Good morning and welcome and thank you for joining us for our results call. Before we take your questions, I thought I would just cover four key points related to our results. Firstly, our financial performance in the year was good and our results were in line with both the expectations for the year and the medium-term financial ambition we set out earlier in this year. We grew revenues both in Europe and Africa. We grew adjusted EBITDA by 5%. We grew adjusted free cash flow to €5.4 billion and delivered a real inflection point in returns with 170 basis points increase in return on capital to 7.2%, well on the trajectory for returns to be above our weighted cost of capital. Second, this good performance is a direct result of all the execution we have been doing on our organic strategy. And alongside that long-term strategy, we have very clear operational priorities, which obviously include Germany. Third, we are not immune to the macroeconomic challenges in Europe and Africa, but we are very well structured to deal with it. We covered a number of those actions in the presentation that give us confidence in setting our FY ‘23 guidance of €15 billion to €15.5 billion adjusted EBITDA and maintaining our adjusted free cash flow at around €5.3 billion. And fourth, we remain fully committed to improving returns for shareholders through both a sustainable organic growth strategy, and at the same time, targeted actions to strengthen and simplify our portfolio. We clearly have a very full agenda. And it’s a tough macroeconomic environment that we face, but both the board and management feel very sure to drive forward on the plans that we have both organically and for our portfolio. And on that, let me hand over to questions.

Thank you very much. Our first question today comes from Maurice Patrick from Barclays. Maurice, please go ahead.

Yes, hi, guys. You hear me okay. Thanks for the question. Maybe if you could start off with the elephant in the room, which is the progress on in-market M&A or rather the lack of progress. It’s been 6 months since you have laid out your priorities for mobile level consolidation. We haven’t seen the visible progress yet. I mean, the slides you do talk about German fiber and Spain options, but you seem to miss out on Spanish M&A with Orange and Masmovil turning down Iliad. Is mobile M&A still the same focus it was in November? Maybe you can update us on your latest thinking on that? And then in the prepared remarks, you did talk about a number of live opportunities, where generally are we in terms of that progress? Thank you.

Yes. Thanks for the question. I would say, first of all, and I want to be in no doubt at all that the priorities we set out in November on the portfolio are absolutely at the forefront of everything that we are focused and are executing on, both the Board and the management team. I think maybe it’s important just to reflect on the goals that we are trying to achieve with these moves. The first one is that we want to have strong assets in healthy markets that are producing predictable free cash flow growth for us going forward. Secondly, we want to simplify our portfolio down to assets that are really leveraging our regional scale. Third, we want to make sure that we move Vantage Towers into a co-control situation. Why co-control, we want to take it off balance sheet, have the right financial and capital structure moving forward for Vantage Towers to make the most of the growth opportunities in what is still a consolidating sector and we want to be part of shaping that consolidation. Obviously, in the process, we would monetize. And that goes to the fourth point, which is we want to take proceeds from all of the actions that we do to strengthen our balance sheet going forward to ensure that we have more financial flexibility. I think we have done a good job on deleveraging the group. We were at 3x. We are now at 2.7x. We are keen to bring it down to the lower end of the range at 2.5x. It’s one of the priorities we laid out. To your point of progress in market consolidation, we highlighted the markets that we were focused on. We remain focused on all of those markets. We are in active conversations. And we have many conversations taking place as we speak. I’d say when it comes to towers, we are very much focused on that co-control model with both industrial and financial players and there is very strong interest and engagement from many players. Clearly, if we were to ever get to the point where we were finding co-control was going to be an issue, of course, we can always monetize separately. And so therefore we can, if you like, sequence that if we want to. And then the final thing is, obviously, Egypt. We are going through local clearance in Egypt. We look to complete that transaction by the summer. I mean, clearly, these are sensitive transactions. All I can say at this point is we are actively engaged in many detailed conversations. I can’t share blow-by-blow what is happening for obvious reasons, but for sure, the Board and management are very much focused on it.

Thank you.

Thank you very much, Maurice. Our next question today comes from Akhil Dattani from JPMorgan. Akhil, please go ahead.

Yes, hi, good morning, Nick and Margherita. I had a question on Germany, if I could please, just to better understand your turnaround plans in the context, obviously, a slightly weak quarter this period. I wonder firstly, you could just comment on what you are doing at the moment in Germany, how far you think you are to addressing the issues in that market? And I guess as we are trying to understand the implications, could you maybe help us understand this Q4 the trough on KPIs, so will we recover from here? And then how do we think about financially? I guess mechanically, the customer losses will impact financials in the next few quarters. But maybe if you can comment on how and when you feel we will have visibility around the trough there? And maybe just as a bigger picture to this. Obviously, there has been CEO change in Germany. Maybe if you could just comment on the choice of your new CEO as well? Thanks.

Okay. Akhil, really important question on a multipart basis. So maybe, Margherita, you can cover the second part regarding the financial outlook. Let me first of all address the sort of operational challenges and the progress we are making. First of all, I would say, before I start, that the financial performance of Germany has been good over the course of the year. I mean, very good EBITDA progress and growth, and that’s been on a multiyear basis. So, I think that there has been good progress financially. I did call out in November that, however, commercial performance was not where we wanted it to be. And this is due to a number of factors. And if I just invest a little bit of time breaking down those factors. So first of all, during the pandemic, we really called out two things that we observed that caused us commercial issues. The first was, obviously, we had a huge volume increase in the pandemic on the network that added a challenge in terms of capacity in some of the clusters. I would say secondly, our footfall in retail, which is a really important channel for us, was obviously significantly down throughout the pandemic and has been slow to recover. Germany is running around, I’d say, 70% of pre-pandemic levels overall. And there has been more of a shift, I would say, to digital, where I think we could strengthen more going forward. And on top of those challenges, the third bit, which was in Q3 that we had the new Telecom Law and the new regulation. So, customers were no longer automatically being renewed for 12 months. We had to recontract with them. We put through these changes into an IT platform with a new set of processes for customer journeys…

On the financial side, different situation from the commercial side. As Nick has just said, commercially, we will see gradual improvement from there. And it’s result of the action as well as the mechanical effect of the pull-forward of terms generated by the new Telco Law, which will wind down in the course of the next few quarters. On the financial side, you have seen the consistency of our growth in Germany so far. We still need to see the KPIs impact going through the financials. And therefore, what you will see in the near term is a further slowdown of the fixed broadband revenue growth. It has slowed down in Q4 and will slow down further going forward. The point that is worth making in terms of overall financial performance of Germany is that this is one of our growth drivers, but the three orders growth drivers that we have in Germany are performing very well. You have seen our mobile service revenue growth. We expect this to continue well. We have seen Vodafone business accelerating. We are growing more than 3% in business. Again, this trend will continue. And then finally, if I move from service revenue to cost, you have seen us calling the achievement of the cost and CapEx synergy of the Liberty acquisition over 2 years in advance of the original targets. And we now have further opportunities that will materialize in the coming years to go after. So three out of four working well.

Yes. And Akhil, just to your final point, which was on choice of CEO. I am delighted to have Philipp join us. Philipp is a strong inspiring leader. He has strong knowledge both in telco and technology, which I think is increasingly important going forward. He has that commercial agility, so bringing together sales, marketing, brand, products, propositions together for the customer in a great experience. I mean Microsoft is known for that. And I think that we will benefit from that. And he also knows how to leverage group efficiencies and scale advantages. So I think that he will have a big impact. We have also strengthened the wider team, leadership team in Germany. So, it isn’t a case of waiting for Philipp to come on board. We are working with Hannes on a very smooth transition. We strengthened the team. We clearly understand the issues. We have got clear plans and we are in execution and Philipp will just take that forward.

Great. Thank you.

Thank you very much. Our next question today comes from Andrew Lee from Goldman Sachs. Andrew, please go ahead.

Yes, thank you. Good morning. I just wanted to slightly follow-up on Akhil’s question and just ask around what your guidance for EBITDA implies for service revenue growth across the rest of the group and particularly Europe? And then just as a side question to that, I wonder if you could talk about what you are factoring in and what your ambitions are as to your ability to mitigate cost inflation with price rises? Thank you.

Sure. On the guidance, let me try and maybe first paint the picture of what is our – I would describe it as mid-case expectation for service revenue growth in Europe and broader EBITDA performance. I’d say, first, as Nick was mentioning, we are pleased with our consistent service revenue growth so far in FY ‘22. As we look into FY ‘23, there is a degree of macro uncertainty for the industry overall. For us, specifically, I think the factors you need to think about in terms of evolution of our service revenue growth are three. Number one, what we have just discussed with Akhil, we will see service revenue growth slowing down in Germany in the near-term as a result of the weak fixed broadband performance. This will be offset in the UK where you should expect an ongoing acceleration of service revenue growth. What we have seen in the UK is very strong commercial momentum. We have connected over 0.5 million contract customers in consumer in the last year, lowest churn on record and also, of course, from April, we are seeing now the benefits in our revenue growth of the pricing measures around inflation. And then finally, the third point to keep in mind also supportive to growth is the impact the European recovery funds are going to have in Southern Europe. We were explaining a little bit the key elements in the presentation earlier. I would say, particularly in Spain, we are seeing strong success in the context of the digital toolkit investment allocation from the government. You know that they are putting over €3 billion on SME digitization. The first €0.5 billion is being distributed now. And we are really punching above our weight in terms of market share of the connection on this. And…

Yes, nice, thank you. That’s really clear confidence. Just a tiny follow-up. Just when you mentioned at the midpoint, you expect European growth. I know you guys getting 10s of basis points of here or there. So I’m presuming when you say European growth at midpoint, that’s more than 10 or 20 basis points of growth?

Yes. If that’s what you’re looking for, yes. I think what is going to have an impact around this midpoint, if I think about the range overall, is going to be a combination of macro. If you want to build a downside case, you think inflation affecting consumption, can’t rule out further lockdowns for pandemic reasons. At the – on the positive end, I would like to consider pricing. I think all the actions we’re undertaking could have a further push and also the European recovery fund we mentioned earlier. I think the governments are seeing the success, and they could allocate even more funding than they have just done to SME digitization, which would be positive for us.

Thank you.

Thank you. Our next question today comes from James Ratzer from New Street. James, please go ahead.

Can you name okay?

Good morning, James.

Yes. Good morning, Nick, Margherita, if possible, could I come back to Germany again. Would just love if possible to get an update on your thinking around potential FTTH build-out plans? You mentioned some stuff on this in presentation. I think in November, you talked about two-thirds of your homes passed being in housing associations. I think at that stage, you indicated about third might be tested. And it seems from the language now you’ve tightened that up a little bit to that specific larger housing associations interested. So it just seems to get a kind of update on the scope potentially that, that JV might include. And you talk about attractive business case. Does that imply ARPU uplift here? And you talk about potential for our footprint expansion, so how large might that be? And I mean I think if this is smaller in scope now, you’re giving a bigger vote of confidence, i.e., to DOCSIS 4 going forward. So it would be great to get an update on that topic, please? Thank you.

Yes, James. Important topic. Maybe I will let Margherita just touch on sort of business case drivers. But let me just talk about a little bit of the engagement with the housing association. So as we’ve said for the last two earnings releases, we’ve been engaged with the housing associations really around the conversation of the new regulation coming in, in July 24, which is around the elimination of collective TV billing. And in that process, we’ve been sort of expanding on our road map of the cable upgrade plan that we plan to do. But in the process, we also ask housing associations are you interested in fiber to the building as well. And what I would say is very few so far have said I definitely want fiber to the building. I mean we have not had an overwhelmingly, yes, I want fiber. We’ve had many, many more actually say, now you’ve explained the cable upgrade plan that will suffice for us. And there is a logic to that because in the end, we have a strong network. We have an upgrade pass. They like the fact that there is no disturbance to the building or outside of the building for that upgrade path. However, the majority still and we have contacted now, what, 8,000 of our largest housing associations, which represents about 20% of the households covered. Still the majority have yet to make a decision. But what they are doing is they are having a conversation with us. And what’s sort of coming out of that conversation is very much, you are our natural partner. At some point in the future, I may want trade my building. I like your upgrade of your cable. That might be absolutely all I need. But there could be the…

From the financial perspective, clearly, our cable road map is well integrated into our long-range plan organically off balance sheet when we have been looking at what could be the best solution for those housing associations that may want over the longer term to have fiber. We have concluded that there is a business case essentially built on four elements. The first one clearly is increased penetration and responding to those customers. But there is also the opportunity to up-sell towards higher value services. There is an opportunity to go off footprint. Nick was saying, we will base the rollout around anchor housing associations. But we have then catchment areas around those, and this can be on footprint, but also off footprint. So that’s new demand for us. And then finally, there are synergies, as you know, with the mobile network as well. All in all, we have concluded on this four to seven size, but the situation will be refined further as we progress with our discussions.

Thank you. And one very quick follow-up of the four to seven how much of that would be new build versus existing households?

We need to still decide, as you can see, it’s a range. But definitely, there will be a portion of new builds in it.

Great. Thanks so much.

Thank you.

Thank you very much. Our next question today comes from John Karidis from Numis. John, please go ahead.

Thank you. Thanks for taking the question and good morning, to you both. I just wanted to ask a few questions, short ones, about the United Kingdom specifically, please. Firstly, when it comes to fiber infrastructure and competitive infrastructure, do you feel that there is likely to be enough competitive infrastructure out there for you to continue to have reasonably well-priced network access? So for example, are you confident that CityFibre has the funding and the expertise to build several more millions of FTTP homes? Secondly, very quickly, can I just confirm that talk about Vodafone acquiring TalkTalk is just not credible? And then thirdly, if you were to consolidate the mobile market in the United Kingdom, I’d love to know why is it that you trust Ofcom to do the right thing, given that earlier this year, they published a think piece in which they said that in their view, Vodafone UK earned zero return on capital employed since 2017, EE earned 20% and even Three had earned a much higher return on capital than Vodafone UK? Thank you.

Okay, John, let me go through the three components. So first of all, in terms of access to competitive fixed infrastructure, actually, I really feel that we’re in an excellent position. We are growing extremely fast on fixed broadband. We are, if you like, building a base that increasingly is attractive to an infrastructure player to have onboard to drive their returns and economics. We have BT, obviously, is building at speed. It’s a regulated rate. But they are engaging with Ofcom to say, could we offer larger discounts to encourage more people to come on to our network like we have contingent-type models in Europe. And I’m very much supporting that agenda as well. You’ve got Virgin Mobile who said they want to open their network. They are keenly engaged to say, could they get some anchor tenant. So CityFibre is building out as well. So I think we have a number of choices. It’s a very active market. Pricing is getting keener and we’re seen as an attractive banker. I’d say secondly, in terms of TalkTalk, look, I think we made clear what our priorities are. Our priorities are in-market mobile consolidation, and we have a big enough agenda already in other activities. So I think that speaks volumes. And then third, in terms of in-market consolidation, and let’s call Ofcom CMA. I think CMA is clearly an important factor here. I think you have to look back at the U.S. as an example where T-Mobile did the merger, went down out to three players. They increased their investment, and then you saw the other two big players increasing their investment. So at this time when governments are looking for strong, resilient and secure networks, is it better to have three strong networks that are resilient with scaled industrial players? I think, increasingly, governments, politicians, regulators are understanding the benefits of that and the vulnerabilities of fragmentation. And therefore, they want to ensure that the digital infrastructure that underpins the country is going to allow global competitiveness. And therefore, I think the agenda has very much and the narrative has very much moved on. Of course, it needs to be supported by the fact pattern. And therefore, I’m not saying all combinations will be treated the same way, but I think we have an opportunity in the UK.

Sorry. May I follow-up very briefly?

Of course.

Thank you. Given that Ofcom is an evidence-based regulator, and they start the conversation by saying that on our calculations, they say, you Vodafone have earned nothing. Three has earned more than you. And EE has earned 20% return on capital employed. Doesn’t that sort of concern you about how they will approach any deal that you might bring to them over the next few months, hopefully?

John I am not quite understanding your line of argument. Because if we’ve earned nothing in terms of returns and Three is below their weighted cost of capital, therefore, both are in an unsustainable position as subscale players. And therefore, a combination would make a stronger player in the marketplace. So I’m not disputing that EE has got scale and earns a return. That’s a good example of someone that has reached industrial scale in the market. So we’ve always said local scale matters, and then we add regional scale on top. But you can’t make up for subscale local.

Thank you. I will leave it that from now. Thanks very much.

Thank you.

Thank you very much. Our next question today comes from Emmet Kelly from Morgan Stanley. Emmet, please go ahead.

Yes. Good morning, everybody. Hi, Margherita. Hi, Nick. So my question, please, is on the Italian market. If you could maybe just give us a few updated thoughts on what you’re seeing in Italy. Clearly, the competitive backdrop is still pretty intense there and maybe some emerging macro headwinds. But it looks like your business is quite stable at the moment on the mobile side and improving on fixed line. So could you just say a few words on how you see the outlook in Italy for 2023, please? Thank you.

Your home market?

Sure. I need to say we are pleased with our execution in Italy. You mentioned that you have seen in the numbers. We have closed the year in which despite the competitive environment, we have, at the same time, increased service revenue market share and delivered stable EBITDA once you exclude the exceptional impact of the settlement from a legal perspective. So good results achieved by continuing to outperform on both service revenue and EBITDA all the established players in the market. Just focusing on the outlook from here, our growth has the benefit of growing wholesale in the past 12 months. This benefit won’t recur. And of course, the market will remain competitive. But if I think about the puts and takes, we now have the benefit of the European recovery fund. You will hear us use these words many times today. Spain has just allocated €0.5 billion. Italy has allocated €600 million in vouchers for connectivity, so impacting directly the telcos, operators over the next couple of years. And we are performing very well there. Stepping back, I think I would like to call out that in terms of key for our relatively strong performance in Italy, business is a key factor. You know that it’s a third of our service revenue there. And we were gaining market share and performing well even before the European recovery fund, particularly through digital. So, this will accelerate. And then in the very contested consumer environment, we are also competing well with our dual-brand strategy, and we are now expanding into FWA. And then if I move to EBITDA, I can’t give EBITDA loan. You know that Italy is considered one of the most efficient operators in the industry in Europe, and we will continue to work on our efficiency levers, digitization and the like. And that’s what has allowed us to deliver stable EBITDA as well in this context. So, I would say, really good performance in Italy at the moment.

Yes. And maybe just one build on the comment you made in an earlier question regarding sort of pricing and what we are doing with the base within Italy. We are actually doing quite a bold move. So, of course, companies like ours get a lot of legacy built up over time, price plans, etcetera. That adds a lot of complexity to the operation. We have a really strong management team under Aldo. And he really said, look, we really need to try and find a way of radically simplifying down. So, we did a lot of cohort analysis of customers, price plans, products, services, etcetera. And what we are doing is a radical simplification by migrating the whole base onto a narrower set of plans. As we execute that through on top of the IT transformation we are doing, we will have a lot cleaner estate moving forward. And I think that will mean that we will be a lot more agile, a lot simpler business and drive further efficiencies, as Margherita said, on top of what is already a very efficient operation. So, that execution is going according to business plan. We have been working on it for probably the last nine months in terms of the planning and the execution, and we are rolling that through. If that is successful, which we have got confidence we will see that through, I think there is applications throughout many of our markets in Europe where we could deploy that methodology going forward. So, yes, it’s an example of how we learn as a group, how we drive synergies and stay commercially relevant in individual markets.

Perfect. Thanks very much both. If I just ask a quick follow-up on Italy. You did decline the offer that Iliad made for your business there, I guess because of the price that was offered. I am just wondering, are there alternative deals such as a JV where you might see merit that you might consider in the future, because it looks like the market is ripe for repair at some point in the future?

I agree with you. I think there are too many players in that market. Pricing is at an unsustainable level. And you are talking currently in mobile for 1 gig, €0.15 on an average usage. And then you look at Iliad’s convergence, fixed pricing and you don’t make any money on that. So, you stand back from that and say things will have to change. People are going to have to force to collaborate, combine due diligence. And we are very pragmatic and open and have been. And we remain actively engaged with players to find better routes to more sustainable returns in that market.

Super. Thank you very much.

Thank you very much. Our next question today comes from Polo Tang from UBS. Polo, please go ahead.

Hello. Just have one question just about Etisalat. Were you surprised that they took a 9.8% stake? From your conversations with them, what do you think their intentions are for Vodafone?

Well, Polo, I got the call on Saturday from Hatem, and he explained that he had taken the 9.8% position. And in that call, he was at pains to go through the rationale and all the elements of the communication that would be going out. I mean he really wanted to stress the fact that this was a passive investment, supportive of the Board, management strategy in its execution, that all the things we were doing on the portfolio were the things that they believe were the right things to do. Clearly, we know them, they know us as industry players. And therefore, I really think that there is an opportunity to develop a commercial collaboration moving forward. I am sure there is areas in procurement, in R&D, technology that we can do maybe shared service centers. There is opportunities and we will explore those opportunities. And look, we look forward to developing a long-term relationship with them.

Thanks.

Thank you very much. Our next question today comes from Nick Delfas from Redburn. Nick, please go ahead.

Thanks so much. Just two questions on hedging. At what point would you decide whether to hedge for H2, not that I view that choice? And secondly, on Turkey, you had about 300 million of free cash flow in FY ‘22. Are you able freely to convert that to euros or sterling at the moment? And do you anticipate any difficulties in FY ‘23? Thanks very much.

Both for you.

Yes. Energy, we are, at the moment, 75% hedged on FY ‘23. And effectively, we have always had rolling hedges over time. And we found ourselves pre-Ukraine crisis very well covered, I would say, all the way to December, but of course, hedges rolling off after that. Since the Ukraine crisis, we have not changed much in terms of coverage. And you are right, it’s not an easy decision to make on when and how to intervene. We are monitoring that very closely. But I would say the bulk of our efforts now is not going on to the hedging strategy. It’s going on to alternative mitigation options. You may have seen us recently announcing a big PPA in the UK with Centrica on solar. We can get really good condition on long-term stable pricing for renewables. And we are stepping this up all across Europe. And then the second aspect where we are really focused on is the interaction between energy initiatives and the European recovery funds and whether there can be support for structural energy consumption reductions. And of course, everything that goes together with the general sort of taxes and subsidies around energy, we think this is more important structurally. So, that’s for the energy side. Clearly, it would be a headwind. In this fiscal year, we are sizing it at current pricing at just under €200 million, so materially in our overall equation. Turkey, management of Turkey, clearly always from our side, we look at it in hard currency. You know our principles, you need to grow revenues ahead of inflation and cost below inflation. And we have been pretty successful if you look backwards to another big case would have been Egypt a few years ago in ensuring that we come out of the crisis with a better cash flow position than the one we went in. Turkey has been able to maintain operating free cash flow stable. This year, we don’t have particular issues on the technical front to your specific point. But we are really all hands on deck to ensure that also looking forward we can drive the strategy I was describing. So, if I take just the example of pricing, which is really critical, you will have seen us raising pricing 33x in six months. The last time was March, 30%. So, very active in ensuring that in the, let’s say, mid-term, we come out on the other side with stronger cash flow generation.

And it’s probably worth just noting and of course, it is quite beneficial that the other two major players are government-owned entities, because then they take a view of the overall industry and what’s healthy for the overall industry. And I think that’s healthy for us.

Thanks. Just to follow-up on the hedging. So, €200 million is the headwind without Q4. So, if you have roughly €200 million a quarter of cost in it inflated by 100% for Q4 FY ‘23, that would be in addition to the €200 million? And that’s the uncertainty that you’ve tried to bake into your guidance, I suppose.

Yes. So, the central case includes the €200 million. And if you take the forward rates of energy today, that’s the effect you have on the full year.

That’s €200 million. Okay. Understood. Yes.

If prices were to go up further, that’s where the range comes into play or go down, because I think over time, you could also see that.

Right. Thanks very much.

Thank you. We have time for one more question today, which will come from David Wright from Bank of America/Merrill Lynch. David, please go ahead.

Hello guys, hopefully, you can hear me and everything is working. So, it was just a question really on the guidance and specifically the mid-term guidance that you have reiterated in the presentation. And I guess what would be quite useful to just understand the kind of timeline around that. Because if it was given at full year ‘21 and say it was a 3-year outlook, then you have done 5%. I think the guidance for full year ‘22 is sort of 2%. So, to get back to that kind of mid-single level, you are going to have to do high-single digit. And even if we were to extend it another year or so, it feels like you need to achieve a high-single digit run rate, especially given some of those hedging pressures are also going to be present in full year ‘24. But I guess I am just wondering how you bridge that gap to the high-single digit EBITDA growth, which is the asset that kind of gets you there. And I speak with Germany, obviously, a little slower this year, some TV headwinds, etcetera. So, if you could just outline that guidance more specifically and the building actually hit it. Thank you.

Sure. So, starting from the logic of our mid-term ambition, starting point FY ‘21. Time horizon as we said last year was 3 years to 5 years in terms of what midterms mean. And then we were very clear already last year that it wasn’t meant to be a sort of year-by-year reference point. But the progression wouldn’t necessarily be linear. In terms of how do we stand against that today and your question on bridging, well, first of all, we have just closed the first year in line or exceeding the progression that we have set for ourselves, growth in Europe and Africa, mid-single digit EBITDA growth. And the return on capital, you have seen the big step-up that we have had in year one, which was 170 basis point. Clearly, FY ‘23 is likely to be slower if we take the midpoint of the EBITDA guidance that we have given, which is around 2% for the reasons we have just discussed, including energy. However, let me also take the opportunity to flag that if you look at our free cash flow growth, the circa €5.3 billion expected into FY ‘23 is actually underlying representing a 10% increase over the 2 years. So, if you think about the mid-single digit free cash flow growth at the midpoint of our guidance, we are there. Why that is, it’s because, as we have flagged earlier this morning, we had a deferral of a €200 million payment across ‘22 and ‘23 in taxes in Germany. So, underlying effectively, we will be moving from €5 billion to €5.5 billion, which is bang on the midpoint of our mid-term ambition. And then as we look at return on capital, again, now we are at 7.2 pretax, guiding for a further increase above that. So, I think we are well positioned to continue in that trajectory.

Okay. But I understand the free cash flow, but how do you get to the high-single digit EBITDA?

I think that there is a range of, how can I say, options on our the outlook may turn on EBITDA for the years beyond FY ‘23. This year, we have had these impacts, for example, for inflation. You need to assess will that last forever or will at some point, for example, the energy price switch and move into the other direction. I think here, we are talking about the mid-term and we are also talking about ranges. And therefore, first, we need to see how we close ‘23. I think we have a range around that already. And then we need to see how it evolves longer term.

And of course we got EU recovery funds. We have got further digital transformation. There is many levers that we have delivered in FY ‘22 that would be very focused on outer-years as well.

Can I just sneak a quick one, I was just very intrigued yesterday, I think as were most investors by the shift from Vantage into this sort of hybrid reseller model in Germany potentially on the build-to-suit. And I am just wondering, was that a push by you guys to kind of keep the foot down on 5G? And essentially, they kind of weren’t able to deliver that so they have had to move to the reseller model? Is it sort of Vodafone driven that they have had to slightly shift that strategy?

David, it’s very much a case of Vodafone has coverage and performance obligations that came with the spectrum. And that’s where the 5,500 towers came from or BTSs came from. What we were really doing was saying to Vantage, look, you have the option to go source them up to 1,200 if you need to moving forward, so it’s optionality, it’s not an obligation. They don’t have to do it. Obviously, it depends on the ease at which they can find locations and do builds. Obviously, you know Germany is notoriously slow as a country to get permits, approvals and build through. It takes nearly 2 years. The government and ourselves are working to bring that target down. But we just want to give them operational flexibility to do it.

Okay. Super. I appreciate that. Thank you, guys.

So, given that was the last question, thank you very much for joining Margherita and myself. We had a good financial year in FY ‘22 with strong growth in many of the parameters and, importantly, return on capital employed. Our guidance points to growth moving forward even with a challenging macroeconomic backdrop. And we are very clear on both our operational priorities and our portfolio priorities and remain firmly focused on executing through. So, we look forward to updating you in future quarters on our progress. Thank you.