Welcome everyone. And I hope you're all keeping safe. And thank you for taking the time to join us today. In these challenging times, we all need to adapt, which also includes the way we communicate our results. Margherita and I are speaking to you directly from our homes, enabled by Vodafone's communication services. I'd like to start my presentation by sharing some of the actions our teams have taken to support society during this period of crisis. We took early and rapid actions to ensure that our own business could operate at full strength and we're able to swiftly move our focus on to supporting our customers and society in general.

In early March, we set out a five-point plan to coordinate a comprehensive and consistent set of supporting actions throughout our markets. Clearly, our mobile and fixed network infrastructure plays a critical role in keeping societies connected and enabling governments to deliver the response needed to fight the pandemic. I'm very proud of the speed and reliability of our networks during a period in which we have seen such a dramatic rise in usage. Mobile data traffic has increased by 15% in Europe; voice traffic by as much as 40% and fixed data traffic by as much as 70% in some of our markets. To meet this demand, we've accelerated investment in a number of areas to boost network capacity and we have seen minimal disruption to service across our markets as a result.

Secondly, we provided critical support to frontline health workers across Europe and Africa. Our teams have connected new field hospitals, donated equipment and services and provided extra mobile packages, so that they could always remain connected. Third, access to information has been vital in limiting the outbreak and keeping the general public aware of what to do in an emergency. So we enabled free data access to official health sites and in many markets supported dedicated apps.

Fourth, we wanted to help our customers through this difficult period. To support our consumer customers, we've also provided extra data allowances to help with remote working and free access to children's TV channels and educational content to support home schooling. For small businesses, key to our supply chain, we have shortened our payment terms from 30 days to 15 days to support the working capital.

Finally, we have worked with governments and health agencies across our footprint, providing data insights to help control the spread of the virus and support flattening the curve. When we add up all of our measures executed, we have already donated a total of around EUR100 million across our markets, reaching 78 million customers. When we look back on this period of response and ultimately the recovery, I'm certain Vodafone will be seen as having played a key role in supporting society through this crisis and that we cared about every local community we had the privilege to serve. Our key stakeholders, including governments, customers, charities and shareholders have given me so much positive feedback on the way we have supported them over this crisis period. And this response to support society would not have been possible without the hard work and professionalism of the whole Vodafone team. On behalf of myself and all our key stakeholders, I'd like to say a massive thank you to the entire Vodafone team across all of our markets. We provide a critical service to society and that criticality was brought into sharp contrast over the lockdown period. You've kept everyone connected with well over 90% of our team working from home. As this chart shows, this was not easy and required longer working days and a lot of communication. It is your commitment, dedication and hard work that makes Vodafone such a special company.

Whilst the battle against COVID-19 is at the forefront of everyone's minds, I'd like to take a moment to reflect on what has been a big delivery year for Vodafone, resulting in an overall good financial performance. We grew our organic service revenue by 0.8% over the year. And I'm particularly pleased with the higher consistency of execution we've established through Europe. This has led to improved broad-based commercial momentum throughout Europe with the Q4 exit rate significantly better than our entry into the fiscal year. We've also made a fast start to the integration of Liberty with the rebranding already completed. This improvement in our commercial performance has been matched by the strong ongoing delivery of our cost program and as we drive the digital transformation of our operating model. As a result, we've grown EBITDA by 2.6% to EUR14.9 billion. As Margherita will touch on later, we also have had a consistent track record of converting our profits into cash. We delivered EUR5.7 billion of free cash flow pre-spectrum and just under EUR5 billion of net free cash flow. This consistency of cash generation enables us to invest in the critical national infrastructure society relies upon, alongside enabling us to declare a dividend of EUR0.09 per share for the year.

The good financial performance delivered during the year was a result of the strong delivery at pace of our strategic priorities. To strengthen our customer engagement, we have launched 5G in 97 cities across eight markets in Europe, have launched speed-tiered unlimited plans and established effective second brands in the value segments. These actions along with many others have delivered a sixth consecutive quarter of improvement in customer retention.

We've accelerated our digital transformation, contributing further EUR400 million of net opex savings in Europe for a second year running and remain on track to deliver our three-year EUR1.2 billion target. The integration of the Liberty assets in Germany and Central Europe is tracking slightly ahead of schedule with synergies firmly on target. Focusing on improved asset utilization, we now have structural network sharing agreements in place in all major markets. In addition, we completed the merger of our passive tower infrastructure in Italy with INWIT and are progressing well with our plans to create Europe's largest tower company.

Finally, we've moved decisively on the optimization of our portfolio with the sale of our operations in New Zealand and Malta, the acquisition of AbCom in Albania, the merger with TPG in Australia, which has received competition approval and an MoU agreed for the sale of Vodafone Egypt. We now have two scaled regional platforms in Europe and Africa.

As we look to the challenging economic period ahead, the Board and my leadership team have been given a great deal of thought to the role Vodafone plays in society in general and how we can support the next phase. We were there for the emergency response phase and we are committed to playing a key role in supporting the economic and social recovery. As we look forward, we see five key areas where Vodafone can clearly prioritize activity to support. First, we will expand and future proof our network infrastructure through 5G deployment and next-generation fixed line technologies, including DOCSIS 3.1, SD WAN and cloud.

Secondly, we will further support governments as they seek to integrate e-health and e-education solutions into the new normal public service frameworks. Thirdly, we will work hard to ensure those most vulnerable get the access they need and support in digital literacy. Fourth, we will also promote the widespread adoption of digital technologies for all businesses with a particular emphasis on SMEs. Finally, we will support government exit strategies through targeted deployment of digital technology. However, in order to achieve our objectives, governments will need to support the vulnerable and small businesses, whilst working with regulators on an infrastructure deployment initiative covering administrative spectrum assignments at lower cost, facilitate cost-effective and quick network deployments and promote more extensive network sharing.

Through an extended social contract, where we work closely with governments and regulators, we will support the recovery whilst emerging a stronger business, playing a critical role in society. I will talk further about our strategic progress and areas of focus shortly, but before then, I'd like to hand over to Margherita to discuss our financial performance for the year and summarize our outlook for the year ahead.

Margherita Della Valle - Chief Financial Officer

Good morning, everyone. As Nick has already highlighted, we delivered a good financial performance this year and met our FY '20 guidance. We grew organic service revenue by 0.8% and our momentum accelerated throughout the year with growth above 1% in the second half, driven by Europe. We grew EBITDA by 2.6% to EUR14.9 billion and our EBITDA margin improved to 33.1%. This is our fifth consecutive year of margin expansion. Adjusted earnings per share declined by around EUR0.01, principally driven by increased financing costs and the higher share count following the issuance of new mandatory convertible bonds. You will find a full summary of our statutory results in our appendices.

We increased free cash flow pre-spectrum to EUR5.7 billion and free cash flow after spectrum to just under EUR5 billion. Having largely reshaped the Group around two scaled regional platforms, Europe and Africa, it's now the right time to start reporting on our return on capital. This is a new external metric, but it has been for many years a significant factor in our internal planning and capital allocation processes. We have included both pre and post tax measures to better assist comparison and we will report on it regularly in the future. While the level of returns is still too low, the actions we have taken during the year to improve our commercial performance, transform our cost base and simplify our portfolio, helped deliver an 80-basis point improvement in pretax returns to 6.1%. This is something that we will continue to work on and Nick will illustrate later the steps we are taking to improve our asset utilization and strengthen our relationship with regulators.

Turning next to our trading performance. A key priority this year was to improve our commercial momentum across our markets. The two charts on this slide illustrate the significant progress that we've made particularly in the fourth quarter when we grew service revenue by 1.6%. As you can see, we have delivered 130 basis points improvement in Europe service revenue growth between the first and fourth quarters.

I would like to highlight in particular the performance of Spain and Italy. The actions we have taken to stabilize our customer base, combined with the number of ARPU-accretive measures have driven a marked improvement in our service revenue trends. But let's now review the performance of each of our major markets in turn, starting with Germany.

Following the acquisition of Unitymedia earlier this year, our German business now represents a third of Group EBITDA and 40% of cash flow. As the leading nationwide gigabit provider in Germany, we have a significant opportunity to increase fixed broadband penetration and cross-sell convergence across our combined mobile and fixed customer base. Our progress since the merger can be seen in the top right-hand chart. We delivered strong acceleration in cable net adds in half two, reflecting the fast start in migrating DSL customers onto the Unitymedia footprint combined with successful new campaigns encouraging customers to upgrade to higher speeds at accretive ARPUs. This acceleration in fixed line momentum combined with good growth in our branded mobile base delivered over 800,000 net additions in FY '20. We also saw further improvement in customer loyalty with Q4 mobile contract churn down 80 basis points year-on-year to 12.3%.

Our TV customer base declined, mainly reflecting customer losses at Unitymedia and low ARPU basic TV disconnections in the KDG footprint. As shown on the bottom right-hand chart, although reported service revenue in Germany was flat, our good commercial momentum drove solid retail revenue growth of 1.7% in Q4 excluding regulation. This includes the pro forma contribution from Unitymedia as Vodafone standalone organic revenue growth is now increasingly distorted by inter-company flows. The operational integration of Unitymedia has continued at pace. We have rebranded the business, completed the switch-off of analog services and accelerated the roll-out of DOCSIS 3.1 with 18 million [Phonetic] households now able to benefit from gigabit speeds.

We also exceeded our DSL migrations target for the year and all other cross-selling goals. To-date, we have realized one-fifth of our cost and capex synergy targets and are well on track to achieve the plans we outlined at the time of the acquisition. Our focus on efficiencies drove 2.5% increase in EBITDA in Germany for the full-year and 80 basis points of margin expansion. Overall, we are pleased to have increased our exposure to Germany, a market that has been relatively more resilient to the impact of COVID-19 to-date.

Turning next to Italy, which in contrast, has been heavily impacted by COVID-19. I will summarize all of the COVID effects across our markets and their implications later in the presentation. As the chart on the left illustrates, in Italy, mobile number portability volumes across the market dropped during the lockdown in March. Our own outbound portability reduced by over 70% and our main brand currently benefits from the lowest churn in the market with customers valuing the high-quality service we provide. During Q4, competition in the low end of the market remained intense. However, our second brand Ho continued to grow strongly, reaching 1.8 million active customers by the year end. In fixed line, we maintained our good commercial momentum, adding 121,000 broadband customers in the year. Full-year EBITDA was 3.9% lower on an underlying basis as revenue declines were partly offset by a 7.6% reduction in net operating costs.

Moving now to the UK on the right hand of the slide. We returned to service revenue growth this year, exiting Q4 at 1.2% or 1.8% excluding regulation. This growth was supported by 800,000 customer additions across both fixed and mobile in FY '20. In mobile, we have benefited from the success of unlimited data plans, our converged [Phonetic] network position and our prepaid brand VOXI, which now has 500,000 customers. Contract churn was stable year-on-year at 14.2% despite the impact of the new text-to-switch regulation. In consumer fixed, we have just achieved our highest ever quarterly customer growth, supported by our Big British Broadband Switch campaign. I'm particularly pleased with the broad-based nature of the UK improvement with growth across all of our customer segments in both fixed and mobile. Full-year EBITDA increased by 8.5% on an underlying basis. This was driven by topline growth and a 10% reduction in net operating costs.

Turning now to Spain, which represents 7% of Group EBITDA. The overall pricing environment remains highly competitive. However as in Italy, mobile number portability volumes have slowed due to COVID-19, following the suspension of all-porting [Phonetic] in March. Restrictions have now been partially lifted but volumes remain suppressed. As the chart on the left shows, we have kept both our mobile and fixed customer base stable for three quarters now, supported in part by the good performance of our second brand Lowi. We also added 97,000 TV customers in half two, thanks to our strong movies and series line-up and despite our decision not to renew football content rights last year. A steady customer base combined with the number of successful ARPU initiatives, such as migrating customers to our speed-tiered unlimited data plans, have enabled us to improve our service revenue trends.

In Q4, service revenue declined by 2.7%, a 380-basis point improvement compared to Q3. As expected, EBITDA returned to growth in half two at plus 8%. This has been the first half year in which we didn't incur any football costs for our own customer base. We will see a further cost benefit from football in FY '21 albeit smaller. Looking ahead to half one, we expect a significant impact from COVID-19 with lower roaming revenues in what is a peak travel period combined with the projected reduction in SME activities.

Moving to Other Europe on the right of the slide, which represents 12% of Group EBITDA. Service revenue growth remained healthy at 3% in FY '20 with all major markets growing, apart from Ireland. Customer growth remained robust across both mobile and fixed and we exited the year with single-digit mobile contract churn in four out of seven markets. We are well on track with the integration of the UPC assets in Hungary, the Czech Republic and Romania. And following the completion of the acquisition of cable operator AbCom in Albania and the disposal of Malta, we are now fully converged in all our markets.

Turning to Vodacom. Service revenue grew by 3.3% in the year despite macro pressures and EBITDA increased by just over 1% to EUR2.1 billion. In South Africa, mobile data volumes continued to grow strongly as customers benefited from improved pricing. In March, we removed regulatory uncertainty by proactively reaching an important agreement on data pricing with the Competition Commission. We have reduced monthly data bundle pricing by up to 40% starting from April, building on the proactive steps we have already taken last year on data transformation and now expect further traffic elasticity.

We also continued to deliver strong growth in Vodacom's international operations with revenues up 7.5% and more than 4 million customers acquired despite the impact of new customer registration requirements in Tanzania. In the Netherlands, our joint venture VodafoneZiggo, is performing well and has reiterated its free cash flow guidance for the year. Our successful convergence strategy is driving significant customer loyalty and NPS benefits with three-quarters of our mobile consumer contract customers now converged. In February, we successfully shutdown our 3G network and are progressing well on our DOCSIS 3.1 roll-out, which is due to complete in 2021.

Now turning to the progress made on our cost program. In FY '19, I set out my target to generate at least EUR1.2 billion of net operating expense savings in Europe and Common Functions by FY '21. We have delivered consistently against this target over the last two years, generating over EUR800 million savings. This progress has supported our return to EBITDA growth in Europe at plus 3% in half two. As a group, we delivered another 70 basis points of organic margin expansion, increasing the EBITDA margin to 33.1%. As we accelerate our digital transformation as anticipated, we continue to identify new areas of opportunity. I can now give visibility on the next three-year cycle. We will be targeting at least EUR1 billion of further net opex savings over the next three years in addition to a reduction of our acquisition and retention costs.

By FY '23, we will have reduced our opex base in Europe by one-fifth against our FY '18 baseline, delivering total net savings of more than EUR1.8 billion. To give you a view on how we intend to achieve this, we have extended our original customer care cost reduction target from 30% by FY '21 to 50% by FY '23. Our retail operations will now reduce by 40% against our previous 15% target, and the productivity of our shared services will almost double. We also see incremental cost opportunities outside of opex. To-date, total commissions have remained broadly flat at around EUR2.5 billion per year. As our channel distribution strategy continues to evolve towards digital, further accelerated as a result of COVID-19, we expect to reduce our total acquisition and retention costs over the next three years supporting the transformation of our cost base.

Moving on to free cash flow, we delivered a slightly stronger year than expected with EUR5.7 billion of cash flow pre-spectrum. Through EBITDA, we generated just over EUR13 billion of cash flow before investments. Similar to last year, this included a small positive contribution to working capital from handset receivable sales. Our capital expenditure for the year was EUR7.4 billion with the capital intensity of 16.5%. Spectrum was only EUR0.2 billion this year, significantly below our longer-term average of EUR1.2 billion, principally because of the deferral of German 5G spectrum fees, which are now phased over 10 years. Despite the step-up in restructuring from the Liberty integration, this allowed us to generate net free cash flow for the year of EUR4.9 billion. We also completed a number of significant portfolio simplification activities during the year, including the sale of Vodafone New Zealand, the sale of Vodafone Malta and the merger of our tower infrastructure in Italy with INWIT, generating over EUR4 billion of additional cash.

Let me now set out our key priorities for capital allocation for the year ahead. We have a consistent track record of converting profits into cash. Over the last two years, we have converted almost 40% of EBITDA into pre-spectrum free cash flow and circa 30% of EBITDA into free cash flow post normalized spectrum and restructuring.

Our consistent cash flow generation underpins our three capital allocation priorities. First, we prioritize our investment in maintaining our critical infrastructure across both our fixed and mobile networks. Our rate of investment is expected to remain broadly equivalent to 17% of revenues. Second, we remain focused on maintaining a robust balance sheet and moving towards the lower end of our 3.0 times to 2.5 times net debt to EBITDA leverage range in the medium term. Third, we will return EUR2.3 billion to shareholders, representing EUR0.09 per share this year. Following the acquisition of the Liberty assets, our net debt increased by EUR18.5 billion to a pro forma leverage position of 2.9 times.

As you know, we have worked during the year to simplify our asset portfolio, generating significant cash proceeds for the Group. We ended the year with net debt of EUR42.2 billion and 2.8 times leverage. Pro forma for the loss of EBITDA for the INWIT and Malta transactions, which completed in March, leverage would have been 2.9 times. Our current liquidity position is very strong with over EUR12 billion in cash and liquid securities. We also have an additional EUR7.7 billion of committed but unused credit facilities.

Overall, we have a solid balance sheet. We have long-tenure debt with an average maturity of 12 years and fixed interest rates ensuring the predictability of our financing costs.

Before we turn to our outlook for the year ahead, I want to highlight some of the key impacts we are seeing across our businesses from the COVID-19 pandemic. The most immediate and direct impact has been on the revenues we generate from roaming. We have seen a decrease in roaming revenues in Europe in March and April of 65% to 75%. Our total annual revenue from roaming is around EUR900 million with just over half of this flowing to EBITDA. Therefore, the decline in European travel will have an impact in FY '21, particularly in the first half. In contrast, we have seen a significant increase in data and voice usage; some of which is out of bundle. This has offset the roaming impact in March, but we would expect some of this benefit to subside as lockdown restrictions start to ease.

We have also experienced a sharp reduction in customer churn and gross additions across Europe as retail footfall has reduced and the digital engagement with our customers has played a key role. As Nick will explain later, our transformation of the distribution channels has become even more critical. Vodafone business has seen a surge in activity in Q4 with customers requiring our support to enable employees to work remotely. We have also started a number of critical transformation projects including for the public administration. However, we have now received the first customer request to delay payments or suspend services. These are coming predominantly from SMEs and we expect this trend to continue affecting our performance. Although partially mitigating this, there will be opportunities to help businesses make the switch to next-generation technologies to deliver high-quality, cost-efficient and reliable solutions for their communication needs.

Let me now lay out for you how we expect this to affect our FY '21 results. Given the uncertainties this year due to COVID, we will not be giving an EBITDA guidance range. However, we are able to give you an indication of the main moving parts that will affect our performance. First, reflecting changes to our portfolio and movement in exchange rates, our rebased outturn EBITDA for FY '20 is EUR14.5 billion. As I mentioned on the previous slide, the total EBITDA from roaming is around EUR500 million. So this would be the maximum impact for the year if there was no travel whatsoever. On the downside, we expect to see further negative impacts from COVID-19, such as lower SME revenues and lower enterprise project revenues. Offsetting this, our underlying commercial momentum has been improving and we will reduce net opex by over EUR400 million this year as well as target additional acquisition and retention cost efficiencies as I previously outlined.

In a pre-COVID world and given our exit rate in Q4, we would have expected to see good growth this year. However, taking the current prevailing global economic outlook into account, our EBITDA is estimated to be flat to slightly down. We will provide further information on this alongside our first half results in November. We are confident on the relative resilience of our free cash flow generation, supported by our strong focus on costs and capex discipline. Therefore, we are providing guidance of at least EUR5 billion free cash flow pre-spectrum in FY '21.

And with that, I will hand back to Nick, who will provide an update on our strategic focus.

Nick Read - Chief Executive

Thank you Margherita. I have always started our strategic review with our purpose as it defies everything we do as a company. Our purpose is to connect for a better future framed by three areas of focus: digital society; inclusion for all; and planet. I will talk you through these in a moment. Our strategy is to be a technology communications leader enabling a digital society, more relevant than ever in a world that will be permanently changed by the impact of COVID-19. Our significant work to simplify our portfolio over the last 18 months will enable us to focus our attention on two attractive regions in which we have a scale advantage.

In Europe, we aim to be the converged communications leader now with the converged offer available in all of our markets. In Africa, we are focused on being the leading data and digital payments provider in all our markets.

Our regional operations are underpinned by leading gigabit networks and best-in-class shared service centers and global platforms, such as Vodafone TV, IoT and M-Pesa. To deliver our strategy, we are focused on four priorities; all of which remain highly relevant in the years ahead. But I will take the opportunity to highlight the areas of heightened focus within them to ensure Vodafone emerges stronger following this challenging period. Many of you attended our open office event in November, where we expanded upon our purpose and our ambitious targets. Whilst our current focus is to support society during this phase of recovery, we don't want to lose sight of some of our longer-term targets. To demonstrate our commitment to these goals, both internally and externally, we felt it was important to include for the first time specific targets in our long-term incentive plans.

In digital society, we are playing a key role in enabling ever-faster and ever-higher quality digital communications and access to information to an ever-wider range of people. In inclusion for all, we will connect more women to mobile services, provide greater employment opportunities to young people and continue to improve millions of lives through the Vodafone Foundation.

In planet, we will reduce our greenhouse gas emissions, buy power from only renewable sources and ensure 100% of our redundant equipment is recycled, and purpose inspires us. And I look forward to reporting on our progress and highlighting the wonderful stories that bring this work to life as our role in society becomes even more central in the years ahead. This has been a period of reflection for all of us. Whilst we have delivered at pace and are pleased with our progress in the year, the current environment and the recovery to a new normal requires us to heighten our focus on key areas, managing the challenges and seeking out the opportunities to emerge stronger. The quality of our networks and the relationships we have built with our customers have never been so important for our continued success. Both need to be protected as we support the recovery. Our digital transformation will experience a step change as customers have embraced the behavioral change in lockdown, allowing us to advance our plans at a quicker pace, especially sales and service channel mix.

Our network sharing arrangements will allow us to improve asset utilization and return on capital. Whilst continuing to achieve improvements in speed, coverage and capacity, the last few months have really reinforced the value of quality communications. And whilst we've executed a significant number of important strategic transactions over the last 18 months with some still in flight, our top priority in FY '21 is completing Europe's largest tower company and targeting an IPO in early 2021, subject to market conditions, which for tower assets, remains robust. So firstly, turning to deepening customer engagement in Europe. Across our markets, we have a coordinated commercial plan to continue to enhance our networks deliver clear and meaningful choice of price plans, provide best-in-class customer care and offer a truly converged experience. Over 90% of all our mobile data traffic is now on 4G, allowing us to begin the 3G switch off.

Netherlands was the first market. This saves costs and allow spectrum refarming to more efficient 4G, 5G networks. On fixed, we can now market NGN broadband to over 136 million homes. We have seen a strong response in Germany to our higher-speed offers of up to 1 gig per second. This has enabled clear differentiation of our offer on both speed and reliability; something we are focused on across our markets. We have also streamlined and simplified the range of plans available to customers, starting with second brands in the value segment through to speed-tiered unlimited plans. We now have more than 4 million unlimited mobile customers across six markets with increasing demand in a world where everyone is relying on fixed and mobile communication. This year, mobile data per user was up to 5.7 gig, which is 55% up year-over-year.

Over the last few weeks, we have all experienced differing levels of remote customer service from a range of providers. Digital and automated channels have never been so critical to provide an efficient, yet effective customer relationship. We now have our AI assistant TOBi live in 15 markets, handling over 40% of all customer contacts.

In Africa, the current situation just further reinforces the criticality of both quality in mobile connectivity and mobile digital payments. We are a leader in both. Mobile data usage per user is increasing at over 40% per annum, but as you can see from the chart, 4G is only 22% penetrated. As customers make the transition from 2G to 3G to 4G, usage increases as does ARPU. 4G smartphones will increasingly become critical for all customers. We are building our networks for these demands. We have now completed the M-Pesa JV between Vodacom and Safaricom, putting the platform and the product development closer to the customer. As the lower chart shows, we intend to build out the full functionality of services by market and drive M-Pesa's overall contribution to service revenue growth.

With remote working now so firmly established in our lives, businesses will be increasingly reliant on emerging technologies to deliver fast and reliable, but also low-cost and easy-to-maintain solutions. We have made a good start in our deployment of SD-WAN in the year and have built a strong sales pipeline given the inconsistent and costly experience suffered by customers of traditional incumbent VPNs. We will work with larger enterprise customers to help them mak the switch from legacy VPNs to faster, more reliable and cost-efficient SD-WAN-based solutions. We have seen the substantial benefits of migrating to the cloud inside our own business. So we fully understand the speed and productivity advantages that are possible. In addition, we will leverage strategic partnerships to ensure we move quickly with best-in-class solutions as seen with IBM on cloud solutions and AWS with edge cloud services. We are only at the beginning of fully understanding and deploying the potential of IoT across industry sectors. We already have a leading position in the automotive sector, in which, over 30 million cars are connected by Vodafone through our global leading platform that now has over 100 million connections.

We are now coupling our IoT expertise with 5G to offer mobile private networks. We are targeting 30 large-scale customer pilots across three industry verticals this year. We firmly believe that a greater focus on these emerging technologies will enable us to increase our share of the value chain in which we operate. Over the past two years, we have delivered a significant shift in our cost base and productivity through targeted deployment of digital technology. At our open office event in September last year, we showcased a number of advancements we are making to be the industry leader in this area, emphasizing at the time that this was a fundamental transformation of our operating model and not just cost cutting. This provides an important platform to make a step change in our ambition, driven by behavioral changes experienced over the last few months.

Within customer management, we've delivered a 20% reduction in the number of calls over the last two years through initiatives, including the deployment of our AI assistant TOBi. We've also further optimized our branded retail store footprint with a decrease of 9% so far. In digital operations, we are now processing 80% of our payments in a touchless way. Through these activities and many more, we believe we will enhance the customer experience, improve customer loyalty, sell more services and ultimately deliver more cost savings. Our new cost target, which Margherita covered, means we will be taking out over EUR1.8 billion from our FY '18 starting point, a 20% structural reduction in our opex over five years. Over the last 18 months, we've executed a series of agreements across our markets to enable a mix of active and passive sharing of mobile network infrastructure. You will see from the map this supports our strong 4G coverage already established across our markets. During the year, we reached agreements in Germany with DT, TI in Italy, with all MNOs in the UK for enhanced rural coverage and extended the scope with Orange in Spain and O2 in the UK.

Complementing our strong mobile coverage through a mix of direct cable and fiber ownership alongside strategic wholesale deals and regulatory access, we can market NGN broadband services to over 136 million homes across our markets in Europe. In addition, we are rapidly rolling out DOCSIS 3.1 across our cable networks, serving 32 million households with gigabit speeds on our own infrastructure, an increase from 24 million at H1. We're targeting to upgrade most of our 54 million NGN homes passed by 2023.

I'd like to take a moment to reflect on the pace and sheer breadth of portfolio activity we've executed in the last 12 months. One of the most important transactions we completed during the year was the merger of our towers in Italy with INWIT, as they allowed us to engage with the European Commission to establish the right principles for network sharing in Europe. As you see from the chart, there has been a range of models discussed and we believe that a national passive share with active sharing outside of major cities remains the optimal target sites, providing a quicker, more optimal way to improve coverage and speeds, whilst allowing us to drive industrial synergies.

In return for our towers, we received an initial EUR2.35 billion in cash and a 37.5% equity stake in the merged INWIT. After the end of the fiscal year, in April, we completed a placing of 4% of equity for a further EUR400 million at a highly-attractive multiple. We firmly believe network sharing is critical for European market to maintain broader competitiveness with other regions, and I'm very pleased that we have established the right target model to accomplish the best outcome for society, customers, operators and shareholders. In addition to the INWIT transaction, you can see the list of transactions on the right hand side, which I've mentioned.

To conclude on India, the critical situation has been under further financial strain by COVID-19. The Vodafone Idea team continues to work constructively with all relevant authorities to find a path forward. The business requires a government support package if India wants to maintain a three-plus-one player telecoms market. Last month, we accelerated a payment of $200 million to Vodafone Idea under the terms of a contingent liability mechanism within the original merger agreement, reducing our potential exposure to EUR0.8 billion. Vodafone Group's position remains unchanged. We will not inject new equity into our Indian joint ventures. We continue to work on the Indus-Bharti Infratel merger, which would provide cash proceeds for VIL at completion.

Turning to our European tower company. We now have the full management team in place, led by Vivek and the operational separation is complete. In addition, the legal separation in Germany and Spain will complete this month. The diagram on the slide summarizes the basis of separation of assets and forms the foundation of the MSAs. We are now focused on finalizing the remaining legal separation and MSA documentation for each market. As a result, we are firmly on track to give relevant financial and operational information in November with our half-year results and are focused on executing monetization options in early 2021.

I'd like to conclude by summarizing four key points I hope you've heard throughout our presentation. Firstly, through the hard work, dedication and professionalism of the entire Vodafone team, we have delivered a rapid, comprehensive and coordinated response to the initial COVID-19 crisis in all our markets. We're also building on our social contracts to support economic recovery in the years ahead. We've also delivered a good financial performance in the year through consistent execution and improved commercial momentum in Europe. Thirdly, our financial performance has been the result of strong progress made against the four strategic priorities I outlined this time last year. And lastly, through clear prioritization of our strategic agenda, I am confident we will emerge stronger, creating sustainable value for all of our stakeholders.

Margherita Della Valle - Chief Financial Officer

I'm sorry. There is no noise at my end. I cannot hear you.

Nick Read - Chief Executive

Now, there's a good reason for this, because I had it on mute. So just to say thank you for joining us and listening to the presentation. We are now open for Q&A. I am told that all analysts that have registered on the call, if you'd like - you're assumed to be making a question. So if you don't want to make a question or give a question, then please e-mail the IR team now. If we could, as always, try and restrict it just down to one question per analyst, that would be wonderful. I know this is the hardest thing we ask of you. And I believe the first question is going to Emmet from Morgan Stanley.

Question & Answers

Questions and Answers:

[

Emmet Kelly - Morgan Stanley - Analyst

Hi, good morning everybody. I hope you can hear me.

Margherita Della Valle - Chief Financial Officer

Hello.

Nick Read - Chief Executive

Absolutely.

Emmet Kelly - Morgan Stanley - Analyst

Super. So very nice to see everybody's faces this morning and I've just got, yes, the one question, as you mentioned Nick. Obviously the lockdown has been very challenging for everybody across society, but as I've seen a lot of articles written, could you imagine the lockdown without the Internet and without being connected. So clearly companies like Vodafone have played a very key role in keeping we say companies connected, keeping governments connected. I've got two kids at home that are doing e-schooling. I am able to chat with you today. In the evening, we all watch a lot of Netflix or BBC iPlayer. And can you just maybe say a few words on what you think this means for the telco industry and for Vodafone may be going forward? What are the likely takeaways of the COVID crisis for the telcom industry? What's really going to change? So rather than looking 10 bps or 20 bps of service revenue growth every quarter, what does this mean? Is this going to accelerate if we move towards unlimited? Could we finally maybe see some better regulation from national regulators or maybe more consolidation from [Indecipherable] in Brussels? What does it really mean for the industry going forward? Thank you.

Nick Read - Chief Executive

Yes, that's an excellent question. Actually, you're sort of reflecting in a way the whole conversation we were having at the Board because at the Board, we were talking about our strategy process and then why would we do it differently this year, and one of the things that we were talking about was I think it's the moment where you step back and say, I think there will be behavioral changes, structural changes to society across the board over the next 10 years as a result of this, and therefore, what are the opportunities for us as a business to, if you like, get stronger through a recession. Clearly, there's going to be a recession, maybe very deep, maybe very prolonged. We don't know. There are many different views. If I part the recessionary impact alongside and sort of look at it from a structural perspective, I'd say probably three points. First is, you've got a situation where there has definitely been an appreciation for quality. People are understanding the quality of networks now, they understand that they are critical to their lives.

I think they are starting to say to themselves for EUR2, EUR3 more, would I rather be on a quality network. It's interesting to see touchpoint NPS and customer reaction to our services. I mean we've got - I've never been so overwhelmed personally from so many positive comments from governments, charities, companies, consumers about how we help them through this crisis. And I think that's really positive for us as a brand. I'm sure that's happening to other quality telcos as well, but it won't be every telco in the sector. I'd say - and - but a real good data point is, we monitor Facebook Analytics. And in Italy, we are now the lowest churning brand in Italy. And I think that's a flight to quality. I'd say the second thing is I think there will be opportunities around products and services, breadth of products and services, so companies are now saying, look, we are going to continue to blend office and working-from-home going forward and we need the infrastructure and the security to be able to do that, the resilience going through it. So we've got a lot of demand coming forward in terms of saying how can we work with you on these type of things. There is opportunities around new products. We were just talking about thermal camera imaging connected with IoT with a dashboard in offices, which is a product we've launched in the UK and we've got it trialing in a number of our allocations.

So I think there is a product demand aspect. You could do unlimited convergence. Will people want servicing of the home environment at home either remotely or physically. And then I'd say the third component is the relationship with governments. I think governments have understood the criticality of telecoms infrastructure. They've really, I think, appreciated the resilience by sector or lack of resilience by sector and therefore they look into telecoms to say, yeah, you did a great job, but we could be even more resilient but we need support from government to do that. So, the approach to spectrum, the approach to planning, consents are very protracted and costly. I think there is an opportunity; I talked before about the social contract. How do we have a social contract in a new normal, I think is more positive for our sector.

I think I have to say [Technical Issues].

Emmet Kelly - Morgan Stanley - Analyst

Thank you.

Nick Read - Chief Executive

So we'll now move on to the next question.

Operator

Thanks, Nick. The next question comes from James Ratzer at New Street.

James Ratzer - New Street Research - Analyst

Yes, good morning, Nick and Margherita. Thank you also [Indecipherable] the call [Technical Issues]. I had a question if possible, I…

Nick Read - Chief Executive

Sorry, we lost your connection there a little bit.

James Ratzer - New Street Research - Analyst

Okay. Great. Now, I am back. I was going to say, question I image you're expecting on the UK market and the deal between - announced between Liberty and Telefonica, the interest in just hearing kind of your reactions to that where you're involved in negotiations in that asset, why you felt the deal with Telefonica rather than yourselves and whether that you feel has a broader impact on your UK business in the medium term, do you need to consider more M&A in the UK market yourself? Thank you.

Nick Read - Chief Executive

Yes, James. Thanks. I think I would start off by saying we're very happy with our organic strategy. We have been happy with our organic strategy. I think you saw from the results, the UK is really performing and I think that the market conditions, if you like, strategically for us are favorable. So let me just maybe talk to those. I think from a performance perspective, you've seen service revenue 1.2% in Q4, you see that we're growing in both Consumer and Enterprise. We are taking share in both segments. We've had a record fixed broadband net add performance, 64,000 net adds, so we know how to sell fixed in this marketplace and you've seen EBITDA increasing by over 10% over the course of the year. So if I stand back, I mean, I'm really delighted with our performance in the UK. I think we have real momentum and the right formula going forward.

If I look at the sort of market from a asset position and structural position, a couple of points I'd make. Clearly, you will know we bought Cable & Wireless. That gave us convergence for businesses. The business part of our operation is 50% of our business there in the UK, which is a lot higher than many of our other operations throughout Europe. Ourselves and BT combined at just under 80% of the market share of business, and therefore, I really think we're in a strong position as the challenger against BT. You then take our mobile, we were sort of co-best along with EE in terms of quality of network. We have access to CTIL, the tower company for scale, synergies and economics. So we can compete on a unitary cost and coverage quality basis, and of course we have a strong spectrum holding. So it's sort of thing we fortified on the mobile side. And then on the fixed, we have a very open opportunity, I believe, for several providers. We all know that BT needs to do fiber build. You know that they will overbuild Virgin moving forward. The cost economics there with, let's say, CityFibre [Indecipherable]. So we know the economic survival.

What we also know is BT needs a really strong anchor tenant to make the returns work. So I think whether it's BT, whether it's CityFibre, or others, we have access to wholesale. So we can offer a converged product. And the final area I would say is around TV. UK is an OTT market. Netflix's penetration is around 45%, compare that to Germany, of more like 15%, maybe 20%, and the ARPUs on TV are very high in the UK, which offers an opportunity around cord-cutting. So I stand back from sort of all those structural facts and say we're performing really well. We know how to make this formula work, and I think we just have to point to Italy as a really good example where we have a fantastic quality mobile network. We wholesale a great product from Open Fiber and we know how to sell convergence. And I think we will be able to continue to successfully do that. In the UK, whilst Liberty and O2 will be going through a very complex integration over many years in the consumer space, so I'm positive about our outlook in the UK.

James Ratzer - New Street Research - Analyst

Great [Phonetic]. No plans there to counter-bid at all?

Nick Read - Chief Executive

I think by - very pleased with organic strategy, you have your answer.

James Ratzer - New Street Research - Analyst

Right. Thank you.

Operator

Thank you. The next question comes from Akhil from JPMorgan.

Akhil Dattani - JPMorgan - Analyst

Hi, morning Nick and Margherita. Thanks for taking the question. I've got a question on return on capital. I guess firstly, an interesting addition to your reporting, so keen to understand what the rationale was for adding at this point. Just one very [Phonetic] technical point, which is just - is the net operating asset number adjusted for write-downs, obviously say, underlying numbers just to understand how you calculate it, but the broader question is that the 4% post-tax return is, as you said yourself, quite low. I'm just interested to get some color on how that varies by market, how you think about target returns, so what are you really aspiring to when you look at the Group and what do you think is key to improving that return? Is it growth, is it cost cutting, or is it, as you talked about Nick, trying to broaden your portfolio in this new environment to try and tackle new opportunities? Thanks a lot.

Nick Read - Chief Executive

Permitting Margherita to go through the six parts of your question and then I'll do a finish.

Margherita Della Valle - Chief Financial Officer

Sure. Akhil, I think you asked about why now, how the numbers are calculated and also what we can do and what our targets are going forward. So if I start taking the first part, the why now is very, very important. As as you know, we have worked very hard in the last about 18 months to simplify our Group structure around two regional platforms, Europe and Sub-Saharan Africa. This process is now largely complete. So I felt it was really the right point in time and the right baseline to start disclosing return on capital and monitoring it over the next few years.

As you can imagine, internally, we have not started looking at it now. Internally, return on capital has been probably the beginning of and the end of all our planning processes and all our capital allocation processes. And actually three years ago, we also changed our bonus schemes to make sure everyone is very, very clear of our focus by introducing EBIT instead of EBITDA. So it's always been really a protagonist in our planning. But now we have a stable base to also allow you to follow our progress going forward.

How is it calculated? It's a very simple calculation. I think there is an appendix that illustrates the moving parts, given it's the first time. It's not adjusted, to your question, because we want you to be able to reconcile every number through our balance sheet and P&L and therefore no underlying adjustments have been made. Clearly, you mentioned difference by markets and what we are targeting. We are not disclosing return on capital by market, but I think you can work out pretty easily the various ranges. What we do is we target each market to exceed its own cost [Technical Issues] of planning periods, and I can talk to what we are doing if you want organically inside the company to do that, which are the key levers you were mentioning. I would say, clearly, at the numerator, in terms of return, is our EBIT growth. And for us, the two biggest levers of EBIT growth I could pick at this point in time is on the revenue side churn reduction, and then on the cost side clearly our cost transformation through digital and our shared services. But the numerator - the denominator, so the capital employed is equally very important. And there, in our new strategy, we have really focused to move at pace on network sharing precisely in order to improve returns. But beyond that, you called out industry structure and I will maybe leave it to Nick to comment on how we are working on this at the moment.

Nick Read - Chief Executive

Yes. I mean just to build on Margherita, on the industry side, it goes back a bit to the social contract that we were talking about. In the end, there are too many competitors and it's too capital intense as a market throughout Europe. I think that regulators have focused on price more than quality. They've encouraged new entrants, done spectrum set-asides, favorable access terms, which if you like of undermined returns and I think we have always shown a return on capital and highlighted this to, but I think to visibly publish here I think is an important step in trying to make them understand that we need to improve the situation. I have been talking about social contract since I came into the role. I am encouraged because COVID-19 aside for all the reasons I said on the first question, we did the UK rural initiative, which I think was a good first step, German government in terms of subsidy and support on rural stage payments on spectrum after the price came out higher than they expected. So I think we're starting to see - and probably the most significant, which I was highlighting in the presentation, was the EC's approval of the INWIT transaction because it was really for - I was trying to establish a strategic model for approvals going forward for the industry. So I'd say regulators and governments are starting to understand the need to support the industry and the criticality of our industry and that the returns are not where they need to be. Of course, proof is in the pudding and actions, but I'd say we're starting to get the bread crumbs and are starting to shape in the right direction. We're having a quality conversation with some good outcomes.

Akhil Dattani - JPMorgan - Analyst

Thank you.

Operator

Lulu? Hi. The next question comes from Andrew Lee at Goldman Sachs.

Andrew Lee - Goldman Sachs - Analyst

Hi. Good morning everyone and thanks for taking the question. I actually wanted to follow up on Akhil's question on the returns. I think it's great that you are now disclosing return on capital. It's really helpful for us. And while the absolute level is suppressed, the direction of travel has clearly been really positive. There were a couple of questions of Akhil, that may be one - so maybe that's because you don't want to - or counter at this point in time, but just going to maybe re-ask them. One was can you improve return on capital this year? And secondly, where do you think the return on capital should be on a medium-term outlook, maybe in the next three years given the current regulatory environment? If you can't answer those, then an additional question will be on any incremental color you could give on the commission or distribution costs which you've also targeted to reduce over the next couple of years, and just wondered if you give some scale and timing of those cost reductions. Thank you.

Nick Read - Chief Executive

I think Margherita can do all of those ones.

Margherita Della Valle - Chief Financial Officer

All mine. So I cover both aspects Andrew. On return on capital, can we improve it? We are coming out with very good momentum from FY '20. I think you have seen the numbers. We were growing revenues, growing EBITDA, growing cash flow and we were on an acceleration path. So what I was looking forward to guide you towards was an another year of further acceleration on all these growth. Now, we have COVID and we had to review our position and you have heard that we expect with the information we have now to see EBITDA being stable to slightly negative in the year, may be a prudent view, but a view we felt was appropriate in the circumstances.

So can returns still grow this year? I think it still is a possibility, but we felt it was more appropriate to guide towards this type of EBITDA and therefore EBIT performance in the year.

Your second part on returns was how far can it go? And I think our target, as I mentioned earlier, is obviously to exceed cost of capital and that's what we plan for. The levers are the one we mentioned earlier and I think a lot of the speed of improvement will also depend on the potential overall industry improvement. If I…

Nick Read - Chief Executive

Can I just - oh, sorry. Can I just build on Margherita's point there. When she says we plan for it, we review the three-year, five-year long-range plans of all the markets, the strategies, the commercial actions, etc. We start with return on capital. So they have to demonstrate to us that they are going past a market cost of capital. And If they don't, we often offset company to come back with more radical structural changes to achieve the goal. So it's very much at the forefront of how we shape the strategic long-range plans.

Margherita Della Valle - Chief Financial Officer

Indeed. And I was thinking of CEOs on the call would recognize this very clearly.

Nick Read - Chief Executive

Yes.

Margherita Della Valle - Chief Financial Officer

We start the process with return targets and we close the process with return targets because it's iterative to make sure we achieve this cost of capital threshold. I think there was a second part to, James - Nick, am I allowed to cover the second part from Andrew?

Nick Read - Chief Executive

Sure.

Margherita Della Valle - Chief Financial Officer

Where do we think cost reduction can come, I think was the angle and particularly around commission. As you know, we were embarked in distribution transformation through digital. And we think that this will continue and actually accelerate in the current environment. I always said in the past when we are talking about cost that I was seeing further opportunities, but the mix of the opportunities may change over time. As you can see, we have more ground to cover on opex with another billion, but on top of that, we are now adding the commission opportunity. Think about commission as EUR2.5 billion that we spend every year in our markets and we do this today with just above 20% of our sales being digital. So of course, as this will continue to increase over time, and as we will progress on our distribution transformation, you can expect for the first time the commission pot to start actually reducing in absolute. And this is the big difference, the EUR2.5 million in the past have always been either flat or increasing year-on-year. We are now confident that together with opex, this P&L line will deliver a net reduction over time.

Andrew Lee - Goldman Sachs - Analyst

Thank you.

Nick Read - Chief Executive

Thank you, Andrew. Lulu?

Operator

Yes. Our next question comes from Georgios at Citigroup.

Georgios Ierodiaconou - Citigroup - Analyst

Yes, good morning, and thank you for taking my question. I was wondering if you can give us a bit more detail on COVID-19 impact across the different countries. And I appreciate it's mainly three pieces. It's roaming, it's cost savings you may achieve and there's also about their provisions. If you can give us some indication, I believe in the slide is such as that Spain would be hit hard because of SME, Germany could be resilient, if you could walk us through the top four markets, that will be great? And just based on the COVID-19 impact on the cost savings, you mentioned the EUR2.5 billion of commissions, can you give an indication of how much of that is variable, so if churn was to benefit, we can give you some credit even if that's delayed? Thank you.

Nick Read - Chief Executive

Margherita, do you want to cover?

Margherita Della Valle - Chief Financial Officer

Sure. First of all, COVID - I will maybe start by painting the bigger picture, Georgios, if you allow me and then just call out the different markets' position, because I think that can be useful. As you heard in our presentation, we are, as an industry, more resilient to COVID impacts, but we are certainly not immune. So we have seen strong demand for our services, but equally, we have seen three things and you call them out. First of all, roaming with the travel reduction. Second, we are starting to see some signals of tension in our B2B business and there I would call out particularly SMEs, but also on the larger end, on big corporates, there are some delays in projects spend from the big corporates. And then as we go through the year, I think it is possible that we may see the impacts from a deeper and broader recession.

Now, on a market-by-market basis to your point, I think there are - all these trends are common to all areas. Maybe, I would call out two extremes if you want, in the range of our four markets. First of all, you mentioned Spain, I think Southern Europe is going to be hit by the travel suspension. Keep in mind, we are getting into the peak season of tourism. Roaming revenues are more geared towards the first half of the year in total and this clearly will hit receiving country like Spain. Just keep in mind that this has not reflected one-to-one into total European performance for Vodafone because clearly some of the roamers in Spain are coming from the UK, and therefore, we have a number of inter-company elimination that in between that make the impact less strong, but I think considering both roaming and SMEs, clearly Spain will be impacted.

At the other end of the spectrum, you've Germany. As you have seen, COVID has a relatively low impacts in Germany so far. And I think it's fair to say that as a group, we are pleased to be relatively more exposed to Germany in the current circumstances. Now, this is all if you are on the revenue perspective. I would just like to call out also the cost perspective for a second, because you have heard us confidently guiding to over EUR5 billion of free cash flow generation in the year. And this is because of course, between revenues and cash flow, there are a number of costs, clearly roaming cost again reduced the impacts, but also the cost transformation we have just talked about is having an impact, and therefore, at cash flow level, we are less impacted.

You were on the cost front with the second part of your question around flexibility of commissions, and now we could see this in the COVID environment. I think that there are two sides to this. One is our own transformation, arguably accelerated by COVID, which brings more activity on direct online channels and this will be an efficiency improvement. And then in the early part of the year, and I think that's what maybe you were referring to, we have seen churn reductions because simply, I mean, retail was slowed down by the lockdowns. I think this will also have an impact because clearly commission are variable, but it very much depends on the balance of the year around what is going to happen next.

We have not planned in our numbers for a really big stable reduction in volumes throughout the year. We are expecting at the moment as we plan that there will be a recovery of commercial activity.

Maybe if I may, just one, maybe technical point, but I think very relevant this year given the discontinuity on volumes that we are experiencing, keep in mind that all the efficiencies that we make around commissions whether because it's lower volumes or whether it's because it's a better mix more direct, are flowing 100% to cash flow, but are not flowing 100% to EBITDA because of IFRS 15. I think most of you know that, but when I look at some of the model, it has not always reflected. When you connect the customer, you have to amortize its acquisition cost over the life of the customer. So if it's two years and they are connecting, I don't know in the middle of the year, you only get 25% of the benefit. Just keep that in mind, but that the cash flow level again 100% of the impact.

Nick Read - Chief Executive

Yeah, can I just do a quick build on Margherita's point because there's two important sort of factors that I'm sure you'd ask anyway. So, Margherita has pointed out the fact that we were not making a big assumption on volume drop in I&O because we've got commercial momentum, we're performing well, so if the volume is there, we want to make sure that we are taking the volume. The volume might be structurally down in the marketplace in which case, of course, we will say that cash and it will have a benefit to the EBITDA. The other factor is also capex and mobile capex because we set ourselves the ambition of co-best on capex. And so, we want to be put in the capex to always ensure we have a good resilient network if incumbents around us slow down the coverage or the capital spend, then of course, we will moderate that as well, but we've held our capex, assuming most of them will do a similar type of performance. So again, both of these were factored in within the overall outlook we were looking at. Lulu. Oh sorry…

Georgios Ierodiaconou - Citigroup - Analyst

Very clear. Maybe if - it's very clear, maybe on one point on bad debt provisions which you mentioned earlier in delays and payments, is there a particular market you have in mind?

Margherita Della Valle - Chief Financial Officer

Not if I can Nick, not really. I think it's fair to say that as we have closed the year in March. We have not seen any material impact in particular in the consumer space. We don't see any significant change of behavior at this point in time. It's a little bit different in enterprise, because as we've gone through April, we have started to get some, arguably so far not many, but some requests from SMEs predominantly of either suspension or delays of payments. So we see this as something that may be gradually building throughout the year.

Nick Read - Chief Executive

Okay, we got to better move on, and Lulu?

Operator

Yeah. Thanks, Nick. The next question comes from Polo at UBS.

Polo Tang - UBS - Analyst

Yeah, hi. Just have one question in terms of German broadband. Can you give us a sense in terms of what percentage of your German gross adds are coming on board with the 1 gigabit speeds? And separately, if we look at broadband retail pricing in Germany, it's been relatively static around about EUR30 to EUR35 per month, therefore how optimistic are you that German consumers will pay more for fast broadband speeds going forward? And then also just to look at Deutsche Telekom, it's actually started offering free Disney plus as a part of its bundles. So this impacting your broadband momentum in Germany for the current quarter? Thanks.

Nick Read - Chief Executive

Let me do a high level, and then if there is a point or two, Margherita would buy. I would say, the promotion that we ran, faster speed in town was very effective. We doubled the size of the gigabit base we had. So I think the demand is there at the right price points. Of course, what we then did was take that promotion out of the marketplace and then put in at pricing. I think the pricing was well judged against the DT's positioning. What we're trying to do is obviously from the point you're really making about where pricing is today is make it in ARPU accretive move as people move up the speed ladder and we are seeing that come through the numbers.

Margherita Della Valle - Chief Financial Officer

Just in terms of data point, you asked what percentage of gross adds are coming at 1 gigabit per second? We are not disclosing the full breakdown, but I can say that over 60% of our gross adds are over 400-gigabit per second, and this number is above 85% if you take the 250-megabit per second level. And we have really seen good ARPU accretion in the recent months as lots of new customers come in with high speeds, but predominantly our own customer base is moving up the ladder. Effectively, speed increase is the more for more, I think for fixed broadband and I think it's in everyone's mind what speed can bring those days and it's definitely reflected in the results we are seeing in Germany, as Nick mentioned in terms of how fast the top speed plans are growing.

Nick Read - Chief Executive

Okay. [Speech Overlap] Lulu, we probably just need to get bit shorter to get through everyone.

Operator

Yes. Thanks, Nick. The next question comes from Sam at Exane.

Sam McHugh - Exane - Analyst

Yeah, hi guys. Just a very quick question on kind of your guidance, I guess. If you look at your slides, I think you said that the roaming revenues of decline maybe 65%, 75% so far. When I think about the guidance, you are assuming within the kind of slight decline in EBITDA that you of flagged that there'll be basically no roaming at all? And when I think about these other pockets of headwind, do you think they could be as big as kind of EUR450 million, EUR500 million roaming headwind? I'm trying to understand how conservative you've been. Thanks very much.

Nick Read - Chief Executive

Margherita?

Margherita Della Valle - Chief Financial Officer

Sure. Clearly we are sharing with you our view on EBITDA, but we are not in this instance sharing a natural guidance range, but if I can give a little bit more color around what we see on the back of the prevailing view of the economic assessment, I think you move from what I would call the top end stable, implies a degree of recovery on the travel patterns and therefore, the roaming trends in the second half of the year. So, better than the minus 70% we see now, and at the lower end, if you want, on the slightly downside of the equation, what you would have ease no significant roaming recovery and a combination of pressure from a broader negative economic out turn if this is what we will see. So that's a little bit how we have been thinking about the two extremes. From a cost perspective, we have factored in obviously our transformation numbers as well as a degree of stability in our capital intensity, which is what Nick was explaining earlier and no major volume changes.

Nick Read - Chief Executive

Okay. Lulu?

Operator

Thank you. The next question comes from Nick at Redburn.

Nick Delfas - Redburn - Analyst

Yeah, thanks very much indeed. Just two questions from me. First of all, you haven't talked very much about net promoter scores and obviously, with all these changes in distribution, how are you seeing those evolve? And secondly, on Huawei, could you talk a little bit about how you see the costs relating to reducing exposure to Huawei and what kind of percentages in the network you're thinking of for the next few years? Thanks.

Nick Read - Chief Executive

Okay. I would say - sorry, the first point was again - sorry?

Nick Delfas - Redburn - Analyst

Net promoter scores.

Nick Read - Chief Executive

Yeah. Net promoter. So what I would say is that we have two types of net promoter. One is touch point NPS. So, it's real time you call the call center, you're asked to give feedback immediately, we monitor all of the touch points around our business. I would say we've had favorable trends on touch point NPS as we've done better products, better network quality, all the things that you were seeing us gain commercial advance to join and momentum has been reflected lower churn, etc. So good correlation.

I would say that the lag NPS, which is the more survey-orientated NPS we do into the market versus competitors, has been a little static, and we've been puzzling as to why that is. We need to understand if it's more segment-orientated, so is it a case of - we've got some - a lot of people are very happy, but then we've got some other people in other segments that are not. So we need to do more analysis of why we've not moved, we were reflecting as a management team, we would have expected with the commercial momentum we've got, that that lag NPAs would have moved more significantly. You never know in two quarters' time it might start moving, but - so work to be done there, I would say.

Just in terms of a long way, we are now expecting the European markets to come back on the tool kit and the implementation of that tool kit in June. So there hasn't been a move on the date. Maybe with COVID-19, there might be a delay. And I would say obviously you know we've said that we're taking the call out of Europe. That was a EUR200 million hit for us, but spread over a four to five year time horizon, so we'll absorb it within the capital intensity that we have planned.

As of this moment, I'm not expecting additional if you like capital pressures. I do think that the governments have now sort of realized, even though of course there are macro tensions, here if we were doing a network swap today, it would have been catastrophic for the performance of the networks and a critical style. So I think a lot of governments are gone, now we understand all the arguments of why it's so important and delicate to handle this over long time horizons and allow us to do it in a moderated way where we balance and develop more diversity of vendors. So you've seen our announcements with Open RAN. We've committed we want to do Open RAN, but Open RAN is a longer term project and you need time to do that over a significant number of years. So as long as we have time and we do things moderately, we don't see this has been an economic downside for our business.

Nick Delfas - Redburn - Analyst

Okay. Thanks very much.

Nick Read - Chief Executive

Thanks, Lulu.

Operator

Thank you, Nick. Our next question comes from David at BAML.

David Antony - BAML - Analyst

Hello, everyone. Thanks for your extended call and listen, just to, I guess, express some appreciation from our side too for the measures that Vodafone has taken over the last couple of months. It is very much appreciated. And then just on to my question, just on the wider portfolio, you've talked about ROCE being a target that you're obviously publishing now, but it's clearly been a key to your discussions with the the regional businesses over the last few years. I guess the question is, are there any real sort of sacred cows here, if your five major markets, the big four Europeans and Africa are not making that ROCE targets on a mid-term view. These assets that you could even consider to divest at some point, they've obviously had a pretty good chance to achieve the results over the last few years. I wonder when you're really drawing a line. And just subsequently on the portfolio, a little softening in the language of Egypt, I think you've said calendar H1 this year. Obviously, we've seen the buyer delays on funding process and you now saying fiscal 2021. So, is it more like a kind of end of the fiscal year now with that in mind? Thank you.

Nick Read - Chief Executive

So, David, very good question in terms of market reviews and that's why I was trying to stress. When we sit down and look at the strategy and the long-range plan of each market, we have to be convinced as a path to making the cost of capital on a market basis. If they can't do it through the organic plan, then we start to look at structurally, how can we reshape that business within the context of that marketplace. So, it is a very rigorous conversation, it leads to restructurings of business. I mean I'd point to Spain as a really good example of one where a couple of times we set back, I mean, coming out of footfall was a very significant decision, going more digital, channel management, you will see us take actions on indirect channels as an example, where we see the economics as not as favorable as we want in certain markets, to improve the long-term returns to that marketplace.

Network sharing was another way of us improving the returns on a local market, having the CEOs go to governments and look for administrative spectrum in terms of instead of large auctions or moderates in the amount of spectrum that they need, all of these things, we go through market by market.

So I would say, we welcome actively and that's why you see the progress that we made by portfolio and by market. I would say that to Egypt specifically, but it's really been hit by COVID-19. You can't really close out due diligence and full government engagement if no one can travel. So though they're making a lot of good progress, ultimately STC top management needs to be in Egypt, needs to engage with government, finish off the due diligence. So we just extended MOU to allow that to happen and obviously there is a number of conditions that need to be fulfilled. We're going through that with the maximum speed.

David Antony - BAML - Analyst

Very good. Thank you very much.

Nick Read - Chief Executive

Thanks. Lulu?

Operator

Nick, I think our time wise, this is our last question which comes from Robert at Deutsche Bank.

Nick Read - Chief Executive

Robert, you're the big finale. How is the beard, is it getting longer?

Operator

We seemed to have lost Robert. [Speech Overlap] Can we move on to Jerry then as - Jerry from Jefferies. This is the last question.

Jerry Dellis - Jefferies - Analyst

Hi, yes, good morning. Thank you very much for taking my question.

Nick Read - Chief Executive

Good morning.

Jerry Dellis - Jefferies - Analyst

I have a question really on the competitive regions - Good morning. Just question on competitive conditions, please, coming out of lockdown. I think we've seen in Spain, what's arguably a bit of a competitive escalation around unlimited data at some quite aggressive price points and I just wonder whether you are seeing the early signs of this in other markets. And perhaps a little bit of detail on how you plan to cope. I suppose relative to sort of previous sort of recessions, there is now much more in the way of sort of no-frills players, so customers could if they so wished, find sort of may be good enough service at lower price points. So I'm sure you have a sort of plan to manage that. It would just be interesting to know how you plan to sort of handle that? And where do you think it's really an issue? Thank you.

Nick Read - Chief Executive

Yeah. If I was calling out just very quickly, where do we see increasing competitive tension. Spain, TEF, unlimited, not speed tiered in mobile, that was a pretty aggressive move. It is shame that Orange and TEF didn't go speed tiered, it was missed opportunity. Glad to see the O2 in Germany, did go speed tiered. So, it shows that people can follow the right model, in my opinion, for accretion of ARPU. So finally, there has been a slight elevation in Spain. And I'd say probably fixed in Italy, has oscillated between ultra aggressive at EUR20 and slightly below, up to EUR35 was sort of sitting in the EUR27 zone at the moment. So, I would say those are two, most of the others are generally, I mean O2 and UK was a bit aggressive in quarter four. I think that was quite promotional and indirect Carphone Warehouse-driven, but generally, I'd say most people have just been stable at the moment.

I think you might get interesting observation. If I stand back, our business is very different from what it used to be. I think you'll see in that commercial performance coming through. We've been really consistent in our commercial strategy. So though you might see variations by market, the framework is the same. And the framework is, we're going to compete high, mid, and low. So we're doing unlimited speed tiered in the high, we are often deploying second brands in the low, we are gaining traction across the board in all of those segments and we monitor our share in each of those segments. If a competitor moves, we move very quickly. So we don't give them if you like this time lag advantage of response anymore, we are immediate, you know where we stand relative to your on pricing.

I'd say the second brands is something that previously we debated. Now, we're committed to second brands if correctly deployed. We've done that very effectively in Italy, we re-purposed ourselves in Spain with really good effect and results, VOXI in the UK. So I could go on. I think that has been good. We do a lot more below the line now than we do above the line. So it's a lot more controlled targeted, AI, big data analytics, ARPU accretive. So it's got a lot more science to the way we go about pricing. Don't get some fixated with above the line pricing so much going forward.

And so I would just in - then we drive convergence, then we drive one more activity, so that we bring down churn, so the customers don't go back in the market. So, all I'm saying is there is a lot of levels now, a lot of sophistication to the way we approach markets, whether our competitors approach with the same level of sophistication, I don't know. But this is something we apply a lot of time and energy on. And I think it will spend us in really good stead to make us stronger through a recessionary cycle. And I go back to the point of people, value quality. So business is high value, consumers will continue to value quality, of course, people that are financially struggling and vulnerable might turn to better deals or value deals and make compromises, and we need to be there for them as well. Which is a beautiful finish to this call.

Thank you very much everyone for listening. Great questions, as always. And we look forward to seeing you soon. Stay safe, from both myself and Margherita. Thank you.

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VODAFONE GROUP PUBLIC LTD CO

Q4 2020

Earnings Transcript

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