sharing agreement with Virgin Media O2 and the contract is built in such a way that we have financial incentives to work together and move faster. There's also penalties in the contract if we under-deliver. This is a vested interest in both parties to use the available assets that the mergers brought together. And we also commit demand, multiyear demand. So we know what to expect from each other, and that demand is consistent with us hitting the CMA target. So it's a good partnership that enables the CMA target, and it's -- there's a lot in it for both parties to keep investing in the sharing agreement that we have in the -- the Beacon active sharing agreement that we have.

It's James Ratzer from New Street Research. So yes, thank you for that, Andreas. So could I ask a couple of questions? Firstly, specifically on kind of deploying new spectrum into the network. On how many sites at the moment have you actually deployed the C-band spectrum. And if you could talk about your kind of plans on how that might evolve in future. And you also talked about the network capacity going up by 2.5 fold by 2034. Does that include any plans in there for what Ofcom is talking about on the upper 6 gigahertz spectrum band and kind of if it doesn't or maybe you could talk about how that might fold into the potential for capacity to grow as well.

So let me start with the first one, James. So when we got the approval from the CMA, the CMA prescribed a certain number of sites with a certain very specific spectrum link for each site. So we have to hit a certain number of sites and we have to hit a certain number of configurations on those sites. And they're divided into 3 main areas: high band, mid-band and low band. You heard from Max, we front loaded our plan because the CMA wanted to see. We want to see benefits to our customers at the start of this program. So we front-loaded all of our upgrades C-band in the urban areas, so we can get that C-band uplift. We won't be deploying C-band in the most remote areas now because those are going to be low band. To answer your question specifically, today, with the upgrades so far done and the exact number is commercially sensitive, how many C-band sites have upgraded but just to give you a feel of the upgrade sites that we've upgraded in C-band in the first year, we are covering 50 million people, 50 million people in the U.K. today has access to our C-band spectrum, which, as you know, is 200 megahertz, the highest than any other operator has. We've consulted with Ofcom on the high-band 6 gigahertz. Our representation to Ofcom is very simple. If you look at the projection, the data projection and the traffic projections, we need dedicated high-band 6 gigahertz for mobile. We being a converged player I know how much I need more spectrum on the fixed side, I know how much I need more. And I can categorically say that is valuable spectrum required for mobile and should be ring-fenced to mobile. .

[indiscernible].

It is, yes. Yes, upside. Yes.

Any further questions?

Paul Sidney from Berenberg. Just a very big picture question. Looking forward, I mean, you've given targets out to 2034. Does it make sense for VodafoneThree to our own fixed infrastructure looking forward, given it's a very fragmented market. We've obviously seen the events of the past week. Would it make sense just to improve your economics? And is that something you're thinking about?

It's important to own the right infrastructure. So we've monetized our towers. And we've seen that the sharing of our mobile infrastructure in the U.K. has brought benefit. We've just shown that even though we don't own them, we can still deliver on the outcome and focus on the outcome for our customers. On the fixed, it's important to own the critical part of that infrastructure, owning data centers, which we do. Some of the important -- what is important because it creates opportunities for future growth, having sovereign AI capability. When I talk about AI, I often talk about AI and RAN, where I can. If I own the infrastructure, I can offload some of my RAN workloads in the data center, and I can use the RAN capability for AI inference and what I'm not using the RAN. So the answer is owning the critical infrastructure that makes a difference that differentiate absolutely, where it can be shared and doesn't affect your business like RAN sharing and you monetize it to a tower company, then it probably doesn't make sense of holding it. .

Great. Thank you all for your questions. That's all the time we've got for questions now. Andreas, thank you very much.

Thank you.

So we've heard how the investments we're making are helping us build the U.K.'s best network and creates a stronger platform for the future. So how do we translate that network leadership into better customer experiences, stronger propositions and growth? Well, to answer that question, please welcome VodafoneThree's Consumer Director, Rob Winterschladen.

Thanks, Kelly. Good afternoon. So as you've just heard, we're building the U.K.'s best network. My focus is how we turn that into commercial success in the consumer market. VodafoneThree already has a strong position in consumer. We are the U.K.'s #1 mobile operator, consistently the fastest-growing provider in fixed and we lead the market on customer experience. The opportunity now is to keep building on those strands. We will maintain our strong commercial momentum, which you've already seen over the last year, whilst staying laser-focused on customer experience. We will set new benchmarks for customers through the launch of new market-leading propositions such as Vodafone Super mobile. And as the fastest-growing player in fixed, we have a huge opportunity to accelerate growth by cross-selling broadband and TV to the U.K.'s largest mobile customer base. The common thread running through all of this is value, creating more value from the network investments, creating more value from our customer relationships and ultimately, creating more value for the group. So let me start with the structure of the market. Mobile remains the largest segment of the U.K. consumer communications market. It is worth around GBP 12.5 billion and accounts for around 40% of operators' service revenues. And it's where VodafoneThree has its strongest position. As I've said, we are the leader in mobile. Our position is different in fixed at around GBP 10.5 billion, is a large market but it's one where we still have significant headroom to grow. We are already the fastest-growing broadband provider. We also have the U.K.'s largest multiple gigabit footprint and fixed wireless access gives us an additional way to reach customers with around 4.5 million homes in the U.K. that still cannot get full fiber broadband. And now with Vodafone TV, we are extending our commercial offering, facilitating our ability to drive convergence even harder across our customer base. In other words, we already lead where the market is largest, and we still have significant headroom in convergence where our growth opportunity remains strongest. And importantly, we are not just growing, we are outperforming the market. As you can see on the chart, last year, our consumer service revenue growth accelerated steadily through the year with particularly strong growth in Q4. At the same time, the broader market moved from negative to just 0.2% growth. What that tells us is -- we are continuing to gain momentum and continuing to take share, and it's a really good early indicator that our strategy is working. A key strength for VodafoneThree is our portfolio of brands. Each brand has a clear role addressing different segments of the market. Vodafone, it's our flagship brand focused on premium customers and families. Three, plays an important role in the mid-market focused on youthful customers. While Smarty, VOXI, and Talkmobile allow us to compete effectively across predominantly digital and value-conscious customer segments. And we have on convergence brand which is Vodafone. That means 1 destination, 1 stack to develop converged propositions on and clarity for all our frontline teams on where to send customers' convergence. This clear multi-brand approach enables us to effectively target and cover all segments of the market and meet their different customer needs. And that becomes increasingly important as we look to monetize network value -- sorry, network quality and drive value, not just volume. Propositions like Super Mobile will, in time, be available for customers of our other brands. And our objective is really simple. Use one leading network, the nation's network support a clear portfolio of brands and give customers a compelling reason to choose the proposition that is right for them. We have an omnichannel strategy, and we will maintain our commitment to the High Street across the U.K., which for those customers are like coming into stores, and there's still plenty of them, means we can serve them in more locations with more brands than before. We're focused on using our footprint more efficiently, more effectively consolidating overlapping stores and transforming them into multi-brand destinations, giving customers more choice and a better experience under one roof. For example, since the merger, we have expanded the Three brands into 134 additional locations where it didn't previously have a presence. And we have converted 42% of our estate to multi-brand locations, which mean they can now serve both Three and Vodafone customers. And that number will continue to grow retail as integration program progresses. And importantly, our multi brand stores are already able to seamlessly grade 3 customers to Vodafone. That capability will be key as we move 3 customers onto the Vodafone stack later in the plan. So by removing overlapping sites, we're creating meaningful efficiencies and helping support the synergy benefits that Darren is going to talk about later. As part of the retail transformation, we are also investing in the in-store customer experience. That includes our flagship destinations as well as our local high street stores. We are creating modern, vibrant retail environments, stores that better showcase our brands and products. We're building a retailer state that gives us greater reach, operates more efficiently and delivers a better experience for our customers. Beyond retail, digital continues to become an increasingly important part of how customers interact with us to manage their accounts and get support. Today, digital journeys account for a significant proportion of both sales and service interactions across all our brands. The slides show that we have strong digital capabilities across the portfolio. but it also highlights one of the clearest opportunities from the merger. We can take what Vodafone does well in digital and apply it more consistently across Three. Vodafone has strong digital metrics. Three has made good progress, but we see clear opportunities to narrow that gap further by bringing the best of Vodafone's digital capabilities to the Three brand. One example is AI-enabled customer service. So Vodafone's AI-powered chat capability is already being used by Three, that will help us improve service quality, whilst reducing friction in the customer journey. And it will allow us to create a more consistent experience across both brands. At the same time, the Three digital platform is moving on to the Vodafone technology stack. That migration will give us a stronger platform for shared future innovation and it will also support a broader and more consistent range of digital services across Vodafone and Three. Leading the way on digital today are actually our value brands, with the exception of some indirect sales, brands like Smarty and VOXI, which offer simpler propositions are predominantly digital. Top Mobile looks slightly different, largely because of its customer profile. But the goal is simple, make digital interactions easier, improve satisfaction increase the digital mix across sales and service and create a better overall customer experience. You can see examples of that work in the demos here today. And this is all underpinned by our market-leading customer experience. Vodafone continues to hold the #1 Net Promoter Score position in the market. Three has continued to narrow the gap to competitors, but there is still more work to do. We have a clear opportunity to apply the strongest capabilities from across the combined business and improved Three's relative position. Brand NPS is a well measure. We are also seeing our best levels of deep detractors. That reduction tells us that fewer customers are experiencing serious friction or dissatisfaction. Our latest performance also shows our best-ever Ofcom complaint performance across the portfolio. In fact, since the merger, Three has recorded its lowest level of complaints ever. Complaints are down 40% year-on-year and Three has moved from the bottom of the Ofcom table to second place. And that is translating into lower churn, stronger retention and greater customer loyalty, which I'll come on to next. That's important because customer experience is not simply a service metric. It is one of the strongest drivers of retention of lifetime value and ultimately, sustainable growth. And we are increasingly seeing that reflected in our commercial performance. And we're one of the U.K.'s most awarded customer experience brands. So when we brought Vodafone and Three together, we said we would move quickly. We wanted to capture the commercial opportunities created by the merger, and that is exactly what we have done. Over the past year, we've launched a series of new propositions and services they strengthen our position across mobile, broadband and convergence. They include Vodafone together family, Vodafone fixed wireless access. Just ask once the converged -- my Vodafone app and most recently, Vodafone Mobile and Vodafone TV. On Three, we've also introduced speed-tiered propositions, including plans offering speed of up to 100 megabits per second. Our approach to 2 main brands is deliberate. On Vodafone, we are continuing to build and launch new propositions. On Three, our immediate priority is the migration onto the Vodafone technology stack. We do not want to add unnecessary complexity to the Three platform before that migration, but we are continuing to make targeted commercial interventions where they add value for customers. The new speed tiers are 1 example. Each of our launches has a clear up, some improved customer experience, some help us grow in broadband and convergence. Vodafone Super mobile allows us to monetize our network leadership. And together, they strengthened our ability to grow and protect ARPU. And the commercial results are encouraging. During FY '26, we delivered more than 219,000 total consumer net adds. We achieved record fixed gross adds and net adds, and as I've said, we are the fastest-growing broadband provider. We also delivered growth in both mobile and broadband ARPU. Mobile contract ARPU increased by 2% in the fourth quarter, and broadband ARPU by 5% in Q4 year-on-year. At the same time, customer retention remains a real strength. Mobile churn is at record lows across Vodafone, VOXI, Top Mobile and Smarty whilst free churn is at its lowest level in 4 years. Fixed churn is also at its lowest level across broadband and fixed wireless access. Taken together, the combination of an improved network market-leading propositions and enhanced customer experience is already translating into commercial momentum. And I've already touched on our recent launches. They address different customer needs, and they create value in different ways. Our broadband refresh is about increasing choice and improving performance. It includes Vodafone fixed wireless access supported by a single postcode checker for fixed and fixed wireless access. And we are launching the only social fixed wireless access tariffs in the country. We are also strengthening our broadband proposition with broadband speeds up to 8 gigabits per second on our Pro 4 router. And we're currently trialing speeds of up to 10 gigabits per second at the moment. So the opportunity is significant. We can use our fiber and our fixed wireless access footprint to reach more households now extends to over 28 million homes nationwide, more than any other provider. We can offer more choice, and we can increase broadband penetration across our existing mobile base. The second launch is Vodafone Super mobile. This is not just a new tariff. It is a new category built around things, customers value the most, speed, reliability and security. What's exciting about Vodafone Super mobile is it allows us to compete on quality and innovation, not just on price. It is an important step in putting value back into mobile and creating a clearer link between network investment and commercial returns. I'll go into a deeper dive on this in a moment. The third launch is Vodafone TV. Our customers have told us they want television and entertainment as part of their connectivity relationship and around 1 in 4 broadband customers in the U.K. takes TV service with their broadband. So this is an established need. Vodafone TV helps us create greater value across both at home and the mobile relationships. And it gives customers another reason to choose Vodafone for the connectivity and entertainment needs. And this is just a start. We will keep innovating to strengthen customer value and support growth. So together, these launches demonstrate how we are supporting the value creation framework Max outlined earlier. So to go a bit deeper on super mobile, convergence and TV. We talked a lot today about building the U.K.'s best network. Super mobile is the first major example of where we are translating that network advantage into a differentiated customer proposition. Before I explain the commercial opportunity in more detail, let's take a look at launch campaign. [Presentation]

So what you've just seen is our ambition to redefine quality in the mobile market. As Max said earlier, historically, our industry has tended to compete on price and on data allowances, Vodafone Super mobile creates a new category. The context is changing. Customers are streaming more content on the move. Their phones increasingly sit at the center of their digital lives. And AI is creating new experiences that depend on fast, reliable, low latency connectivity. In that environment, theoretical peak speed is not enough. Customers need confidence that their connection will perform when it matters. Vodafone Super mobile is our highest performance mobile plan. And as I've said, it's built around 3 elements: speed, reliability and security. So first speed, we are building the nation's network, bringing together spectrum and infrastructure and technology and precedented scale and pace. Our 5G plus network unlocks new slicing capabilities, which are at the heart of supermobile, we call it the 5G plus fast track. It provides a dedicated slice on the network for our super mobile customers, and it can deliver speeds up to 4x faster than standard plans. Second, reliability. Performance is not just about how fast the connection can be. It is about whether customers can depend on it. Vodafone Super Mobile is the U.K.'s only plan for guaranteed minimum mobile speed, where customers who are within 5G plus coverage we guarantee at least 15 megabits per second download speed. It gives customers confidence and it differentiates our proposition. And finally, security. Super mobile includes advanced security features enabled by 5G plus encryption. It also includes our market-leading SecureNet mobile at no extra cost. SecureNet helps customers against protect customers against malware and viruses, it provides identity protection, scam call protection and network level parental controls. We want all of our customers to be able to experience the best mobile connectivity available. Super mobile has launched first on Vodafone. It will also be available through VOXI as a monthly add-on, and we plan to expand it into our other brands over time. Super mobile introduces quality-based pricing. For Vodafone contract customers is available for GBP 3 more than full speed plans on a 24-month subscription and as a GBP 12 rolling monthly add-on. It allows us to monetize network quality and protect ARPU. And it creates a direct connection between capital investment, customer benefit and commercial return. Our ambition is to reshape how the mobile market competes. Alongside mobile, perhaps the biggest opportunity is for growth in broadband and convergence. Through our asset-light strategy, we now have the U.K.'s largest full fiber footprint reaching more than 3/4 of the U.K.'s households. It also gives customers access the fastest broadband speeds in the market, including speeds of up to 8 gigabits per second which we will launch in November. Alongside fiber, fixed wireless access gives us another growth lever. Today, our fixed wireless access footprint covers around 16.5 million households. It allows us to bring high-quality, fiber-like broadband to comers who don't yet have access to fiber. It also helps us make better use of the investments we're already making in our mobile network. The convergence opportunity is equally important. Across Vodafone and Three, we have around 6.6 million [ male-only ] households, and that number does not include the further opportunity across our value brands. These are not customers we need to acquire. We already serve them. The opportunity is to deepen those relationships. Together, broadband TV and mobile allow us to build deeper customer relationships, increase value per household and strengthen retention over time. That is why -- we are so excited about the convergence opportunity ahead. Let me finish on Vodafone TV. When investors here are telecoms operator talk about TV, the natural question is whether this means getting into the content business? The answer is no. We are not planning to own content, bid for sports rights, build studios or make large investments. Instead, we see TV as an important component of a stronger converged proposition, our objective is not to create a stand-alone TV business. Our objective is to grow and retain higher-value connectivity relationships. Today, there is more content than ever. It is spread across multiple streaming apps alongside live TV, on-demand services, games, music and other digital applications and customers can find it difficult to discover what they want and can end up paying for bundles of content with content in them that they do not use or consume. So Vodafone TV is built around an aggregated entertainment experience. It brings together live TV, streaming services on-demand content apps and gaming for a single interface. Customers can create individual profiles, receive personalized recommendations and smart voice AI search helps them find content across the platform. The hardware is compact, but powerful. It supports 4K entertainment Dolby Vision, Dolby Atmos, and it's built on Android TV, and we have partnered with the best, Netflix, HBO Max freely. We have over 150 additional streaming channels, more than 300 cloud console grade games and thousands of apps through the Google Play store. Vodafone TV isn't just TV. It is a complete family entertainment platform. And it's not just the home experience. The companion app takes content with the customer wherever they go and for the best out-of-home content streaming experience, you need the best network experience. So Vodafone Super mobile becomes the perfect partner for Vodafone TV, giving you the speed and reliability you need to stream your favorite content uninterrupted. Importantly, we're taking a low-cost partnership-led approach. We are not taking content ownership risk. We're using partnerships to broaden the customer proposition in a capital disciplined way. And we are bundling Vodafone TV with home broadband, fixed wireless access and mobile plans. We're increasing customer choice, and we're expanding the commercial opportunity beyond the traditional broadband TV bundles. Vodafone TV broadens our role in the home. It strengthens our converged proposition, and it can help us win and retain broadband customers. It can encourage customers to take higher value bundles and it gives them another reason to stay. Ultimately, it's another way we're turning customer relationships into broader, longer lasting engagement with our brand whilst remaining disciplined in how we invest and allocate capital. And if you get the chance later today, I'd encourage you to spend some time in the demo area and experience the platform for yourselves. So let me close with 4 messages: One, we start from a strong position. Two, we've maintained strong commercial momentum since the merger. Three, we're creating new ways to monetize network quality through propositions such as Vodafone Super mobile. And finally, four, we see significant growth opportunities across broadband, fixed wireless access, TV and convergence supported by the U.K.'s largest mobile customer base and the largest marketable fiber footprint. Taken together, that gives us real confidence in our ability to drive sustainable consumer growth and create long-term value in the years ahead. And with that, I'll hand back to Kelly.

Thanks, Rob. Thank you, Rob. It's great to hear more about how we're leading in the consumer market and really exciting to hear more about those new propositions you've just launched. So we've now got time for just a few questions for Rob. As we say, this is a mini Q&A. We've got the full Q&A session at the end, but we'll try to take a couple of questions. [Operator Instructions].

Great. Thanks for the presentation, Carl Murdock-Smith from Citi. I suppose today, we're being asked to think forward quite a long time out to kind of 2032 and a lot of investor conversations I'm having at the moment are about agentic AI. So and consumer mobile feels like one of the potentially more impacted areas. So my question is, how are you adapting to engage with AI agents and in terms of on that kind of time frame, what's your base case for the impact on pricing and churn? And what kind of scenario analysis have you done?

So look, I think the first thing to say is the U.K. market is a very well-established and mature switching market. So today, customers are using search. This is using a plethora of comparison websites to do price comparisons. We've got regulated communications that have to go out at the end of the contract. We need to do annual best tariff notifications for our contract customers. So the point is that the U.K. is already a very mature switching market. In terms of what we're looking at to do in the future, I think it's important to note that, first of all, it's not just all about price. So customers don't just care about price. What do they care about? They care about network, they care about care, they care about customer experience. They care about proposition. So what do we do? I mean we're building the U.K.'s best network. We are leading on customer experience, and we continue to build innovative props like we've just talked about with Vodafone Super mobile, which there's nothing else like that on the market. . Vodafone TV to create an even stronger converged proposition. And a lot of our customers don't just take mobile. A lot of our customers are converged -- they're taking multiple products and services which I think is important to note in the context of this. So when I think about the future, I also think about all the opportunity that agentic brings for us. And actually, when you go into demo area, you will see how we are starting to harness agentic and some of the demos that you'll see is how we're going to bring that agentic capability into our digital estate to help us drive sales and help us drive service in the not-too-distant future. And then there's several opportunities. So discoverability, for example, we have been doing a lot of work in geo, so the agentic equivalent of SEO and that investment is really paying off for us. So I think about the recent iPhone '18 launch. You look in ChatGPT, Vodafone were top-ranking operator in terms of discoverability within ChatGPT. So that's working for us as well. In terms of looking further afield and to answer the rest of your question around scenario planning, et cetera. I'm not going to disclose numbers in terms of what we may or may not think about where this might be in 2032. But hopefully, the other answers give you some context for how we're thinking about Agentic.

Great. Next question.

It's Josh Mills of BNP Paribas. I think one of the phrases you used earlier was reshaping how the mobile market competes in the U.K., and you talked about the capacity advantage you have at the moment, the speed advantages, which are coming. And to Carl's question, it sounds like going forward, speed tiering is going to be one of the differentiators between the Vodafone versus Three versus Smarty brands. So -- how are you thinking about moving fully to an unlimited mobile market proposition across all of your brands in the future? Maybe moving to a more delineated [indiscernible] model like we see in the Swiss market, for example. And is that something that you would be looking for the next few years? And if so, why not?

So we still see value in data allowances and finite data allowances, as you'll see, as you look across our brands with clear ladders. And yes, we've introduced speed tiering in -- some of our brands already. So it's there in Vodafone, it's there in Three. The super mobile element is slightly different. So super mobile is not about speed tiering. It's all about quality and actually providing a level of speed and reliability and security that you don't get outside of the proposition. So it's a slightly different paradigm, I guess. Will be -- are we thinking about moving to unlimited only plans. Right now, we don't see the need for that. We think there is still a lot of value to be made from the structures that we've got in the market.

One very quick follow-up. On the super mobile office and the technology that you're bringing there. Is there any obligation under the CMA wholesale terms or any voluntary agreements that you've made, which mean that technology goes to the MVNOs as well? Or is that exclusively reserved for Vodafone branded customers.

So I think Max talked about it at the beginning. So when we launched Super mobile, we launched it across every segment. Consumer enterprise and wholesale.

So we've just got time for 1 last question.

Polo Tang from UBS. Just have a question in terms of your portfolio of brands because you actually have 5 major brands. So does it make sense to rationalize the portfolio or simplify the portfolio going forward? And specifically, on the Three U.K. brand, do you have to pay a brand fee [indiscernible], for its use? .

Okay. Two questions. So let me take the first question first. So we have a multi-brand strategy in mobile. We have a single brand strategy in convergence. So let me start with convergence, and I think I outlined the rationale for that in the presentation. But we want a single destination in convergence for our customers, we want a single stack to be able to develop conversion propositions on. And we won a single destination brand for our frontline colleagues to take our customers to. It's clean, it's simple. On mobile, we have lots of customers with many different needs. So what we've effectively done is created a multi-brand strategy which allows us to serve those needs. With Vodafone, we play in the premium end of the market, targeting families and convergence with Three mid-market targeting more youthful or younger customers. And then we've got VOXI, Talk, and Smarty, which are all focused at a more value conscious end of the market having different segments within that. As we said at the beginning of the merger, we may rationalize our brands at some point but we don't see it as a big strategic decision. Value brands, a low cost.

Thanks, Rob. Perhaps we can pick up that final line question through the IR team, just conscious of time. Thank you, everybody, for your questions and your active participation in the first part of today's session. We'll reconvene at 3:30 after the break. For those of you joining us here in person, refreshments are available upstairs and the demo areas are open for you to explore if you haven't done already. For those joining online, you'll find additional content in the portal, including case studies, videos and explainers that you can browse during the break. So we look forward to welcoming you back shortly before 03:30 but we'll continue the afternoon with a closer look at Vodafone business and get more of a breakdown of the financials from Darren. Thank you, everyone. [Break]

Welcome back, everybody. I hope you're all feeling refreshed and have had a chance to explore some of our demos and additional content during the break. Before the break, you heard how VodafoneThree is building the U.K.'s best network and how we're turning that capability into differentiated consumer propositions. But the opportunity doesn't stop there. Many of the same capabilities we've discussed today from 5G stand-alone to network slicing to AI-ready infrastructure are becoming increasingly important for businesses, too. As organizations across the U.K. embrace AI, embrace digitization and automation, connectivity is becoming more critical than ever. And before I hand over to VodafoneThree's Business Director, Nick Gliddon, to take us through how we're supporting and connecting businesses across the U.K., here's a video to set the scene. [Presentation]

Thank you, and good afternoon, Kelly, thank you very much. I had the pleasure of spending some time with some of you up in the demo area. And I was a bit risky, and I said, what do you want to hear from me? Well, the first person I spoke to said, be quick because we want to hear from Darren Purkis, who's coming after you. So I promised to be on time. But many of you said two other things. The first said, can you give me an education on what business is and the business market? And then secondly, can you talk a little bit about what you are in the business market and how you differentiate yourself? So the good news is I can't change the slides, but that's what I was going to talk about. So I'm really pleased with that. So I'm pleased to be here today specifically to explain why Vodafone Business is another important driver of growth and value for VodafoneThree. I know many of you spent time with the demos upstairs. I know there were lots of questions. What I'm going to do is, as I walk through, I'll bring out the demos, and we'll talk about how they're relevant and how they reflect the slides. So at Vodafone Business, our mission is to connect businesses to their potential and power the U.K.'s next generation of business growth. And I'm personally really excited about this and the opportunity in front of us. There's four reasons why. Firstly, we have great foundations significant scale, long-standing trusted customer relationships, a broad set of capabilities that give us a platform for growth. Second, we're simplifying the business. That means we can deliver market-leading customer experience at a lower cost to serve. We can also differentiate. We have the U.K.'s best network, fixed and mobile, and our opportunity now is to create more value from both. And finally, we can grow. We can grow by expanding beyond core connectivity into some of the fastest-growing parts of the market. Now together, these four elements help us deepen the customer relationships, run a more efficient business and deliver long-term sustainable growth. Let's start with scale. Vodafone Business is already a large and a strategically important part of VodafoneThree. We generate GBP 1.85 billion of annual service revenue. That's about 27% of the company's total service revenue. And that scale extends to customers. We power over 6.5 million mobile connections, 15 million IoT connections and our reach spans the whole market. We go from sole traders and small businesses to major corporations, public services and critical national infrastructure. Many of you in this room will use the services we provide. The numbers are really striking, 1 in 2 small U.K. businesses powered by Vodafone Business. Around 70% of the Fortune 500 choose us, and our network supports 80% of the U.K.'s emergency services. That's 80%. That gives us reach across almost every part of the economy with a truly diversified customer base and multiple routes to grow. We're particularly strong in SoHo and private. In SME and public, we've definitely got greater headroom to grow. So the opportunity is not just to win more customers, it's to do more with the customers we have. We can deepen our relationships, we can drive convergence, and we can focus our investments where we see the greatest growth potential. And as I'll come on to later, bringing these relationships under one brand, and we've made the choice to go under the business brand, the Vodafone Business brand, enables us to deliver a consistent experience and make better use of our scale. Now our foundations extend well beyond core connectivity. Mobile remains our largest category, contributing just over half our service revenue today. But alongside that, we've built strong positions in fixed connectivity, unified communications, cloud, security and IoT. And our capabilities span everything from broadband to software-defined networks to public cloud and managed security. So we have that scale and that breadth, but the value isn't in the number of products that we have, it's how we bring them together. Today, the average customer relationship is still concentrated in a relatively small number of product categories. But the feedback I hear and we get from customers is they want fewer suppliers, but in that supplier, they want someone who can bring connectivity, cloud, security together. So our role is to make the portfolio easier to buy, easier to manage and more valuable as an integrated solution. When we get it right, it gives us a clear opportunity to capture a greater share of their spend. So scale matters, but so does local expertise. And Vodafone business combines both. We benefit from Vodafone's global footprint. That includes a Vodafone business presence in 75 countries together with international infrastructure, subsea cable systems. We can draw on group platforms and capabilities at a global scale. We've got over 240 million IoT connections worldwide. So we've got that global capability, but equally important, we understand the needs of U.K. customers. We can take those global capabilities and apply them in ways that solve U.K. challenges. Vodafone Business as a whole supports more than 5 million business customers, including the U.K.-headquartered organizations with multi-market and international requirements, actually like lots of you here today. And we also benefit from strategic partnerships with leading tech companies such as Microsoft, Cisco, Fortinet, AWS and Google. They broaden our capabilities and our portfolio. And that allows us to do it in a capital-efficient manner, which gives us advantages. And these advantages are important. We combine Vodafone's scale with deep U.K. market experience, and that is a real point of differentiation that is very difficult to replicate. Now these foundations matter because the market is changing and the market is changing a lot, and customers are asking more from us than ever before. So core connectivity remains essential, but increasingly, customers need connectivity, cloud, security and applications, and they need them to work together. And as more critical workloads move to cloud and cyber risk increases, that needs become even greater. And so what we do is we move into our opportunity to addressable markets into fast-growing adjacent services. We're already the market leader in mobile, and the mobile market is worth about GBP 2.6 billion. In fixed, we're a really credible challenger in a market that's about GBP 5.6 billion, and we've grown 8 out of the last 12 quarters in fixed. And just like consumer, the core connectivity market, it is relatively mature, grow maybe 1, 2 percentage through to 2030. So we can take market share there, but the adjacent markets are a different story. And in adjacent markets, we talk about unified communications, cloud, security, they're all growing at double-digit rates. So three opportunities for growth: protect and extend what we're doing in mobile, grow our share in fixed and we drive convergence when we do that and then expand selectively into the faster-growing services where our connectivity assets, our customer relationships and our wider capabilities give us the right to win. Market is changing fast, change creates opportunity, and that's a great opportunity for Vodafone Business. So the first of these is AI and digitization. Organizations are adopting more cloud. They need more automation. They need more data-intensive applications that become increasingly dependent on high-quality connectivity and infrastructure. AI doesn't work in isolation. It needs connectivity. It needs capacity. It needs security, it needs resilience and it needs access to compute. And that's where we play a critical role. So U.K. AI infrastructure market alone, 6.5 billion by 2030. And at the same time, customer preferences are changing. So they want technology that's easy to buy, easy to manage. When you think about that, today, 70% of small businesses manage their technology primarily through mobile. And we think that's worth just over GBP 33 billion, and that's across integrated communications and the adjacent services. And then finally, and some of you asked upstairs, we're seeing greater demand for differentiated services. They want secured outcomes. They want performance and they want that confidence. And our survey and our insight says 76% of businesses are prioritizing service level compliance. They increasingly want clarity about the performance they're going to receive. That's an opportunity. So finally, security, resilience and sovereignty have moved to the top of the agenda. The fundamental business priorities. Again, market research, U.K. AI cybersecurity market, we think is going to be over GBP 8 billion by 2030. And that creates a further opportunity across security and sovereignty and all those services and the managed services around that. And these trends expand the services we can deliver for customers. They play to our strengths, strong network assets and capabilities, trusted customer relationships, secure capabilities and they give us a right to compete. Our ambition isn't simply to participate in these markets. It's to use our connectivity leadership as the platform to capture more of that value chain, that technology value chain. So what are we going to do about it? We've built our strategy around three priorities: simplify, differentiate and grow. Simplify is about delivering a better customer experience while we reduce our cost to serve. And we do that through standardization, automation and we remove unnecessary complexity. Next is differentiate. We are monetizing our network and our investment and our customer scale through distinctive propositions, single business brand, greater use of our own infrastructure. And again, lots of conversations with many of you upstairs about using our own infrastructure and our own assets in the U.K. And then finally, grow. We're expanding beyond traditional connectivity into areas such as sovereignty, security and AI, where we see attractive growth and a clear right to win. plays to our strengths, outcomes we're targeting are straightforward, drive the efficiencies, improve the returns, accelerate the growth. So let's start, and I'll try and give some examples about how we're simplifying and the way we work with our customers. So what's the objective? Objective is to create a differentiated customer experience with a structurally lower cost base. So we've got market-leading position in customer experience. We outperform our competitors and we significantly outperform our competitors on NPS. And in SoHo, we're the clear brand NPS leader. And our ambition is simple. We stay ahead. But at the same time, we improve the underlying economics of how we serve customers. And the great thing about those two objectives is they reinforce one another. Better customer experience means simpler ways of working, translates to lower cost. Removing friction from customers also removes unnecessary activity and complexity. How do we achieve that? Four principles. get it right first time. make it effortless, own the outcome and know the customer. And these are what matter most for customers. In all our customer advisory boards, in all our research, they sit behind everything we're investing in. Now we also have a new sales and service platform that creates a simpler, faster and more connected end-to-end experience. And that's really important because we do it for our customers. And as Max talked about, we also do it for our employees. We deploy AI and automation. We deploy it at scale. That reduces our manual activity, improves our productivity, speeds up our response times. And we build a simpler operating model, standard product and process, more consistent ways of working. By 2030, we're targeting 25% improvement in workforce productivity, 20% improvement in speed to market and more and a 25% reduction in cost to serve. And that creates for us a more efficient, scalable business model and a stronger platform for profitable growth. And lots of you talked to me upstairs about difference in enterprise and how you drive profitable growth. That's how we do it. Now I want to talk a little bit about how we differentiate ourselves. We've got 3 levers to do this. Firstly, we have a set of differentiated propositions. We want to convert our investment in the U.K.'s best network into products and services that customers are willing and their value -- sorry, customers are willing to value and they're willing to pay for. So in mobile offerings such as Vodafone Super Mobile for business turn network capacity and capability into customer value. And I'll come back to that in a minute. Significant opportunity in fixed wireless. We can leverage the three footprint. We can scale 5G business broadband. We can give more customers a high-quality alternative to traditional fixed connectivity, and we can drive convergence at the same time. And in fixed and converged services solutions such as software-defined networks, SD-WAN, they help Business Connect to manage multiple sites, the applications, the cloud services, and they do that through a single platform. And you've seen that upstairs in some of the demos with [ Optus ] and some of the things that we're talking through. Now our brand positioning is really important. We're bringing our customers together under a single Vodafone Business brand, and that creates a more consistent experience and greater scope to cross-sell, to upsell and to drive convergence, and we can do that on the three business. We're migrating more than 1 million 3 business connections to Vodafone Business. So it's not just simply about migration. It's about strengthening the customer relationships. We give them access to a broader range of products and solutions, increased convergence and we improve retention. Now the third area was the area, I think, that had the most engagement upstairs, and that was improving our connectivity economics. This is about making greater use of the assets we've already built and continue to invest in. So we want to, in our fixed environment, move a greater proportion of the services that we sell onto our own infrastructure, and we want to do that through automated delivery. We've made some really good progress on that. Last year, we doubled the number of fixed services delivered on our own network. So we started with a base of around 8%. We then moved to 16%. Some months, we get to 19%, just under 20%. And our objective is we will get to 30%. And we'll achieve that through our new customer wins. As new customers come in, we put more of those assets or more of those opportunities on our assets. But we've also got a series of targeted migrations, and we'll have greater automation and process improvement. So we don't have to get those new customers. We just have to move those customers on to our services and our assets. And those actions do three things for us. They improve the customer experience, the value and the retention. They increase the proportion of higher-value connectivity revenue and they make better use of the assets we've got and continue to invest in. Now let me talk about Super Mobile for business as a specific example because I think this is quite interesting. Firstly, Super Mobile in business is a portfolio of mobile connectivity offerings, and it's anchored to our national business slice. Now the national business slice doesn't have any consumer traffic on it. It's for businesses. We launched it last month. It's the only business-specific mobile network slice in the U.K. It provides dedicated capacity for business. And it's in the places and the moment where performance really matters, that's when you use a national business slice. It's enterprise grade. What does that mean? It means it's got skewed performance, speeds and it turns that connectivity into confidence. And so for businesses, confidence means you can keep teams working, you can stay connected. You can roll a truck and ensure that, that truck executes on the installation at the time. And we're working -- and when we announced this, we're working with a range of brilliant organizations to explore what this capability can do for them, but not just for them, for their people, for their operations and for their customers. Super Mobile as part of the portfolio includes 5G local slicing. Max mentioned that at the start. We launched that back in April. That's the U.K. first time in the U.K., we've offered a guaranteed provide service level agreement back to performance at specific locations where connectivity can't fail. And we were the first to do that in the market. And we're seeing that delivered in the real world. So an example of the Principality Stadium where the local slice delivers assured connectivity for Max Day. We broadcast where we did it at the Kings Coronation where we did it for ITN and ITN didn't then need to roll a satellite truck. They just gave them the ability to streamline content direct to their new studio. So we've got real-world examples that demonstrate the potential, and we're working through with lots of customers and lots of organizations. Thank you. And then we talked about the future. So there's one aspect I'm really excited about. And Max touched on this a little bit. for organizations providing essential services depending on connectivity, it's mission-critical. And so that's why, and Andrea mentioned this as well, we're building a dedicated national critical slice. We reserve capacity and prioritized traffic, no consumer, no general, no business. It's for organizations where every second matters. And this changes on what they can rely on mobility to do. So I'm going to try and explain that with the use of a video, so you can play the video, please. [Presentation]

I said at the start, I was excited about some of the things we're doing, and I hope you're seeing that we're setting new benchmark for business connectivity. And for me, that's a world where mobile doesn't simply support operations, it moves into the customer and it becomes part of the operation itself, part of their business process, part of their systems, part of their performance, and that creates opportunities for managed services for us. And it's a great example of how we think about growth, which actually brings me to the final priority that I've got, which is growth. So again, when we think about growth, we're not starting from scratch. We've got assets and capabilities that are already there, customer relationships. What I'd really like to walk you through now though is how we build on those strengths and we expand the role we play for our customers. So firstly, I would start and we would start with infrastructure. So that's data centers, fiber, subsea cable, satellite. They're the foundations that provide enterprise-grade connectivity with the coverage, speed, resilience, low latency that business customers need. Business customers want more though. They want trusted partnership. They want greater responsibility for the technology that supports their business. And that means you need to go to applications, to cloud, to communications, security and managed services. And from there, we can enable new technologies, AI infrastructure connectivity, AI-enabled service propositions delivered directly or you can deliver them in partnership. So strategic direction is clear, move further up the customer technology stack, increase our share of customer spend, but remain anchored and trusted in secure connectivity that our customers rely on. I think the opportunity is significant. The adjacent markets we've highlighted represent more than GBP 6 billion of addressable spend, and we've got several of those are growing materially faster than core connectivity. I hope I've identified a number of areas we're particularly well positioned to grow, and I hope you'd agree with that. Areas where secure and resilient connectivity are becoming mission-critical, where our capabilities give us an advantage. And I want to bring that to life with three sectors. Firstly, defense. U.K. is undertaking a significant monetization of its defense capabilities, requires secure and sovereign digital infrastructure. Government defense spending is increasing significantly. Connectivity is a critical part of that. Modern defense depends on secure -- sorry, modern defense really depends on securely connecting forces, assets and locations. We've got really strong relationships in this space. Dedicated operations exist today, designed to support the unique requirements of defense and other critical organizations. And our ambition is to do more across secure connectivity, infrastructure and managed services. Second one I want to talk to you about is energy and utilities. Here, digitization, decentralization, they're transforming critical national infrastructure. Millions of assets across electricity, gas, water networks, they all need to be monitored, managed in real time. And it's an area where we've got real considerable experience. We provide and support with managed services across all of the U.K. electricity, gas transmission and distribution operators, and it gives us a strong platform for growth. And then finally, public sector. Digital transformation and resilience are becoming increasingly important to the delivery of public services. Government technology spending continues to create significant opportunities for modernization. And we've got significant relationships across central, local government, health care and emergency services. I hope you saw the [ NHS 111 ] upstairs. And we manage a substantial part of public sector mobile market today. So in public sector, our ambition is to scale our position as their trusted transformation partner, and we capture more connectivity, modernization and the managed services spend. Common theme across the sectors. Connectivity is no longer single communication service, increasingly part of the operational infrastructure itself, plays directly to our strengths, scale, security, sovereign, resilient networks and established customer relationships. So to conclude, we start from a position of real strength, significant scale, trusted relationships, broad and differentiated portfolio, and we've got the capabilities that Vodafone Group brings and gives us global reach. I think the opportunity we've got is really exciting and greater -- and for that, we've got a really clear strategy: simplify, differentiate and grow. And as I've said before in the presentation, these priorities reinforce each other. simpler business, better economics, differentiated network, more reasons for the customers to choose us. Stronger customer relationship gives us the platform to expand and capture more share of wallet and the growth opportunities. So it now really comes down to execution, turning our scale into growth, our capabilities into customer value because that's how we'll connect businesses to their potential and how we'll help power the U.K.'s next generation of business growth. And when we deliver this, that's how we'll create long-term value for Vodafone Three and Vodafone shareholders. Thank you very much.

Thank you, Nick. It's great to hear more about Vodafone Business. It's one of the less visible parts of our story. So it's fantastic to hear about the scale of the business, the role it plays in supporting organizations of all sizes across the U.K. and the opportunity for future growth. So I'll now open the floor to questions. Please do introduce yourself once you have the microphone.

It's Polo from UBS. I was particularly interested in terms of your comments about the national critical slice and what you may or may not be doing with emergency services. But is there an opportunity for you to take some of the business in terms of the emergency services network from EE? Is that the plan going forward? And then just on the point about taking share from BT, they're obviously switching off their legacy PSTN network. So is that providing a tailwind for you in terms of the SME and SOHO segment?

So on the first one, yes, I would -- we're going to be a real challenger and we're going to offer alternative to government in that space and the alternative to many customers. So I think you've got ESN. Actually, we do quite a lot with ESN today, but we also do a lot with other customers in that environment. I think on the PSTN switch off, I think you've got lots of opportunities. So we have an at-scale business today. PSTN is being switched off. That's great when you got things like fixed wireless access. It's great when you can do a high-gain antenna and leverage all of the 5G FA capabilities that Andrea is building. So I think we can compete, actually build the network out far more than we've ever been in the past. And we're credible across the country on that one. Good. Sorry, I think it was a question there, was it? Are they worried about the question you're going to ask? I think that was.

No, no, I don't worry. Well, maybe your biggest competitor in the fixed business is scaling back on its international footprint, selling assets, et cetera. Is that a relative advantage for you as they become less international because you can presumably pull on expertise elsewhere in Vodafone Group? And then on the bottom end of your competition, the altnets are increasingly getting into -- after focusing on consumer in the beginning, they're increasingly offering business services. Is that affecting your SME business at this stage or too early or not?

I'll do the altnet one first. Not really partly because when you look at a lot of the services we provide, you've got to provide the managed services wrap, you've got to provide security or we've got a range of portfolios. And as I said, the customer demand is, don't just give me a piece of connectivity, you need to give me a wrap around that. And often, if you're a business, you need to have a professional way of doing a really good install or a statement of work or scope of work. So when our engineers turn up, you can't just knock on Deutsche Bank or Goldman store and say, hi, I'm here to install. You can't do that in SME business or a large-scale customer. So you need a professional level of professionals you need a business skill to be able to do that. That's the first. Then when you talk about the biggest competitor, I think you've got two opportunities or three opportunities. Firstly, I'm not sure they are internationally. I think I've done a lot of international, and I think we're pretty well placed, and we compete really well. I expect us to scale that. I think you've also got the geopolitical complications where if you become an American company, some companies can't actually work with you or have risk if you're now contracting on American paper. So there's other things you need to think through. But also the U.K. is also a really exciting destination from SDI. So when you think about FDI in, often those decisions might be made around the world. That decision might be made in Germany. The decision might be made in Abu Dhabi, that decision might be made in Johannesburg. Actually, that's where we are. So you've often had that. So I don't want to sound overconfident, but I just think we're really good at this stuff, and we know how it works. That's the way we do it.

We've just got time for one final question, if there are any more questions in the room? Otherwise, we'll leave it there.

Okay. Well, thank you, Nick, and thank you, everybody, for your questions. So this afternoon, we've seen how VodafoneThree is leveraging its network leadership and scale to drive growth across both consumer and business. To bring these elements together and to explain how they translate into stronger returns, synergy delivery and long-term value creation, please join me in welcoming VodafoneThree's Chief Financial Officer, Darren Purkis.

Thank you, Kelly. It's great to see so many familiar faces here today. You've now heard about the many opportunities created by the merger across both consumer and business. This final section is about how we now bring these opportunities, combined with the synergies we're targeting and how that translates into strong adjusted EBITDA and free cash flow growth and materially better returns over time. I have to say, standing here, I am genuinely excited by what we're building. We're only 16 months into the journey, and we're making great progress, and I have real confidence in our ability to deliver. There are four messages I'd like to take away today. Number one, the merger had a clear rationale. It addressed the structural problem in the U.K. market, and it created the scale needed to invest and compete effectively. Second, we have a clear path to delivering GBP 700 million annual cost and CapEx synergy target by FY '30. FY '27 will be the first year where you'll see material synergies with more than GBP 100 million delivered. I'm extremely confident we can deliver these savings, which represent a significant midterm tailwind for the business. Third, the strong execution we've already demonstrated and the progress we've made to date have increased our confidence to the point where we're now upgrading our cost ambitions. Together with the benefits of full Vodafone Group ownership, we're able to move at an even faster pace, enabling us to increase our annual cost and CapEx target to GBP 1 billion by FY '32. And finally, the combination of synergy delivery, EBITDA growth and a clear investment profile create a path to good operating free cash flow growth. They also support returns well above the cost of capital over time. However, before discussing the merger itself, it's worth stepping back a bit and looking at the broader market context. As Max said earlier, the U.K. has been one of Europe's most competitive mobile markets for many years. The industry has consistently delivered affordable services and low prices for consumers. As a result, the U.K. has some of the most affordable mobile data relative to income globally. But that affordability has not been matched by network quality. As the charts show, the U.K. continues to lag many comparable markets on key measures of network quality and performance. It ranks behind the other G7 countries on overall network excellence. It underperforms the EU 27 on consistent quality and download speed, along with many other metrics you've all seen before. In other words, consumers have benefited from affordability, but the industry has struggled to generate the returns needed to sustain the investments at the levels seen elsewhere. The result has been a cycle of low returns, constrained investment and lower network quality. That has increasingly impacted the U.K. ability to compete on the international stage. That is the backdrop against which VodafoneThree assess the opportunity. And it helps to reiterate why structural change was required. As Ahmed highlighted earlier today, before the transaction, VodafoneThree were the two smallest mobile network operators in the market. Both lack sufficient scale and both generated returns materially below the cost of capital. As a result, the economics did not support the investment required to improve network quality and compete effectively. It was never a question of whether the U.K. was an attractive market. The question was whether either business operating independently had the scale to earn the appropriate returns while funding the necessary level of investment. The merger addressed that directly. It combined two subscale positions to create one operator with the customer base, network assets and financial capacity to invest and compete sustainably. As you can see, the merger creates a structurally stronger business and a more level playing field across the MVNOs. We moved from 2 small operators to scaled player with approximately 27% market share today. The outcome is not less competition. It's stronger competition, an operator able to self-finance the levels of investment required to materially improve network quality, an operator that can challenge the incumbents. Prior to the merger, there was little incentive for any operator to significantly increase investment in mobile infrastructure, while so much capital was being directed towards the fiber rollout. The market lacked a scale challenger capable of changing that dynamic. VodafoneThree changes that. We now have the scale to invest meaningfully, improve quality and compete more effectively. And that scale underpins both our investment program and our synergy opportunity. Our value creation model has four connected elements. First is integration and restructuring. We set out a detailed program to deliver GBP 700 million of annual cost and CapEx synergies by FY '30 and whose progress today underpins our increased ambition. Second, investment. These efficiencies effectively support the financing of our GBP 11 billion network investment program over the 10 years. It's deliberately weighted towards the first 5 years, reflecting the scale of work required. It includes IT integration, rollout of the nation's network sites and the retail rationalization program. Third is network leadership. The program creates a denser, higher capacity 5G stand-alone network. As Andrea and Max have outlined earlier today, our significant investment will enable us to deliver 5G stand-alone population coverage of 99.96% by 2034, more than any other operator. That significantly improves our customer experience and the commercial capabilities of the business. And the final element is the financial returns. Together, these elements materially improve our EBITDA, free cash flow and returns profile. We expect the transaction to be free cash flow accretive to the group by FY '29. And we expect returns, including goodwill, to exceed the cost of capital by FY '32. This is why investment and return should not be viewed as competing priorities. Scale and synergies allow us to fund better infrastructure while building a financially stronger and sustainable business. Now let me turn to Wholesale. The MVNO segment is an important and growing part of the U.K. mobile market. Our strategy is to participate in that growth, but we will do so with clear pricing discipline and without undermining value on network quality. As part of the merger, we made specific wholesale commitments to ensure continuity in the market during the early years of the network build. More specifically, for the first 3 years after the merger, we have an obligation to provide wholesale terms to prospective MVNOs through the wholesale reference offer. These standard terms were established to ensure that the conditions for MVNOs post-merger would not be any worse than that of premerger. For existing Vodafone and free wholesale customers, there are also rollover commitments for contracts expiring within the 3 years immediately post-merger close. Both customers can extend their contracts for up to a further 5 years under the same terms. Both conditions are clearly linked to our network commitments with clear oversight from both the CMA and Vodafone. Over time, we will monetize network quality effectively in all our segments. None of our wholesale partners sell 5G+ today, but can by taking an add-on for an appropriate fee. But I want to be clear about the nature of that opportunity. We have a disciplined wholesale framework. We will pursue wholesale growth where it is incremental, profitable and consistent with protecting network quality and value. This makes wholesale a credible additional source of value. It is not a substitute for retail growth, and it is not a volume at any cost strategy. Now turning to our targets. As we've announced today, we're increasing our annual cost and CapEx ambition to GBP 800 million by FY '30 with a clear path to GBP 1 billion by FY '32. The reason we can do that is simple, confidence in delivery. My confidence comes from three things: the detailed preparation work we did before the merger, the clear execution plan that's in place and most importantly, the strong progress we've made to date. As you can see, we already have the plans in place to deliver the organizational, retail and commercial change required. Combined, these represent 45% of the total cost and CapEx synergy target, much of which will be delivered in the first 3 years. Within this, organization is the largest component. We moved quickly to establish the combined business structure. All teams have now been integrated down to the fourth level of the organization. We expect half of the target to be delivered by the end of year 2. And many functions will reach their end state well ahead of IT migration. Once the IT migration is then complete, we will have a consolidated -- we'll have everyone consolidated onto a single stack and the full organizational changes will be implemented by year 4. In retail, we will consolidate overlapping stores. That supports approximately a 30% reduction in the premerger retail cost base while maintaining a significant presence on the high street. The program is well underway, and we expect it to complete by the end of year 3. Lease expiries have been aligned to the program plan, giving us certainty around timing for this crucial aspect. Commercial represents a further 10% of the overall synergy target. This includes the rationalization of marketing, sales, distribution and logistics activity. Progress is ahead of the initial plan with more than 80% of the marketing synergies and 50% of logistics synergies expected to be delivered by year 2. Turning to network integration. Unsurprisingly, this is the largest individual opportunity, representing around 30% of the total synergies. It includes site rationalization, the consolidation of operating centers and field operations and capital savings once the early investment phase is complete. Network operating cost benefits begin from this year and build over the 5-year program. CapEx savings emerge later following that main investment period. Importantly, and as Andrea has noted, we are well on track here, which gives us a high degree of confidence in the delivery of this plan. IT consolidation contributes approximately 15%. These benefits come from customer and data migration, platform consolidation and the decommissioning of duplicated systems. The designs are now complete and the build is well underway. Testing and business readiness activities are now being planned, and we expect delivery to be completed by year 4. Procurement represents the remaining 10%. These savings come from combining purchasing scale, eliminating duplicated contracts. I would also highlight the material savings our procurement function has already delivered through our relentless pursuit of cost optimization, both through synergy realization and ongoing cost-saving programs. These savings have helped us offset some of the inflationary cost pressures the business faces each year. So the key point is this. This is not one large independent program. It is a portfolio of identifiable initiatives. Each has accountable owners, defined milestones and a clear delivery profile. The plans are in place, execution is underway, and our progress to date gives us a high degree of confidence in delivery. Cost synergies, however, are only part of the story. While we're not providing a specific figure, we're also seeing meaningful revenue opportunities across four areas: number one, creating the best network in the U.K. better network quality improves customer retention. It creates monetization opportunities through propositions, as you've seen with Rob and Nick on Super Mobile, and it supports further upselling opportunities. As discussed earlier, each of these contributes to stronger long-term growth. In addition to upselling, we're also looking to capitalize on cross-selling opportunities, selling into the three mobile customer base, and we can strengthen retention through converged offers, supported again through the launch of new propositions, including Vodafone TV, helping us to improve lifetime customer value. The addition of fixed wireless access from three creates another meaningful revenue synergy opportunity and benefit from on-net economics. This will further strengthen our position as the U.K.'s fastest-growing broadband provider. It will allow us to offer fiber-like speeds across the entire country regardless of the pace of fiber rollout. And finally, 5G stand-alone is creating opportunities for dedicated enterprise applications. These include national, regional and critical infrastructure network slices. The services create opportunities to monetize assured performance, resilience and low latency connectivity. Full Vodafone Group ownership now also adds another opportunity, enables us to simplify further our reporting and governance structure, reduces management complexity and supports faster decision-making. It also allows us to make full use of Vodafone Group's procurement scale, commercial platforms and shared services. These benefits create a further GBP 100 million annual cost and CapEx opportunity over the next 4 years. That increases the target that will be realized by FY '30 to GBP 800 million. Importantly, it also means that Vodafone shareholders now capture 100% of the value created through future synergy delivery and cash flow growth from the business. Slide 66 sets out how we move then from our original target to the GBP 1 billion by FY '32. The original GBP 700 million by FY '30 remains the foundation of our plan, and we have a clear line of sight across each work stream. As we consistently said, FY '27 is an important point in the profile. It represents the peak year of our investment cycle. It will, therefore, be the final year which we report a net dis-synergy. As cost synergies build, the CapEx dis-synergies then gradually unwind, becoming accretive by FY '30. As I noted earlier, FY '27 will be the first year in which we see deliver material cost synergies. They will be well above GBP 100 million, and we will continue to build towards a full target by FY '30. So looking to what's changed versus what we committed to before. Full group ownership allows us to increase the pace of delivery and add further group scale efficiencies. As a result, our annual cost and capital expenditure ambition increases from GBP 700 million to GBP 800 million by FY '30. The move from GBP 800 million to GBP 1 billion is driven principally by two factors: number one, further CapEx savings as we near the completion of our network build, having front-loaded investment in the early years; number two, further benefits as we rationalize the network to our target site footprint and optimize infrastructure across our sites. This gives us a clear path to GBP 1 billion target. On top of these targets, we will maintain our relentless focus on cost optimization across the business. That will remain a key feature of our plan in the years ahead. As I've said, the investment and integration profile is deliberately front-loaded. FY '27 is the peak year for CapEx at approximately GBP 1.4 billion. From that point, annual investment moderates. At the same time, we remain on track to deliver our GBP 11 billion program over 10 years and achieve 99.96% 5G stand-alone coverage. Around 3/4 of the integration and restructuring costs will be incurred within the first 2 years. That reflects the pace at which we are integrating platforms, customers, stores and operations. Importantly, these costs are temporary. As these costs reduce, the synergy run rate increases and a greater proportion of earnings converts into free cash flow. So FY '27 does not represent the steady-state economics of VodafoneThree. It is the peak investment year, and it is that investment that enables the structurally stronger economics that follow. Slide 68 brings together the key financial indicators over time. I've provided a lot of color on the upgraded efficiency targets. Now let me show what that means for our other key financial metrics. We expect adjusted [ EBITDAaL ] to grow mid- to high single digits on a compound annual growth rate basis between now and FY '32. That growth is supported by synergy delivery as well as the underlying commercial momentum of the business. Operating free cash flow defined here as adjusted EBITDA less CapEx will more than triple by FY '32. That reflects our updated cost forecast and the group buyout benefits. And crucially, returns improve. Return on capital employed moved from negative territory on the premerger baseline to above the cost of capital by FY '32. We expect further improvement as the network program matures. The improvement in return on capital employed is initially gradual, and that was always expected. It reflects the deliberately front-loaded investment profile of our plan. As the program progresses, that balance changes. Once we're through the more capital-intensive phase, profitability continues to grow. That growth will be driven by the full delivery of our cost targets and the monetization of the U.K.'s best network. and it will enable us to deliver returns well above the cost of capital. This is an exciting growth profile. And as Ahmed outlined earlier today, we will be a key contributor to the group's midterm free cash flow ambition, a business with a stronger earnings growth, materially higher cash generation and a sustainable returns above its cost of capital. Let me finish with the same four messages I started with. First, the merger had a clear rationale. It created the scale to invest, compete and earn sustainable returns. Second, we have a detailed plan to deliver our annual cost and CapEx target. Third, our increased confidence in synergy delivery, combined with the benefits of full Vodafone Group ownership has enabled us to increase the target to GBP 1 billion by FY '22. And finally, the financial profile is clear and compelling. Taken together, this gives me and the whole management team you've heard from today, tremendous confidence in what lies ahead. We have a clear plan. We're delivering against that plan, and we believe VodafoneThree can create significant and sustainable long-term value for Vodafone shareholders. The foundations are in place, delivery is underway, and I firmly believe the best is yet to come. With that, I'd like to hand back to Kelly before we wrap up with management Q&A. Thank you for listening.

Thank you, Darren. So that brings us to the end of our formal presentations. We're now going to move into our leadership Q&A. Throughout today, we've explored how VodafoneThree is turning the promise of the merger into tangible outcomes. We've seen the scale of the opportunity created by combining the two businesses, the progress being made to build the U.K.'s best network, how we're creating new opportunities for growth across consumer and business. And finally, how that all translates into synergies, value creation and stronger returns. So this is your opportunity to put your questions to the team across everything you've heard this afternoon. We're just going to take a few moments to reset the stage to allow for this. So please stay with us for a moment.

Thank you for your patience. I'd now like to ask Max, Andrea, Rob, Nick and Darren back to the stage to join me for our final Q&A. We'll have around 45 minutes, and I'll be taking questions both from the room and from those joining online. If you're asking a question, please keep it. Concise. So our first question is from our online audience. So the question is, how are you ensuring that Super Mobile users actually receive the quality and speed of service they pay for? So Andrea, I'll start with you in terms of how the network works and then Rob and Nick, please comment on how the customer proposition builds on that.

There's 2 fundamental ingredients to get super Mobile working. First is to have 5G SA, 5G plus coverage because that gives you the inherent 5G SA capability. Once you've got the 5G SA coverage and an associated 5G SA core, you can introduce slicing. So you've got the coverage. You've got the core that is an SA native core that allows you to have slicing. Once you got slicing, you can start prioritizing the traffic. The capacity that we're introducing into the network, I said we're putting up to 5x more -- well, 2.5x more capacity and up to 5x speed enables you to have enough capacity and the speed to be able to differentiate on top of already raising the bar for all the other customers. So it's the combination of those three things, SA core, your slicing capability and your prioritization with enough capacity and speeds to be able to -- on top of already raising bar for performance for all the customers to give you more differentiated service.

Thanks, Andre. Rob, Nick, anything to add?

Couple of points. I think the first is to say we are tracking the performance of every single super mobile user in the country. So we know exactly what speeds people are getting, and we know exactly who is getting the minimum guaranteed speed that we talked about previously. And when we made that guarantee, we made it. So if a customer, for whatever reason, feels they are not getting the speed guarantee, they are welcome to call us, have a conversation with us. We have an ability to see what speeds they're getting. And as we said in our proposition, they keep their contract for free. And so far, nobody is doing it.

Take a question from the room.

Andrew Lee from Goldman Sachs. I had a question just maybe a challenging question. simply, are you doing enough on cost efficiencies? You presented a growth outlook that if we strip out the synergies, I think maximum, the underlying EBITDA growth is 4% in a 3-player market. And just conscious of a new shareholder in Vodafone Group, we look across the rest of Europe, and we see costs being ripped out of Spain and Italy post Vodafone's running of those assets. So how confident are you that you're pushing hard enough on your cost efficiencies? And what scope is there to do more on that front? And if you don't mind, a second question, but I don't think I'm going to get an answer on it, but I have to ask anyway. Why didn't you have a go at taking up TalkTalk?

Darren, can we start with you on cost efficiency?

Yes. Look, I think initially, I would say it's probably not the right way to look at it to try and take it out. There's a number of things, elements within there. Firstly, you've got significant inflationary impacts within the business that's going on -- within the markets going on. Inflation has run at over 3% since the merger and for the year leading into the merger. So we've had to work really hard to take additional costs out to stand still in some areas to get back to the same position. So we are doing a huge amount on cost programs, and we are taking more cost out. Incrementally, as part of the synergies, there are circa 20%, which are CapEx synergies, which won't flow into the EBITDA, but obviously go into the 3x cash flow. So we feel we're doing a lot. We feel we're doing as much as we can. We are going through a program, and we have very clear line of sight for all of those synergies. But we will continue to look as hard as we can for further opportunities, and there may be further things that come as we go through that program. But we are pushing extremely hard. And as I say, it's difficult because you need to strip out the CapEx element to get to a true underlying as well as the inflationary impacts that we're fighting against.

Maybe if I just build on that. I think we are doing enough. There's obviously the opportunity in -- with AI. And we're learning all the time. You might have seen from some of our demos what we're doing in that space. So AI will definitely help within our plans and is being built into the plans that we have, but there are opportunities for more. So I'll give you an example and bring that to life some color. So when we look at one particular use case, we have some productivity gains from the use of AI in developing code and digital. And some of our tests have shown that, that productivity gain could be up to 40%. Now 10% is what we would have in our plans to cover inflation. So there is a delta there of a potential opportunity statement. So we're learning all the time about what we could do with that. Do we take that straight as an overlay as a cost efficiency initiative? Or do we redeploy that potential productivity gain in digital and go after all the other opportunities that we were talking about in terms of digitization of the business. So we're learning all the time. We're seeing opportunities and potentially, there could be some more. But that gives you an example of how we're thinking about AI and how we're advancing in that space. And the other question is relatively straight up, hopefully, you've seen through the course of today that we believe in our organic growth opportunity, both in consumer and in business. And that transaction, I don't think it has any bearing on what -- on that growth opportunity. So we're now in, as you know, in an expedited process in terms of providing feedback to the regulators, and we will do so in due course.

Next question.

It's David Wright from Bank of America. My first question, I'll ask 2, if that's okay. I suspect it's for you, Rob. you have the -- you've obviously got the fixed wireless access product, but you also have wholesale fixed fiber. But it would seem that fixed wireless access is a lot more profitable to you because that's owner economics, it's network economics. So I'm just wondering within your marketing when customers are calling in or when you're actually speaking to customers, how you think about that? Do you -- would you rather prefer to push an FWA into a customer rather than a fixed line where you make just a lot less money? That's question one. And then question two, Darren, maybe to you. I just don't understand why you exclude goodwill from return on capital when it's an acquisition. It's a transaction-based.

Goodwill isn't excluded. It's included in the calculation.

Its' included.

Yes, it should say on the slide as well. If it doesn't, apologies...

I thought you said excluding goodwill...