Vodafone Group Public Ltd Co Q3 FY2025 Earnings Call

Good morning, everyone, and thank you for joining us for our Q3 trading update. Before taking questions, a brief summary as usual. Let me first start with our results. Overall, we have performed well, the group, and we continue to trade in line with our full year guidance, which we have reiterated today. Service revenue accelerated to 5.2% this quarter and EBITDAaL grew by 2.2%. This was driven by good growth across most of our markets with an acceleration in trends in both the U.K. and Africa. Turkey also delivered another strong set of results with growth in euro terms over 50%. Operationally, I would like to call out 4 months in the U.K., where we have several records this quarter. We reported our best ever set of net promoter scores and leading the market across every single consumer segment. The level of trust is record low and we reported our highest ever net additions. This demonstrates the importance of investing in a market-leading customer experience with consistent operational execution. In Germany, our performance was similar to Q2 as we continue to be impacted by the MDU TV law change. While this transition continues to have a significant financial impact, the migration of this customer base is now effectively complete, fully in line with our expectations. We have also seen further improvements in our commercial performance with our gigabit broadband base now stabilized. A result underpinned by structural and our customer experience with a strong network and continued investment in customer satisfaction and brand. Our transformation of Vodafone Germany will now leverage the full reset of the leadership team with new directors for business to cover IT and HR, having joined in the last few months. However, as we highlighted in our results today, the combination of more challenging mobile market conditions and some one-off items will impact the pace of our financial recovery in the second half of the year and the entry point into FY '26. Beyond this set of results, I'm pleased to say that we are now nearing the completion of our portfolio reshaping that I announced just over 18 months ago. In late December, we successfully completed the sale of Vodafone Italy, having received €8 billion in cash. Proceeds from the deal have been used to reduce net debt and will also support the next €2 billion share buyback program, which we intend to commence after the current program is completed in the middle of this year. And in the U.K., we have received approval from the CMA on our merger with Three. We now expect the deal to complete in the next few months, after which we expect to make a fast start in integrating the 2 businesses, capturing significant cost synergies and delivering on our multiyear investment plan to build the U.K.'s best network. With these 2 transactions closing, we complete our portfolio transformation, with Vodafone now having good positions and scale in all of our markets. Looking ahead, we will continue to prioritize the turnaround of Germany as well as accelerating our growth opportunities across the rest of our portfolio. All the markets where we have been performing consistently well and following the U.K. merger will now represent around 70% of group revenue. With that, Luka and I are looking forward to your questions.

Our first question this morning comes from Robert Grindle at Deutsche Numis.

I'd like to ask about Germany, which is the issue dejour amongst decent performances elsewhere. I see improving KPIs, but note the commentary around tougher mobile, delays to B2B, turnaround investment and one-offs. And 1&1 also appears to be a bit sluggish. Please could you add some color on Germany into Q4? What has changed in H2? And how is that evolving into next year, please?

Thank you, Robert. Before we move on to Luka for the financial outlook, I wanted to share a couple of points about the situation in Germany regarding both the market and Vodafone, and I'm sure we can discuss this further during the call. Germany is indeed an attractive market for large operators with substantial customer bases. It has always been competitive, but sustainably so. Recently, however, we have observed changes in the mobile market that have made conditions more difficult. I won't go into specifics because we have all noted this issue. Regarding Vodafone, I want to reiterate certain points I made earlier. We now have a strong leadership team actively working on a comprehensive turnaround. As reflected in our results, we see signs of progress, including stabilization of the broadband base, improvements in customer satisfaction, and performance in mobile, despite the current challenges. However, it will take time for these advancements to reflect in our financial results, and I’ll now turn it over to Luka for more details and our expectations for the second half of the year.

Thank you, Margherita, for the question. Regarding the financials, I want to start by discussing service revenue in Q4, where we still anticipate some improvement, although it may not be significant. This is because any potential gains from the ramp-up of 1&1 will likely be countered by the tough market conditions we are experiencing in mobile and the competitive environment there. On the EBITDAaL front, as mentioned in our release, we now expect that the second half of the year will be lower compared to the first half. The reasons for this are a mix of expected and unexpected factors. We had always indicated that the second half would be more impacted by the full effect of the MDU transition, which is about a €100 million negative headwind for both Q3 and Q4; during the first year, the MDU impact was still in the ramp-up phase. Additionally, we are seeing less support from energy relief in the second half compared to the first half. Initially, we thought we could counter these challenges with organic improvements in the second half, particularly in mobile, but that has not occurred due to several reasons. The heightened competition in the mobile market has limited the improvements we anticipated, even though we did observe some positive early performance in our commercial trading numbers. We had higher hopes in that regard. We also faced some one-time occurrences. Throughout all of this, it’s important to note that we continue to invest in our customer experience and B2B performance as this will position us for a sustainable return to growth. We are committed to this strategy. Furthermore, despite the revised expectations for the second half in Germany, we are maintaining our guidance on EBITDA, indicating that we are indeed performing better than we originally expected in other parts of the group. This also gives us confidence as we look forward. As for the future, I would like to touch on our ambitions for Germany as we head into next year. Margherita, would you like to continue?

Yes, if you want to sort of paint the bigger picture and in the longer term for Germany, I move already straight into what we expect for FY '26 on the basis of what's going on. Two clear positives supporting us into next year. Of course, first of all, the MDU transition will be behind us. So no more MDU drag from the second quarter onwards. And then, of course, the improved commercial performance that we are having already this year, although not going as far as we would have hoped in mobile, is going to obviously support the revenue trends. However, there will be 2 swing factors, I would say, for the final outturn and these swing factors will be first of all, the pace of acceleration of the wholesale revenues into our revenue mix. And then second, the mobile market conditions. As we have said before, they are today more challenging. There are no structural reasons for it to be this way, but of course, we will need to judge. Net-net, I think it's a bit too early to call the shots and we will, as usual, give you a better update as we get into May. But our ambition remains the same and our ambition is to grow in Germany this year.

Thank you, Robert. Our next question comes from Polo Tang at UBS.

I just have one question about midterm free cash flow. So dividends received from Vantage Towers and VodafoneZiggo are important contributors to the free cash flow of the group. And together, they represent more than €300 million per annum. How do you see risks to these dividends? For example, you've got Zegona talking about walking away from Vantage Towers in Spain in 4 years' time. And looking at VodafoneZiggo, what is your view on deleveraging the business compared to upstreaming cash? And looking at the starting point for adjusted free cash flow in FY '25 of €2.4 billion, do you think this can grow in the near to midterm, just given upfront restructuring costs from the merger in the U.K.?

Yes, perhaps I'll take that. So first of all, on the free cash flow from our associates. You have seen that in Vantage Towers, we had actually a very positive movement from last year into this year. We essentially are going from €200 million to €300 million expected dividends from Vantage alone without VodafoneZiggo in FY '25. And I would expect that this trend of Vantage Towers increasing its cash flow and therefore, also then the dividend contributions to Vodafone and our partners from the consortium should continue. They have a very healthy business development. And in terms of the market opportunity out there, not focusing on a singular market, but actually the whole breadth of the market coverage, I think there are enough opportunities for Vantage Towers to deliver that. So I'm actually very confident about the trajectory into the midterm future on Vantage Towers. With VodafoneZiggo, you obviously know that they are operating in a market where they have generally, I would say, pretty reasonable conditions. They have, of course, significant leverage, and that needs to be taken into account. They are going to report on their numbers in actually a short while and will then be, I think, also able to talk about their distribution strategy. But for this year, I think there were originally some doubts. And ultimately, they have come out with a pretty good return expectation for us. So I wouldn't be too concerned about that. I think in combination across both entities, Vantage Towers and VodafoneZiggo, should be quite okay. And yes, of course, as we have said, our ambition for the midterm is to shoot for growth in our adjusted free cash flow. You are right that we are going to see in the early years of the U.K. merger coming together the free cash flow being dilutive from a contribution perspective from the U.K. But elsewhere in the group, we continue to make progress. We have been guiding for growth for FY '25. And therefore, in combination, I think we're quite confident about our projection for the midterm in terms of our cash flow evolution.

The next question comes from James Ratzer from New Street.

So I was wondering, can I just ask about cash returns to shareholders? So I know you have the €2 billion buyback planned for FY '26 as the Italy deal has now closed. But it seems like your leverage is still going to be around 2x even including that buyback. So kind of below the 2.25 to 2.75x range, and you'd have about €3 billion, I think, of excess capital that could be distributed. So I'm kind of wondering with the share price where it is, can we expect you to announce something on accelerating returns at your full year results in May? And how do you see the balance really between investment and leverage going forward?

Yes. Thanks for the question. I'll take this one as well. And let me start by saying that I'm really happy that we're bringing all of the elements of our capital allocation framework into execution. I would argue like a clockwork because we have been successful in the portfolio transactions. We have now the funds from Italy in the bank account and that is, of course, very helpful. You're right, temporarily, this could set us up for staying below our targeted leverage range. But I would say you need to take 2 things into account. With regard to this. One is, of course, the additional €2.5 billion of share buybacks that we have already committed to and that we continue to execute against. The other one is that upon closing the U.K. merger, we will actually add another €2 billion of debt to our consolidated group figures from the Three side coming in. And that despite the fact that we'll also get some EBITDA through the combination will still result in us going into right where we wanted to be, which is the lower half of that 2.25 to 2.75 leverage range, but we will be in that corridor. Now from here on, you are obviously correct that we are in a very good position. We have some extra freedom, so to speak, which we can decide. I think the pace of our share buyback that we are currently executing is about right, and there is no real opportunity to further accelerate this massively. But we will obviously execute on it and then when we are done with it towards the end of our FY '26, we are going to reassess the situation. So it's a comfortable position to be in and gives us optionality but we also shouldn't overdo it. So with the U.K. debt being consolidated, I think you'll find us being within the debt leverage corridor that we have been announcing last year.

So it sounds like we shouldn't expect any form of extra tender or any new announcement with the results in May then on the cash return.

I think you should expect us to be predictable and execute with reliability across our capital allocation framework, all of the conditions combined, and then take another hard look at what is most value accretive when we are done with that.

The next question this morning comes from Andrew Lee at Goldman Sachs.

Luka. I had, if okay, two just follow-ups from the questions before. So just one follow-up, Margherita, to your comments when you're referring to the swing factors of German mobile competition and 1&1. Can we just infer from you referring to the swing factors? Is that swing factors to delivering growth at all in Germany? And therefore, can we infer from that, that if mobile competition stays where it is, the 1&1 has to be that without 1&1, you wouldn't be growing organic service revenue growth in Germany, and it needs to be a certain degree of onboarding to deliver growth even at a headline basis. And then just the second part was just on your comments, Luka, on the Hutchinson implications. When we're thinking about modeling Hutchinson coming in. Can we just take the Hutch numbers that are reported? Or are there any adjustments we should be making when thinking about modeling that?

Thank you, Andrew. I want to expand a bit beyond just the specific figures in your two questions because there are two important broader points to consider. Starting with pricing and the competitive landscape in Germany, the answer to your inquiry about the numbers goes back to what I mentioned earlier regarding the significant factors at play, which include 1&1's migration pace and mobile pricing. Therefore, it’s challenging to provide specific details until we gain more clarity on both of these aspects. I prefer not to dissect the performance piece by piece based on that. Allow me to share my perspective on the pricing environment as a whole, as I believe this is significant. Back in November, we anticipated that competitive pressures affecting the lower end of the market would also influence the mid to high end. By Q3, we observed promotional activities from all operators, which impacted everyone involved. You are likely well aware of the details. As I mentioned earlier, this situation doesn’t have to remain as it is because we have a fundamentally solid structure in the German market with four large players, all possessing substantial customer bases. Promotions are inherently temporary, and we will see how various deadlines are managed in the upcoming weeks. Regarding future developments, I still believe a shift in direction is quite feasible. As long as conditions remain as they are, you can expect Vodafone to adopt a careful approach. This ties back to your question, as our current outlook considers existing conditions, which, as I noted, can change quite easily. Therefore, when I mention our ambition to grow in Germany next year, it is within the context of the current market conditions. Now, regarding the U.K., the critical financial parameters we outlined for the merger's impact back in mid-2023 have not changed. They remain the same, but we will now need to collaborate with our partners to develop a final joint business plan following the merger’s completion. Thus, we cannot provide further specifics beyond stating that the primary parameters should not change at this stage. I should also mention that we are eager to enhance our involvement in the U.K. market, as we will be positioned with strong conditions supporting long-term growth. We will have a unique mix of assets, including spectrum, network, and customer base, in a market where we have consistently excelled. We are looking forward to the merger's completion and fulfilling the parameters we have shared. Do you have anything to add?

Just a very quick double-click, one of those elements that will be happening as part of the final alignment and business planning is also the alignment of accounting policies. So in that respect, while I don't expect any significant movements in this respect, obviously, as part of our consolidated accounting, we will apply the Vodafone policies, and we will go through a detailed matching of Hutchinson's accounting with ours. So this might, in a few areas, result in smaller adjustments. Just wanted to flag that, but this is also one of the steps that we will have to go through, obviously.

The next question comes from Adam Fox-Rumley at HSBC.

I'm sorry, but it's quite a specific follow-up to Andrew's question. But I wanted to ask about the risk of a write-down in Germany in light of your comments that trends are more challenging than expected. The margin of safety fell to just €500 million at the interims. And I wondered if there are any implications for the broader group. And on the pricing side of things, I suppose, is it possible to say how the current pricing levels in Germany compare with the pricing assumptions that go into the medium-term business plan that then impact that value in use.

Yes. So first of all, you are correct, and we have been laying this out transparently that obviously, we were going into the second half-year with a fairly limited headroom in Germany. And as we are going now through the replanning and our fair value assessments across the different segments, we will obviously take current performance into account, but also changes in discount rates and so on. So it's too early to prejudge the outcomes of this accounting assessment that we are doing. But clearly, the half-year two performance, which is lower than original expectations is, of course, increasing the risk of an impairment. Having said that, an impairment, obviously, would be a noncash accounting event that would also not have a cross read to any of the other segments as it's really then focused on the cash-generating unit in Germany that we are going to assess as all of the other assets. And in all of them, as we are doing better than expected, there is obviously no increased risk for an impairment in any of the other ones. In terms of the way how these assessments are going to be done, of course, we will have to update our expectations for the financial performance into the future. However, this is a multiyear planning process. And so it would certainly not be exclusively and one-dimensionally focused on short-term pricing environments that we are observing today.

The next question comes from Carl Murdock-Smith at Citigroup.

I was wondering if you could expand a bit more on the German business decline and the 3% decline there. There seems to be 3 moving parts, lower ARPU, contract phasing, and then digital services growth on the positive side. I was wondering if you could just kind of scale those and how those contribute towards the 3% decline overall. And with regard to the commentary around the mobile ARPU pressure, is that more macro or more competition-led? And is it with respect to one particular contract? Or is it more broadly in what's the outlook for Vodafone business in Germany in the coming quarters?

Yes. Perhaps I can take the business question and then you can comment on the more broader questions. Look, in Vodafone business, I think the impact that we are seeing now is really a twofold. One, you see an impact that we have already observed in the past few quarters that in the large enterprise segment in mobile, you are facing or we are facing pressure because of the effect of resigns of the last year, which came with a lower ARPU and therefore bringing the mobile performance on, and we also had some disconnections as part of RFPs going on mainly in that multinational corporate sector. The other one that we have been flagging right now is indeed one that is confined to one single but material case. So 1 of the significant projects that we are running in Germany is currently facing delays and that is obviously then resulting in delayed revenue recognition and therefore, a negative impact. But this is a phasing impact but it hits us in FY '25 and perhaps also into the first part of FY '26. In the underlying, you see in Germany, actually elsewhere, especially in digital services, a good performance, and this will continue to become a bigger part of the total pie everywhere, but also in Germany and will continue to grow much faster and therefore should give us then support as we work on building our base in that business. And I think with Hagen now on board and the investments that we're doing into capacity in that space, in particular, I'm quite confident that we will also see in Germany a better performance in B2B as we move into the next year.

I would like to add that you mentioned the broader macro environment. Any pressures from this environment could actually present an opportunity for us. Specifically, in B2B, our exposure to legacy products is significantly lower than that of our competitors. This positions us as a challenger capable of assisting companies in enhancing their efficiencies, especially through digital services which can help them become more effective. Therefore, we view this as a competitive advantage for our business.

The next question this morning comes from Akhil Dattani at JPMorgan.

Just a couple of follow-ups on the comments you both made on Germany and the German outlook. And they're all quite small. But the first one is you mentioned, Luka, that in Q4, the recovery in service revenues won't be as material. You mentioned both competition but also one-off. I guess I was just keen to understand how much is one-off, how much is competition. But I guess the bigger question is, if we're running at still a, let's call it, mid-single-digit service revenue decline, I guess I'm just struggling to understand Margherita, your comments around the ambition to still return to growth into next year. So I guess what I would love to understand a bit more is what are the building blocks as you see them at a high level that are required and sustained. You've mentioned a few, but I guess, given the run rates we're seeing, it's a bit tricky. And I guess linked to that, at a high level, I guess, what is a bit difficult to understand is if we look at the last 3 years, operating cash flow in Germany has now fallen 1/3 in 3 years. To what extent does that hamper your ability to reinvest the tenders around? Because the scale of decline we've seen in the last few years has been quite challenging. And I just wonder whether commercially and financially, that creates some constraints on the business as a lot.

Sure. And I'll keep this high level. So I'll answer all the sort of moving parts. First of all, your broader question on growth, I think the answer is visible, if you want, in the current performance, right? If you look at the growth rates, mid-single-digit negative, as you called out now, within this mid-single-digit negative, you have 4 percentage points drag from MDUs and the rest, by and large, is the decline of the broadband base that we have suffered from in the last 12 months. Now if I project those 2 forward, MDUs stop impacting us negatively starting from Q2 next year. We have now stabilized our broadband base, as you have seen in the results this month. And on top of that, we have, of course, the growth coming from wholesale with a gradual migration of 1&1, and this is just, if you want, taking into account the basic factors. We can then talk more about B2B and other sort of growth drivers in the future. But I think this is, if you want, the big picture for service revenue growth in Germany. The point you are making on free cash flow is really an important one because it's not influencing us at all, would be my short answer. I think Luka said it earlier, we are continuing to invest in our turnaround in Germany and this is not changing. Yes, we are working with a set of turnaround actions that are all geared for mid long-term growth in the market. Maybe I can give you a couple of examples. Brands. Some of you may have noticed it, if you are traveling around Germany, but we have started reenergizing our brand in Germany. We have brought our investment in our brand to the right level, which is share of voice matching market share. And for the first time in several years, I need to say, we are now co-leading in the market in brand consideration, both for users and known users. Another source of investment for us is customer experience. Again, you may see or perceive some of that, but we have turned around the trends in customer satisfaction. We talk a lot about the U.K. because it's now leading on every parameter, but in Germany, the level of detractors in our base, which is what internally we really all focus on is the lowest it's been in the last 10 years. And again, you know what actions have led us there, investing in our cable network and in general, working on all our customer processes. And this is why you then see even in the context of some challenges in the mobile market with these promotions around the Christmas period, you see the numbers you see in the commercial performance, and the stabilization of the gigabit base in broadband has stopped the long-standing erosion. And even in mobile, I was calling out earlier, headlines are not that exciting. But once you split the resellers reduction that we are living with, which is very low value, we have good growth in our branded additions, which are the ones we care about. You should expect us to continue to maintain these investments, whether it's B2B capabilities, customer satisfaction, or brand, ongoing as we go through this year and next year because they are underpinning really the comprehensive turnaround. And I need to say, I'm very energized now having seen the new leadership team in place in Germany. Again, some of you will have chances to meet in the coming months. I think it's great to see we now have real industry leaders working across operational excellence across the company, and we have a very full agenda for FY '26.

Perhaps just to come back to your Q4 question on the service revenue front. That I think has 2 components. The main reason why we expect an improvement is the beginning of the lapping of the MDU impact. If you may want to recall in Q4, we had the first moderate impact in the last year, and that is partially then annualizing in the numbers. We obviously have the ramp-up of revenues from 1&1. It's coming in, honestly speaking, slightly at a lower pace than we would have anticipated. It's a technically challenging migration process, in which I think 1&1 is still kind of working to accelerate, and from that perspective, I would expect a smaller shortfall against our original expectations, but not significant. So the main reason that is then working against us is the higher competitive intensity in mobile. I would say we have been holding up reasonably well in our first brand performance, but we had certainly higher expectations in that respect than what we could ultimately drive towards. And as you look into next year, obviously, we expect still that the 1&1 contract will ramp up to the full set of customers by the second half year of FY '26. That's another component that will clearly underpin our ambition to grow again in the next year.

The next question this morning comes from David Wright at Bank of America Merrill Lynch.

So a question on Germany, but I will just add a tiny comment, Luka. I think actually on the U.K., the accounting is quite significantly different on acquisition subsidies. I think Hutch capitalizes them, you guys don't. So I think that is a difference that could quite material, is it not? Or we can just come back to that. So I guess on Germany, you've mentioned multiple initiatives, Margherita, but I think the 1 differentiating factor for most telcos performance, and if anything, something that's hurt Vodafone over the years has been network quality. Telcos tend to work when they're either the best network or the cheapest price, and I think Vodafone for a long time was neither. And thus, I suspect a lot of your moves to add scale in the U.K. and shrink the portfolio. You haven't mentioned network investment. I'm just wondering, we're not going to go over my long-term fixed questions here. But just on the mobile side now, are you even confident that your mobile network is a differentiating quality factor? I think historically, the D1 and D2 networks, you guys and Deutsche are differentiated. I feel like you guys have dropped a bit. O2D has caught up a bit. Do you need any more tacks in Germany in the mobile business to better defend yourself against essentially price competition? Because you can't compete on price. Do you need any more CapEx in the business?

Sure, David. The short answer regarding Germany is that we expect to maintain a similar level of capital intensity moving forward. Our investments are primarily focused on the €100 million allocated for the 1&1 migration, which will be phased according to customer growth. Other than that, we are satisfied with our position. At the beginning of your question, I would like to emphasize that having high-quality networks is crucial for Vodafone. We are pleased that in the U.K., we are positioned to build one of the best 5G networks with returns exceeding our cost of capital. I fully recognize the importance of network quality. In Germany, I feel positive about our standing; we rank as the strong number two in mobile. While we may have differing opinions on network testing, I will hold off on making a judgment and suggest we rely on independent testing. In fixed networks, we continue to be recognized as the best broadband provider in the country, as confirmed by tests conducted last quarter. Looking back three years, our cable network required significant investment, but now, with our focus on ongoing fiberization and the current investment run rate, the results speak for themselves. Our goal is to maintain this strong position in Germany while keeping capital intensity broadly similar.

Yes. As I said, there will be differentials. But to what extent they are plussing and minusing up, that's really we have to go through the final alignment. But there are differences also in other areas, lease accounting application.

Next question this morning comes from Joshua Mills at BNP Paribas Exane.

My question is again coming back to Germany. Margherita, you mentioned a couple of times during the call that you still see the mobile market actually sound. I maybe wanted to challenge that a little bit. If we step back and look at the market today, you've got Telefónica Deutsche with a 20% gap in the network as a result of losing the 1&1 contract. We've got 1&1 fighting to prove, but their network strategy is going to work and probably taking advantage of some of the better terms you've offered them. And then the recent changes from Deutsche Telekom cutting mobile prices by 20%. Those discounts have been extended now into March. So I think my main question here is what are we missing? Why do you think this is a structurally sound market? And who needs to take the first step to make this rational again? And perhaps if I can tack on a second question as some of the other guys have. If I look at your guidance in German EBITDA for the second half, I know you haven't specified how much lower it will be. Let's say it's €100 million delta. That looks like a number which is not just driven by price competition; it will also be driven by reinvestment and marketing, handset subsidies, and other things. So perhaps you could give us a bit more detail about what that additional investment is going into because if you're saying you want to remain rational and not cut price, this guidance looks like it would be suggesting you're investing elsewhere to reenergize your net adds.

I'll hand over to Luka for the EBITDA. But if I take Turkey specifically, and I think it's a very important point that we also need to cover because we are really outperforming in Turkey today. And it's not just about prices and inflation. Of course, we are growing in euro terms significantly. Actually, Turkey this year in EBITDA terms will be €300 million higher in euro than it was pre-devaluation. So we are building real growth at a very respectable CAGR there. And the reason why it's not just management of pricing and management of inflation but it goes much deeper than that. We are quarter after quarter posting record high market shares in Turkey. We have the lowest churn in the market. We have had this for the last 3 years. And I would say this is down to the outstanding commercial execution of our Turkish team, whether you look at marketing, sales, CBM, I think they have a particularly strong formula around loyalty. They actually have a loyalty platform that we are bringing elsewhere in the group, connected also to a very strong e-commerce business in Turkey. And on top of that, they are managing digital very well, which helps significantly with profitability. So it's not just top line. 40% of our sales in Germany are now through digital channels, which is the highest number that we have. So in general, they are managing a very, very good performance overall. And maybe Luka can add some sort of shape of the growth.

Very happy to. Perhaps the last point as well. There are some very specific growth opportunities in the Turkish market that come along also from regulatory constraints for telcos. The most important one is the data residency laws that require data to stay in-country. And therefore, the telcos, including Vodafone, have a great opportunity in B2B to have a very healthy data center business. So that adds further to the growth opportunities in a way that could not be replicated in, let's say, Western Europe. So that's just on the strategic levers perspective in terms of how this will play out. We remain absolutely bullish about the Turkish market. I think it will continue to show very positive growth contributions in hard currency. Of course, in Q4, but then also going into next year and into the midterm. What we will certainly see is a moderation of the growth rates within that because inflation also in Turkey is starting to come down. We will continue to grow above it. But with it coming down, certainly the growth rates will moderate. However, as the absolutes have become such a significant piece, even a slightly lower growth rate will still translate into a very strong absolute contribution in euros. And therefore, we fully expect that Turkey will remain a strong growth engine for the group overall also in FY '26, even at lower growth rates. But it's not only Turkey. I think we have an opportunity to replicate what we have shown in Turkey in Egypt, in particular, where we are starting to see a similar very healthy trajectory where we're growing significantly above inflation rates, where now new prices have come into place in December, 30% higher price flows which allow us also to reset our price points and where we also have a very strong position in the market. In fact, we are actually the market leader in Egypt and can further expand on that lead. So I think Turkey is a good precursor of what we can drive in our emerging markets in a broader sense.

This was the last question. And I would now like to hand back to Margherita for any closing remarks.

Thank you very much, everyone. I look forward to seeing you in May when we will communicate the new guidance with our new reshaped Vodafone, playing from strong positions in every market. Thank you.

Thank you. Bye, bye.