Good morning and welcome. Here's the agenda for the nexthour and a half. I'm going to run through the highlights and give you an updateon our strategy. Andy will come next and will give you a detailed financialreview. We'll then be joined by Vittorio Colao and Paul Donovan in aquestion-and-answer session. Our first half results are good and show that we'reexecuting well on each of our five strategic objectives. In Europe,revenues have grown in a tough environment. We're driving strong usage growthand data revenues. Our cost reduction programs are delivering results in anenvironment of falling prices, protecting our margins and our cash flows. EMAPA produced another great set of results with strongcontributions from its markets. Good momentum continues at Verizon Wireless.Our performance in the first half has enabled us to improve our guidance, inparticular on revenue, by GBP1 billion and cash flows, free cash flows by 10%.Our dividend growth of 6% is above our previous guidance, and reflectssuccessful execution in the first half and our view of the future. Here are the key financial results. Revenue was GBP17billion, up 9%, or 4.4% on an organic basis. EBITDA margin has fallen in linewith our expectations by 1.4 percentage points. Operating profits rose 6.1% onan organic basis. The dilution of M&A and foreign exchange has loweredreported growth to 1.6%. EPS rose 7.4%, benefiting from the reduction in sharesassociated with last year's GBP9 billion share B return of capital. CapEx roseby 9%, reflecting increases in EMAPA and reductions in Europe.Free cash flow remained strong, albeit a little lower than last year,principally for tax reasons. And we added 20 million proportionate, organiccustomers taking the base to 241 million customers. Let me dig into the numbers a little bit deeper. In Europe,we saw modest revenue growth of 2% despite the adverse impact of competitiveand regulatory…

Right. Thank you very much, Arun, and good morning toeverybody. I'm going to go and provide a little bit more color to theoperational performance, touch upon the interest, the tax and the overall debtposition. So, slides permitting, we will go through. Let's start withthe Group income statement. Two key numbers here, as Arun has mentionedalready, highlighted on the top left, GBP17 billion of revenue and GBP5.2billion of adjusted operating profit. The revenue figure headline is up by 9% year-over-year. Ifwe take out the effect of Turkeyand India,which were not in both periods in full, and adjust for some small foreignexchange differences, then the overall increase organically was 4.4% on therevenue. And on the adjusted operating profit, doing the samecomparison, the major effect here was actually the removal of the Belgacom andSwisscom profit contributions from the previous year. So that, plus the ForEx,has the impact of actually increasing the organic growth rate on the profits by6.1%. If you look at this by region, just added in here, a thirdline in the middle of the EBITDA line. So the first column here, is Groupnumbers, I've just been through. And I'm going to pick each of these up in moredetail as we move forward. So, on Europe the key number is 2% upon revenues organically, and about 2% down on the EBITDA and the adjustedoperating profits. In EMAPA, excluding the US, key numbers there, 16% up on therevenues, 13% up on the EBITDA and 11% up on the adjusted operating profit. And in Verizon Wireless, 16% up on the revenues, 17% up onthe EBITDA and a big 26% increase in the adjusted operating profit. VerizonWireless now represents 22.5% of the Group's adjusted operating profit comparedwith 20% a year ago. So, let's just start then with Europe.Headline GBP12.7 billion of revenue, GBP4.8 billon of…

Thank you, Andy. Can I invite Paul and Vittorio up? Okay,with that we're very happy to take the questions. We'll start with Christian uphere.

Thanks Arun. It's Christian Kern of Lehman Brothers. I wasjust interested if you could help us with the revenue growth outlook in termsof the curves you're anticipating for voice. Is it a stabilizing curve or is itstill flattening over couple of half years? The second one would be then on thedata side, we've seen exponential growth curves on subscriber growth in the mid90s in Europe. Is this an exponential curve you seeflattening any time soon, or is the consumer segment coming in? So just to get a feeling for the underlying drivers, how yousee them developing over the next two, three years. You mentioned advertisingon the mobile side, as well in your release and that would be very helpful toget a feeling for? And then a pretty similar one on net debt towards the end,Andy maybe you can help us there, where you see net debt towards the end of theyear? Thank you.

Christian, a very good opening question and it encompasseseverything pretty much. So thank you for that. I'll take a shot at it and I'llask my colleagues to join. If you say kind of what are the real drivers in the business,the real drivers in the business continue to be voice usage growth, which we'regrowing at 24% in the first half; data growth that's growing at 40%; 45%,messaging growth which is growing at 8% or so. In EMAPA the underlying focus ineach of our markets, the kinds of numbers that you're seeing, are numbers thatone can expect to see in the future. Offsetting that are two major downward trends. One iscompetitive pressure, price per minute. We're talking about 19%, which includesboth price pressures from competition and price pressures from regulation. Now,the question is the things that are driving our business forward, I think willcontinue to drive our business forward. I don't expect any major changes there. So, then the question becomes what's kind of pulling back onthe business competition. It's very hard for me to sit here today and say thenumbers are going to be substantially lower. Our own view is that it willremain competitive here in Europe. Exactly plus or minusa few hundred basis points, I'm not trying to be that precise. But we expectthings to remain competitive. On regulatory pressure, we had double and triple whammiesthis year. We had roaming, we had termination rate cuts. We had Bersani.Frankly, we don't expect triple whammies in the years ahead. We will expectsingle whammies and we expect determination rates to continue to decline andwe've got them planned into our thinking. On the margin there might be one or two other smallerthings. But we don't expect the kind of regulatory hits that we've taken thisyear. So, when you net it all out you basically say the positive things arelikely to kind of be similar and the regulatory pressure is likely to lift alittle bit. And that gives you whatever set of numbers you can dial in. Andy, you want to add something to that?

Well, maybe I'll just pick up from there. I think the secondpart of your question was on the net debt side so I'll just go on to that.Broadly, implicit in the guidance is GBP4.6 billion, GBP4.9 billion of freecash flows in the second half of the year 4.4 to 4.9. So, 4.6 or so on average,we've done 2.7 inthe first half. That's implying about GBP2 billion in the second half. So, it'sessentially a similar run rate but more capital expenditure in the second halfparticularly on India is really sort of how the profiling on the cash sideworks.

Vittorio, did you want to add something?

I can get Christian's point on data. I mean data; weperceive it as a great opportunity. If you take just some basic facts, Vodafonetoday we have 1.5 million active e-mail customers, which is a very goodpromising number, but still very small. Data cards and PC based access to datagoing up a lot but still the number is in the sub 2 million thing. In total outof 106 million customers we have in a way and another more or less 20 millionpeople who are active on data, but not a regular tariff. So, the potential wereally feel is there. And now that the speed of the networks clearly have improvedand on the other hand devices are becoming, are very user friendly, alsoconsumer data we perceive is going to be a reality, and here you have tobelieve that the whole society will go into more kind of personalcommunication, e-mail, maps, music listings, which by the way is our dailyexperience. So, that we perceive as a kind of great potential, of course, wehave then as operators to price wisely and to make the services very easy andvery accessible. But that's a great potential that we have to really exploitand compare it to Verizon Wireless. We do a lot of comparison and a lot of kindof sharing best practice and experience. And again the experience is that people will move to biggerkind of tariffs and packets including mobile communication on a data basis,which we think is growing in Europe.

Thank you.

Terry.

Thanks. Terry Sinclair from Citi. The German contract churnis up. Sacks per customer are down. Is there a chance that sacks per customerwill rise in the second half? And secondly, I have seen the guidance does notinclude anything for Spectrum in India.I know we'll talk about this on December 10th. But can you help us think abouthow -- when we should expect Spectrum payments? And finally, can I just askwhether you're able to give any help to us on quantifying the unit -- price perunit reduction in CapEx. You've clearly had -- you're spending more in terms ofstaff but you're getting a better price for it. What's the efficiency gainthere?

Andy, if you take the spectrum guidance question, Vittorio doyou want to take the German question and I'll maybe ask Steve Pusey who's ourChief Technology Officer here to actually comment on what is happening to priceson a unit basis.

Yes, on Germanywhat I can say is that Germanyis and has been a challenging market from the price point of view. At somepoint last year we have taken a decision to be more competitive from a pricepoint of view. And we are now in a way closing the gap, the negative gap interms of revenue growth with our main competitor. We still have much I wouldsay, bigger profitability compared to the main competitor, which for us is ifyou want the cushion that we can reinvest into being more aggressive, which iswhat we are doing in these days. We lead in the data space. Clearly we have been conqueringthat space earlier than our competitors both in the kind of connectivity spaceand in the entertainment, the consumer space. So we think we're doing a prettygood job at defending our share. We are focusing more on higher value customersrather than on lower value customers, which is what you would expect. Butprobably it's going to be for another couple of quarters a challengingenvironment. Now the good thing about Germany is that if you have comparedGermany with the other European markets, Germany is still the market, which hasthe lowest usage in Europe or one of the lowest usage in Europe, which againindicates that every time that we move the price, there is a great potential tobasically catch back in terms of volume. So overall we don't think that thesituation is really as negative as you just described it. But there is stillsome more work to do.

Terry, on the Spectrum side, there are specifically twoparts to this, one is policy and maybe actually Paul can comment just a bitabout what is actually happening out there. This is not specific to Indiabut generally because Spectrum is lumpy and very difficult to predict whenprice changes do occur. We have typically guided and I think it is footnoted inthe press release that we guide exclusive of changes in spectrum and licensecosts on that front. So to the heart of your question, you're absolutely right.We have continued to guide on the basis of the existing regime continuingthrough the balance of this financial year. I don't know, Paul, whether you want to just sort of commenton where that situation is.

Yes, I think the kindest description that I can give of the Spectrumsituation in Indiaat the moment is that it's a bit of a mess. There's been a couple ofpronouncements from the Department of Telecommunications recently. Number one,allowing CDMA operators to obtain GSM Spectrum under the same licenses as theyhad before, the second one is a review of the Spectrum allocation criteria,which is actually done on a per subscriber basis, which is actually introducingthe potential for an up to 800% increase in subscribers before retrieving thenext [chance] of Spectrum. And the majority of the GSM operators do not believe thatthese proposals are neither technically acceptable nor indeed practical interms of their implementation and therefore, have through the industryassociation filed a petition challenging the Ministry's rulings. The issue of Spectrumfees is therefore a follow on and is equally unfair and so we're notanticipating any incremental fees for Spectrum in the near-term, certainlyuntil the fundamentals of allocation become clearer. And indeed, yesterday there were some further announcementson 3G, which are equally unclear in terms of scope and timing. So this issomething, which is clearly going to unfold. We hope that by the time we havethe India Day in December that we have greater clarity on these particularissues. There does seem to be ahead of steam in Indiato get them clarified and give us a certainty in terms of investment outlook.But right now it's a mess.

Well I think the policies will be clarified in the next 30,60 days and I think we're just going to have to kind of walk through the pressreleases that we keep getting from Indiabut more clarity in 30, 60 days. Steve?

Hello, good morning, Steve Pusey. GermanyI'll give you an answer in two areas here. One is if you look on depending thework we're doing in both markets and the price movements in both markets, thetechnology itself is reducing as we exert our volume ability to procure acrossall markets and the scale of India running [assist in] with reverse synergiesthat we can bring to bear with the vendors. But secondly and as importantly as the technologies areevolving quite rapidly and they're offering us an efficiency as we deploy inthe marketplace, it's about service the customers and service the growthparticularly in data that you'll see. And so, there are two measures looking tosupport the growth of our business in all those areas, both net pricing, thepower that we bring being as one large company and the evolution of the technologiesthemselves that are offering better coverage, more customers connected et cetera,et cetera. So two areas there.

Thank you very much.

Nick.

Thanks very much, Nick Delfas from Morgan Stanley. I havetwo questions. The first is on capacity utilization, page 15 of yourpresentation. You say 50% to 60% utilization in busy areas at busy times. Ijust want to clarify, is that the busiest area or is that multiple areas? Itsounds like within a year of data growth that could lead to some congestion. Ijust wanted to get your perspective on capacity utilization and whether youneed to buy any more Spectrum or do something to increase capacity in thoseareas? Secondly, just to Arun's point on trends, obviously Q2 overQ1 maybe there was a slight incremental roaming drag in Q2, although I thinkyou have changed most of your prices in Q1 to comply with the regulations. Butmany of the markets Germany,Italy, Spainand even some of the EMAPA ones, Romania,Egypt, showed aslowdown Q2 on Q1. I wonder if you could just talk about why that was, on anunderlying basis? Thanks very much.

Okay. Let me take the first part of the question and maybeAndy and Vittorio you can reflect on the second one here. So, first off on the 50% usage in our busy areas, those areliterally cell sites or a group of cell sites that are in very high usageareas. The way to kind of solve for the capacity problem there is you canintroduce another carrier. So it's not that we are Spectrum constrained but wemight have to put a little bit of capital on top of those particular sites tomake sure that we're providing good services to our customers. In general, likeI said, we're 20%, 25%, data usage is growing very rapidly and frankly we aregoing to have to augment our networks in the hot spots but not broadly across,which is what costs a lot of money. Andy?

Let me just pick up on this, the growth rates from the firstquarter and the second quarter, the revenue recognition changed from maybe ayear ago, so one has to normalize for that. The roaming price changes havehappened slightly differently in some markets in terms of their exact timing sosome did, as you say, happen very early in the year. There was one or two ofthem that happened sort of late summer. So we'll see some of that comingthrough. But to be honest, I think the actual underlying change in the growthrate between quarters is very, very small. I mean it will really amount to pointsomething of percent. So from my perspective and Vittorio I'm sure will commentthat we are pretty constant on the growth when you strip it back. I don't thinkit's a big change there .

Nothing more to add.

Okay. Robert. Robert Grindle - Dresdner Yes, hi. It's Robert Grindle from Dresdner here. Justactually on the capacity utilization thing again, I'm afraid. Is that 20% to25% before the upgrade to 7.2 megabits HSDPA? And is it possible to knowroughly, on average how many carriers you have activated per base station? Isit still broadly one across the footprint? And then in Italythe agreement you've done with TIM, the expansion of the scope of thatagreement. Is it possible to give a broad idea as to how much extra that mightbe worth? Thanks very much.

Okay, Robert let me, so first of the capacity utilizationnumbers here they are mostly on HSDPA 3.6 because 7.2 is just beginning tolaunch. And we've given you numbers in the last six months so it's before the7.2. Second, in most parts of our network we have deployed only one carrier.Selectively, we'll deploy a second carrier when a need for a second carrierarises. And on the TIM extension, I'm sure Vittorio can add a lot to this. ButI'm very pleased that we're extending this and we're frankly expanding thescope. So, we can do much more than what we've done in the first time around.

Yes, I think it's another very positive type of agreementthat we have reached. The agreement, first of all is very long, of course intime, so it's going to be seven years and it's going to take a lot of time tofully deploy. But we are thinking of sharing thousands and thousands of sites, kindof a big number. Now the savings will come over time because of course, youhave to decommission existing towers and basically replace and put theequipment in the new ones. But here you have probably a very good effect alsoin the rentals, which is in Italya particularly very high cost, much higher than everywhere else because of howthe country has been. Power maintenance, I mean everything, which makes actuallyincreasing our capacity more difficult from an operational point of view notfrom a Spectrum point of view, but from an operational point of view will becomemuch easier. And we think this is not only cost saving but it’s also veryfuture proof in terms of all these improvements that we have to make. So it's avery positive development.

Laura.

Thanks and good morning. It's Laura Janssens from UBS. Firstof all, I wondered if you could comment on the strength of the EBITDA withinthe common functions line in the P&L. And should we interpret this as abetter-cost cutting. And is it fair to assume that most of that is attributableto Europe? And secondly, now data is becoming a moresignificant part of revenue, I wonder if you could comment on whether there'sreason to assume that the margins are very different on the data part ofrevenue compared to the rest of the business? Thanks.

Andy, you want to take that.

Let me just take your first one then. So, on the commonfunctions the comparison year-on-year if you got into that level of detail sofar, there is an increase and sort of a profit contribution from there. Andsome of this is because of reorganization charges we took in the previousperiod. And some of it is because as we're moving more to shared types ofactivities. We are evolving the recharge model for the shared serviceactivities. So, it's the two of those together, which have caused that changethere. Sorry, your second question Laura was?

About the margins on data?

The margins on data vary quite considerably. From messaging,which is obviously very high to a number of the products where we've got sortof built in components and we've got different ranges of profit share. But Iwould say overall the margins are probably a little bit lower than the companyaverage, but not too much different from the company average.

The fastest growing part of data is connectivity andconnectivity has a very good margin. Andrew.

Hi, it's Andrew Beale from Arete. Just a couple ofquestions, one on advertising, and the other on convergence I guess. Onadvertising you've got a very bullish statement -- paragraph in the statementtalking about the prospects for that. I'm just wondering if there's any sort ofnear-term evidence, which supports your great optimism there? And secondly whatthe model is long-term how it's mixed between TV, clicks, banner advertisingand so on? Secondly, on convergence, I think that a few of yourcompetitors are abandoning thoughts of selling fixed and mobile together,whereas you've obviously bought Tele2 Italy and Spain. Given that you've paid aconsolidation multiple for those assets, I'm just wondering how you thinkyou're going to make a return on capital after those acquisitions? Thank you.

Okay, thank you Andrew. So first off, on advertising it'svery early days. The fact that a number of other players such as Google, etceteraare interested in coming to our particular industry is because they think ofmobile advertising as the next place where advertising, digital advertising isgoing to go. Our own view is that we are very well positioned as operators withgood CRM, with billing, with information to actually help monetize all of this.We're doing a number of trials in our markets. I think the most advanced trials that we have are here inthe UK, wherewe're doing it with Yahoo, where we're trying different models, banneradvertising, content, push. And I'd say it is early days for us to say we'velanded on a particular business model in terms of saying this class ofcustomers like this kind of advertising and this is the monetization in termsof CPM. It's still early. The numbers that we've got are still down in the tensof millions of pounds. So, it's not a big number in terms of revenue. But weremain hopeful in the medium-term that this will grow into a good-sized streamof revenue for our business. On your second question around convergence, so first of allI don't think you've heard us talk a lot about triple play and quadruple play.We are in the business of satisfying customers' needs. We believe that mobilityis a strong business. We believe broadband is a strong business. We believe theInternet is a strong business. And the assets that we've got and that we arecollecting are assets that will help us meet either the mobility needs or thebroadband needs or the Internet needs of our customers. So we are perfectly satisfied with what we're doing, buyingin some cases, doing ULL in other cases, doing resell in other cases, to makesure we can satisfy our customers' needs on a country by country by countrybasis.

So just coming back on that point, if you've paid aconsolidation multiple for these assets do you then need to buy other assets tomake the math work in those markets? Or do you think you can make a return onthat existing business as it stands just doing broadband?

Yes, I think the businesses that we're buying are businessesthat we will take and frankly grow. Typically we're buying a 3%, 4%, 5%, 6%market share position and obviously, our mobile market share is in the 30%,35%. And we will grow the broadband businesses that we have to a number higherthan where we have today. Vittorio, you want to add?

No,I can just, I'm not sure what the consolidation multipleis. But basically what we are seeing and I can take Germany,which is a case where we have actually already today presence in both segments.We see that we have at least two strengths, one is distribution power. In Germanywe are selling broadband, which is really given to us by Arcor so it's an Arcorin bred type of thing. And we see that the power of distribution under theVodafone brand is getting traction and secondly it's created the brand. Becauseyou know in high value customers in SOHOs, in small and medium businesses, wehave typically in a position of strength. That per se is what we really want to do. We want to servethose customers with their needs. And again if then one day there is a triple,quadruple play, quintuple whatever is going to be in Spain in these days Orangeis trying again to play this game, fine, we will be in a position to respond.But our main goal is to serve the high value customers with their needs and doit out of our major strength, which are distribution and brand.

Thank you.

We'll take Andrew here.

Thanks. It's Andrew O'Neill from Bernstein, a couple ofquestions if I could. Firstly, it seems looking at the results from theindustry broadly in Western Europe that in the Septemberquarter there was a certain level of competitive reduction. Do you have anysense for why you think that things got a little bit more benign this quartercompetitively? I know you've already said that you don't want to predict whatwill happen next. But what is Vodafone's strategy going forward from here,given some of the reaction of your competitors? And then secondly, thinking through a couple of things, oneis looking at the margin result in Western Europe thishalf year, it looks like half-on-half given the seasonality probably marginsare about flat. You were describing a picture for revenue where the regulatorydrag next year would be diminished. So, are we moving closer to the point wherewe can see EBITDA grow again in the European division?

Okay. So, first of all I would not describe the competitiveenvironment in Europe as benign. I actually think itcontinues to stay competitive. And frankly, whether it's Germanyor Italy or Spainor the UK orany of our other units, I think we're all experiencing competitive markets. Andfrankly we expect these competitive markets to continue in the next six, twelvemonths. In terms of your question around EBITDA actually rising, Idon't see a scenario, at least in the kind of the near-term where we're goingto see EBITDA margins climbing. We think that our prices will continue todecline for the next couple of years. And frankly, we will have lower margins.We're working very hard on the cost side to make sure that the margins don't deteriorateat a fast rate as you saw this time around 1.3, 1.4 percentage points. We’llcontinue to do that, we’ve got programs in place at the present time. We’llhave new programs, constant cost structure reduction to make sure that we canhave good free cash flow and we can have good margin production. So, that’s the scenario that I see for Europehere. Vittorio, do you want to add to that?

Yeah, I mean, I just don't know whether we can define. Imean, if I say look at the price decline quarter-over-quarter, minus 16%, minus21%, minus 20%, minus 18%. I mean, yes, occasionally in one quarter maybe wecan get, because in one country somebody has gone on holiday or something likethat. But eventually the next quarter comes back. The positive thing from mypoint of view is that most of us, most of the operators are really trying toget elasticity out of this price reductions. This is the game that we are alltrying to play. And I think you’re seeing some volume increases, which againthis is not won, yet. But we’re seeing some volume being brought back to us interms of more users and more things. But in Spain,UK, there’salways somebody who basically does in a aggressive mode, if it’s not just acoincidence.

Okay, John?

John Clarke, Brewin Dolphin. Two questions, if I may.Firstly, you talked quite a bit about regulation. What are the prospects and areasonable degree, of regular stability do you think, I mean, my perception isthat search in the past 18 months regulation from the EU has been somewhat onthe captious side, is there something that the industry didn’t have to dealwith before? Can you give us some idea on where do you see stability inEuropean regulation going forward? Secondly, could you just briefly also comeout with one or two areas, where you definitely see your servicesdifferentiating from the growing competition?

So, first on regulatory stability, it's interesting you askedthe question because Commissioner Redding actually this afternoon is going tobe making a presentation about the state of regulation and what's going tohappen in the future. It's very hard for me to kind of pre-judge what she mightsay. But what she's largely expected to say is that there are parts of themarket reviews that will be dropped, which is a good news for us, which meansthat we will be regulated on a more limited basis, on a going forward basis. The second thing is, that she will probably talk aboutcreating a super regulator for Europe. And I thinkthat's going to take a couple of years to kind of thrash out because you've gotlocal regulators and national regulators. And what happens at a national leveland what happens at a European level will be a subject of intense debate. And Ithink that debate needs to be had and sorted. But that will take a couple ofyears. And I think she has said in the past that she will be watching ourindustry closely in terms of data and SMS prices. And frankly our data and SMSprices are falling and we continue to make sure that customers have the bestrates as they travel around Europe. So those are the kinds of things that are likely to comeout. The net of all of this is what I said at the beginning to Christian'squestion around do I expect slightly less revenue pressure from regulation nextyear. The short answer to that is, yes. Now, on your second question aboutnon-differentiated products and services, we try very hard to staydifferentiated. Whether, it's in the provision of our 3G HSDPA data services.Whether, it's the plug-and-go USB modems. Whether, it's the proprietaryhandsets that we have. But obviously, there is a vast majority of handsets that arenon-differentiated. You could always find a price plan with a competitor thatlooks quite like the price plan that we have. So our industry is all aboutconstantly trying to find differentiated elements in our strategy, and tryingto promote those to our customers.

But are you known, can I come back on that? Are you knownfor any single particular application? I mean, not necessarily talking about akiller app here, but I'm perhaps talking about a particular servicedifferentiation?

I wish we had a killer app, which unfortunately does notseem to exist. I would say that Vodafone is recognized from our own marketresearch basically for two areas. One is kind of the ownership and being alwaysahead in the roaming space. And this goes back to the passport tariffs and theseamless working services, the data to the European data tariff and more tocome in that space, which is natural because of our footprint. And second, isthe continuous effort to be leaders, which so far, I think, we are succeedingwith, in the data, in the mobile data space. And going back to Christian'spoint, before we launched mobile Internet, which is again an attempt to putoccasional data users into regular tariffs. We have 0.5 million of thosesubscribers today. In the UKin these days we are launching this very innovative music service. It's a MusicBox, which is a rental type of music service. We are introducing the [7.2A]data card. I would say, if it's not a killer application, but there are clearlytwo areas that we are trying to warn. And one is mobile data, the other one beingroaming. Then, of course it goes back also to good very basic performance. Soin Germany, wehave the best performing network in terms of speed and in terms of data, whichis certified by external people. It's just basic good running. In Italywe have the best customer service in the country. It’s just basically goodrunning of the company. The characteristics that I would really focus on arethe roaming and the mobile data space.

Very good. HSBC.

Hi. It's Stephen Howard here with HSBC. Two questions,please. Firstly, can we have a little bit more detail your thoughts about theOpen Handset Alliance and Google's plans there? To what extent do you fear youmight be disintermediated by that initiative? And, secondly, on the data sideof things, would you agree that it's probably easier to get consumers to startusing data services more aggressively if they are on contracts? I mean,basically it's easier to pitch them the flat rate plan. You can subsidize ahigher end device. And that being the case, what kind of ratio of contract topre-pay would you like to see in the European developed markets in, say, threeyears time? Thanks.

Okay. So first let's talk about the Open Handset Alliance.Let's go back a couple of years when we said that there were 30 operatingsystems in the mobile world. And frankly we'd like to see the 30 operatingsystems converged to a number more like, three, four or five. Symbian is anoperating system here in the mobile space, Microsoft is an operating systemhere. We've always talked about somebody in the industry coming up with a Linuxoperating system. And of course the Google system is a Linux based system.There'll be a couple of others as well. So, we in general welcome the fact that the total number ofoperating systems in the mobile industry is reducing from 30 to some numberhopefully closer to five. This is important because as people developapplications they can't develop applications for 30 operating systems. Theyobviously can develop applications for one, two, three, four, five. So it is agood thing that's going on with Google and the Open Handset Alliance. I don't see this as kind of disintermediation, as much as,like I said, this is an operating system. We can write that operating system,anytime we would like to write that operating system. And what we’ll have tosee is what set of developers come around this operating system and what kindsof new products and services will be sold. I made this remark in my preparedremarks where I said these innovations are good for our industry, becausefundamentally they will increase the kinds of products and services ourcustomers will buy. We’re going to the beneficiary at the data connectivitylevel, because we have the broadband data [pie] and everybody is going to bewriting our broadband data pie. But equally in end services, whether it’s an OV service orVodafone life service or iPhone service or whatever services get developed onGoogle, frankly we’re going to have to compete with that. And there a biggerpie is being constructed and we will probably have a smaller share of a biggerpie in the services layer. But we'll certainly have very good market share atthe data connectivity level. Simon -- I'm sorry, there was a second part to yourquestion. I apologize. Do you want to take that?

Yeah. The prepaid/counter piece, I think you have a point,but I'm afraid, it’s slightly different. In Europe, Vodafonetoday has about two-thirds, lets say customers prepaid and these goes from a lowin Spain to avery high in Italy.The point is not strictly prepaid versus counter but these flat commitmentsversus if you want pay by the meter type of thing. With a flat commitment andwith a flat paying then the worry with using data services goes away and thenpeople do it more, which is why we have introduced this mobile Internet tariff,which goes for GBP7.50 and EUR9.90 in the rest of Europe -- EUR9.90 of coursein the rest of Europe. Which is why we're introducing e-mail entry tariffs as lowas EUR5.00 per month for very basic usage, which can be done also acrossprepaid, it's a little bit technically more complex, but can be done. So theissue for us is really more to kind of educate the customers to get this extracommitment and then be able to build additional ARPU on the services that theyget. So, from the basic e-mail and then move them to more kind of full e-mailand then full e-mail with attachments and then whatever you want. It’s notstrictly just contract, it's kind of more being able to give some kind of flat,no worry type of tariff. And that we do across the board prepaid market and innon-prepaid markets the same way.

Very good. [Simon]?

Thanks, Arun. I've got a couple of device like questions.One of which follows on. You're obviously buying handsets at $20.00 each forsome of the emerging markets. Word on the street is that, Nokia N95 phone sellsat about $750.00, which sounds like quite a big gap. Does the Android concept providea means to chop a piece of cost out to the cost of handset development and perhandset costs? Is that a way of bringing higher functionality phones into asort of lower price point in the market? And second question is relating todevices again but the flipside slightly which is USB modems. You've got acompetitor in the UKthat's selling a monthly package of gigabyte for USB modem for free on a GBP10.00per month tariff plan. Does that sound like the sort of tariff plan that wouldget the market, you know, using up the 80% of your 3G capacity that isn'tutilized at the moment? And finally I wondered if you could give us a little bitmore color on market dynamics in Turkeywhere we saw a little bit of a slip in the margin this half? Thanks.

Okay. Well maybe I'll take the first one. You can take thesecond one. You can take the third one. So the development of an Android operating system will, inits final form, reduce the cost of high-end phones, both because the IPR feesthat are paid are going to be minimal. I don't think they're going to be zero,but they're going to minimal in an Android open system, Linux system. And Iwill say that it there will be more folks who will have access to these openplatforms. And I think they will reduce, frankly, the price of high-end phones.It's going to be good for the consumer in that regard. You want to talk about the GBP10 unlimited?

On USB modems, I would say that in general in Europethere is some kind of, I would call it, convergence on the EUR30.00 kind ofband or GBP25.00 in that range. That seems very consistent with what'shappening also in the fixed broadband space. And we think that going below thator above in terms of users puts a big challenge on the network quite frankly.So we are not sure that it is a very, very wise pricing what we are saying. Butof course not only in the UKthere's the same operator does very aggressive offer in Italyas well. And we don't think that you can deliver a very good experience in thatspace. Now what we are kind of seeing from our customers is whatthey really like is the increased speed of HSDPA. Now you have to trade-offgood customer experience with numbers, we think that customers are happy to paya price, which is inline with fixed broadband for getting a good experience.Getting a lot of peer-to-peer traffic, getting a lot of bandwidth hungry kidsbecause this is what we're talking about, take away the capacity from yourbusiness customers, I'm not sure it's a very wise long-term strategy.

So, we don't actually see the GBP10 unlimited as thelong-term right price in the marketplace. You can do that for short periods oftime. You can do that for certain segments of customers, but that's not thelong-term price. Turkey, Paul?

Yes, Arun. And, Simon a year in Turkeywe had a highly congested network with a limited footprint. We had customerservice that candidly was impossible for our customers to get through to. Wewere living with Telcin brand and therefore not investing in it because we knewwe were going to re-brand. We had no resilience in our IT infrastructure and wewere not really competitive in the channels. A year on, we've increased thenetwork, we've dramatically improved customer service. We've now re-branded asVodafone and are investing in our brand at a higher rate. And our share ofgrowth positions has risen dramatically. All of that has had the short-term effect of depressingmargins. But we did always say to you that the Turkeybusiness was about a medium-term turnaround that was going to requiresignificant investment. So, in terms of the glide path of where we intended toget to, we are on-track. And in the remainder of the year you will see margins,which are in the twenties of percent. So, just as you were pleasantly surprisedat the margin this time last year, why has it gone so high. It's merely areflection of the investment that we've made.

Justin? I'm being signaled here that we need to stop. But wewill take one more question from Justin. After that we will stop. Justin.

Thanks. Just a couple, if possible. Just firstly, to try andunderstand the difference in the messaging trends between the UKand Germany;obviously the bulk of your data revenue is still SMS. The UKdid, I think, it's double-digit growth in revenue. Germanywas high single digit decline. I just wondered, if you could provide a bit morecolor as to compare and contrast those two trends? And which of those twotrends do you think is most close to where you see messaging revenue going overthe next couple of years, growth will decline? And secondly, you've now managed to sustain 40% growth inmessaging -- sorry, non-messaging or data revenue for this last year on agrowing base. I just wondered, if you would care to give us a feel for how yousaw that percentage rate evolve over the next two years? Do you think you cansustain that sort of growth on a growing base going forward? Certainly our ownwork would suggest you might be able to, in which case are we all essentiallyunder-forecasting your European business? You have raised your revenue guidance for Europefor the first time in -- for about eight years. Why not does not this feature intofuture years as well? And on a separate thing on India,you say in the statement that you've had a boost from these new low pay, lowcost handsets. Does that imply that we're now actually running at more than$1.7 million net adds per month in India?

Okay. Vittorio, do you want to take the first question, I'lltake the second and third?

Yes. I would say in Germanyand UKmessaging probably is the two extremes. And here there's several thingshappening. On one-hand, prices of messaging is coming down, if messagingtherefore can be used more. On the other hand, the more you give bundles, themore you give big buckets of minutes, there is, inevitably some kind ofcannibalization. Now where is the future? Is the future Germany,is the future UK?My guess is the future is somewhere in between. And we're not 100% happy withthe results in Germany.But we understand that there is a consequence of introducing those big bundles. And there's a consequence of giving the customers suddenlythe choice to make. And of course which are already included in what they pay,inevitably we had to get some cannibalization as a factor of voice versus -- ondata. On the long-term, I'm not sure who is forecasting what. As I said before,we are confident that data growth is there. Spainis growing a lot. However, if you look at the percentage of non-messaging dataover the total, Spainis not one of the highest. So there is potential to grow. And again, I think everything will depend on how well we wouldintegrate very nice data devices with -- and very easy to use data devices,with tariffs that can take the customers into the experience and then upgradethe experience from whatever they get as a basic service into deeper packages. Butas I said before, we are confident that this is going to be an important thing.And we want to ride it.

Yes. So just specifically on your question about dataforecasts, we obviously are not forecasting any particular number. What ispleasing is that it doesn't matter if you're in the UKor you're in Germanyor you're in Spainor Italy or Netherlands,we're finding very strong 40ish percent data revenues, data revenues in Portugalare at 75%. The data revenues in the United States are 70%. So we're finding good,strong data. We just need to package a number of things together to continue tomake sure that this trend moves. And we are confident. We are not trying topredict a number but we are confident that we're going to see good growth here. And on India,very short simple answer is no. We're not getting up to the 7 million mark onthe back of ultra low cost handsets. We're expanding the distribution. We'reexpanding the marketplace. We're happy with the 1.5, 1.6 that we get and we'llcontinue to do so. Thank you all very much for coming. May I just remind youthat on December 10th we have an Investor Day where we'll be featuring Indiaand a couple of other things. So hope to see you then. In the meantime, have agood day. Good-bye. Thank you for coming again.