Vodafone Group Plc (VOD) Q2 2021 Results - Earnings Call
Vodafone Group Plc (NASDAQ:VOD) Q2 2021 Earnings Conference Call November 16, 2020 4:30 AM ET
Company Participants
Nick Read - Chief Executive Officer
Margherita Della Valle - Chief Financial Officer
Conference Call Participants
Akhil Dattani - JPMorgan
Emmet Kelly - Morgan Stanley
Andrew Lee - Goldman Sachs
Jerry Dellis - Jefferies
Georgios Ierodiaconou - Citigroup
Polo Tang - UBS
Maurice Patrick - Barclays
David Wright - Bank of America Merrill Lynch
James Ratzer - New Street Research
Sam McHugh - Exane
Nick Delfas - Redburn
Robert Grindle - Deutsche Bank
Jakob Bluestone - Credit Suisse
Nick Read
Hi everyone. And hope you're staying safe. Thank you for taking the time to join Margherita and myself for our Half Year results. And you've seen our presentation. So we are open for Q&A. Just one point around Vantage Towers, you saw that we had a specific slide in the deck regarding Vantage Towers and importantly the relationship with Vodafone. We are happy to take Q&A regarding our relationship but we can't go into any more specifics because there is a Capital Markets Day tomorrow.
I think you will find it very informative in terms of the strategy, growth drivers, capital structure, so all your questions will be answered tomorrow. And because we are under regulatory constraints, we can't go into that today. So on that, I think we have one question per analyst. And they're never disciplined but hopefully we can get through everyone and I think we will start with the queue.
Question-and-Answer Session
Operator
Thank you. So your first question comes from Akhil Dattani of JPMorgan. Akhil, your line is open.
Akhil Dattani
Yeah, hi, good morning. Thanks for taking the question. And the question is really around the revenue trajectory going forward. You've had a much better service revenue performance this quarter than the consensus expected. One of the components you've called out is B2B. So obviously very keen to understand specifically, what in B2B is driving that and how we can think about that going forward?
And the second part of that is pricing. And if I'm understanding correctly, traditionally, a lot of your price increases kick in, in Q2 but actually, this time around with the lockdown, they didn't. And I'm looking forward and seeing that you are starting to put through a number of price increases into Q3 and Q4. So can you maybe just talk to those pricing moves and just help us to understand how that also drives the going forward trajectory as long?
Margherita Della Valle
Good, Akhil. I'll comment first on your point on B2B and then try to give you a picture of how we see the moving parts, going forward. As far as B2B is concerned, we're very pleased with our performance, I would say around pretty much all KPIs in that space. If you look at the numbers, we've had the lowest ever or at least that I can remember, churn rate; in mobile, we've had good growth; in fixed with Europe growing 6% in the quarter, we are leading in customer satisfaction in NPS, in B2B in four out of five of our main markets now. And so it's, I would say broad-based acceleration after the lockdown in Q1, which we see very much being the result of effectively being very fast in Q1, in being close to our customers, deploying a range of products that were helping them going through the crisis. And I think we are now reaping the rewards of that. So competing, well, I would say is the headline in B2B.
In terms of how we see the trend lines, then, overall, I would split the answer into two parts, maybe near-term. So the remainder of this fiscal year, and then the more longer term, as we look into Q2 and Q3, I think it's fair to say there are still some drags that we can expect on our service revenue. As you've seen, the lockdowns have somehow restarted in different ways across our markets. And this for us is relevant on revenues on two fronts. First one, obviously international travel, there was a bit of a recovery over the summer in Europe. I suppose, we need to expect that this will now fall back down again with the lockdown.
And then the second element when there is still uncertainty for the remainder of the year, is government support packages, and for how long they will last and how, particularly in Africa. So these are the moving parts sort of going forward. I think on the back of the fact that we had good commercial momentum, good demand for our services in B2B, we definitely see that the second half is going to look better than the first half, but still a degree of oscillation as you'd expect, likely. I want to also point out to the medium-term because I think this is a bit of a special moment in terms of trends, because we have a significant drag from COVID, in particular, on roaming as you have seen.
And you have seen in our release, we keep referring to service revenue growth also ex-roaming. The reason why we do that is that as we move into next year, from April, you will see that the roaming drag will lapse. We will compare ourselves to a year where there was already very little travel. And therefore, this will allow our underlying performance ex-roaming, which at the moment, as you have seen is positive with 1.5% service revenue growth across the group ex-roaming Europe now, stable. This underlying performance that we are seeing is going to be emerge and let alone be accelerated then if there was any recovery in international travel into next year. So, clearly return to growth on total service revenue performance expected for the coming year.
Akhil Dattani
That's great. Thank you. And just on the pricing bit, I mean, are there any specific market you'd call out, just to understand the pricing dynamics?
Margherita Della Valle
No, it's a very good point actually, that you're raising on pricing. Because you're right, COVID did create a bit of rephrasing, repositioning around these moves. What I would say in terms of near-term service revenue growth, I don't see this as being a big driver of acceleration, because as you mentioned, in prior year, we also were going through pricing cycles, maybe a little bit earlier or a little bit in a different timeframe, but of similar size.
Nick Read
But I think - I think it's fair to say we will be looking to next year to see where the opportunities are, just like we would normally.
Akhil Dattani
Thanks very much.
Operator
Thank you. Your next question comes from Emmet Kelly of Morgan Stanley. Emmet, please go ahead.
Emmet Kelly
Yes, good morning, everybody. Thank you for taking my question. So, a similar question from me, except on the EBITDA side. So you have reported EBITDA of minus 2%, in H1. And if I look at the guidance, it suggests, I guess, positive EBITDA of roughly plus 0.5% to maybe plus 3% in the second half of the year. Can you maybe just say a few words on what the key drivers are off the EBITDA improvements, and maybe just refer to your cost cutting plan as well, please? Thank you.
Margherita Della Valle
Sure. In general terms, you're right, we expect EBITDA in the second half of the year to be, let's say, on the right side of zero. And this is what we have factored in upgrading our guidance to what I would call the upper end of our outlook range that we gave immediately post-COVID. I mean, a number of drivers are the same as the one we just mentioned with Akhil, so on a positive front, strong commercial momentum and good demand for our services in B2B, clearly offset by some further drag on roaming, should be lower in the second half than in the first half of the year because of seasonality. But as I said, probably the volumes will fall back down again, we need to see.
In terms of cost progress, well as you as you can imagine, anytime someone asked me about cost, we are very pleased with our results so far. All the KPIs around our cost reduction programs have been either progressing at the same pace as before, in the first half or have been accelerated. And you can look at things like digital transformation, integration of activities into shared service. I would say COVID has not slowed us down in this journey. Actually, in some instances, we have seen some supportive trends, particularly around digital coming from the change of behaviors that the customers have had due to COVID. And we are locking those behavioral changes in going forward.
So very, very positive progress. Clearly some further opportunities ahead of us both in the near term and in the longer term. You may remember my, another billion of cost reductions in Europe between a FY21 and a FY23. And I think that we have some really strong assets to deliver these further improvements into the Group operating model. You've seen in the presentation, we're talking about what a good machine we have now to effectively standardize similar processes across market, integrate them, package them, decide what's the best location to carry them through, and automate them and on the back of that, link to also an integrated procurement process. We think that, if anything, the opportunities there post-COVID to further accelerate our cost reduction programs.
Emmet Kelly
Super. Thank you very much.
Operator
Thank you. Your next question comes from Andrew Lee of Goldman Sachs. Andrew, your line is open. Yeah.
Andrew Lee
Good morning, guys. I had a question on portfolio management. There's a lot of detail and really helpful detail in the presentation around the parameters for this and how you think about it. Can you give us any kind of more color on what this practically means and how you're thinking about underperforming assets, such as Spain at the moment?
Nick Read
Yeah, Andrew, thanks for recognizing in the presentation, we tried - laid out a framework, and it really sort of had three core principles to it. And these three core principles have been there, since I came in as Group CEO. We decided this is the way we need to look at our portfolio going forward. So the first principle is that we need to ensure that an asset has benefit from a regional scale, but also must be of local scale; it must have a credible and actionable long range plan that delivers return on capital employed greater than market [rack] over the long range plan that we agree with. And then thirdly, we have to be the best owner of the asset, we have to make sure that both the asset and Group are benefited from being part of the portfolio.
So if we take Spain as an example, Margherita and I, two years ago, did a very deep dive on Spain. And we looked at the long range plan. And frankly, we felt they weren't on the right trajectory. We didn't have that confidence in the return on capital over the long range plan. And so we did a very radical restructuring and an alternative transformation strategy, totally different commercial plan, making sure we're competing high, mid, low-end, to branded. We came out of football, we drove digital transformation, we did network sharing on a more drastic and radical basis. I think today is really good demonstration.
And frankly, the last number of quarters have been really good demonstration of progress that we've made. I think the team have executed that transformation through, excellently. And I think that you're now seeing us on the front foot in Spain. I think when you see us - relative results to others; I think they are a good set of results. We are now number two on retail, having just past Orange. We have five consecutive quarters, either stable or improving mobile, TV, and fixed broadband. And we've had two halves of EBITDA expansion. So, I think we've got a good organic plan and that will prove to improve returns over time.
Of course, yeah, were there to be consolidation opportunities, we will always evaluate those opportunities, if they're value accretive for our shareholders. And we've always taken that sort of pragmatic view, market-to-market on how to strengthen positions.
Andrew Lee
Thank you. Can I just ask a very short follow up? I take it from your comments then that the big improvement in Spanish trends that we saw in the quarter as sustainable into the second half of the year?
Nick Read
Yes. Well, I think you're saying that we've got momentum as a business. If you remember in quarter four, I think that was a first acknowledgement, yes, you are a business with momentum. We were growing in the second half EBITDA, we said we'd be growing in the first half, we are growing. And I think even though the market has intensified from a competitive perspective, both at the high and the low end, I think we are competing very effectively.
Andrew Lee
Thank you.
Operator
Thank you very much. Your next question comes from Jerry Dellis of Jefferies. Please go ahead.
Jerry Dellis
Yes, good morning. Thank you for taking my questions. I wanted to ask about 5G, please? We understand that 5G delivered over mid-band spectrum brings performance gains. But the mid-band spectrum is not fully available in all of your markets. So what's the commercial case for launching 5G in the low-band spectrum first, and is there a sort of a commercial necessity to being first to deploy 5G market-by-market? And perhaps related to that, as there is some enduring Huawei uncertainty, differs a bit market-by-market, to what extent is that uncertainty about Huawei holding you back from fully investing? Thank you.
Nick Read
Jerry, I think we made, if you like, we went on to the front foot on 5G. We were one of the first to launch across Europe. I think we landed that message in the minds of businesses and consumers very effectively. Of course, it wasn't mass scale. It was small, but it was widely dispersed throughout European markets. So actually, from a perception perspective, we are very much seen as a leader in 5G. Then the question is, as it starts to now ramp up. And as you see, we're deploying in, I think it's a 126 cities currently, across nine markets in Europe. The question is, how should we deploy? Some operators are taking dynamic spectrum sharing, so DSS, which is effectively giving you a 5G symbol but 4G performance.
And what we said as a company is, no, we don't want to do that, because it will be misleading to consumers and businesses. What we want to do is, is 5G built right. So we want the real 5G performance. We know that if we deploy the significant 3.5 GHz type level spectrum along with 700, ultimately, when it's available in each of the markets, that is real 5G. We're starting with the cities, we're starting with the business part where there is an economic case, because the demand is there from a data usage perspective, and also the user cases from a business perspective. I see 3G was browsing, 4G was video. 5G, this is about enterprise, it's about businesses, enabling the capability moving forward in an IoT world. And we have the world's largest IoT platform. So I think it's about us focusing not on coverage messages with an inferior product, it's about a superior product where the economics really count.
Jerry Dellis
Thank you. And does the Huawei uncertainty matter? Does that create a constraint?
Nick Read
Well clearly, you would want clarity and we're working with each of the European countries and governments to implement on the European 5G toolbox. They are in the process of doing that. But the toolbox made a distinction between core and RAN. We've already made our decision on core. We're taking Huawei out the core over the next four to five years, but RAN, very much different from core. And I think we'll engage with each of the governments on that. So what I would say is, I wouldn't say it's been any material delay. Maybe in some markets, we pause for a few months, but nothing more than that. Thank you.
Operator
Your next question comes from Georgios Ierodiaconou from Citigroup. Georgios, please go ahead.
Georgios Ierodiaconou
Good morning, and thank you for taking my question. It's on the regulation. And Nick, during your introductory remarks, you highlighted that regulation is going in the right direction in a number of countries you are present. Perhaps, with one exception which is Portugal. And my question is in two parts. Firstly, I believe the market leader there, Altice, have already stated they will make no material investments in the country until they revisit the spectrum auction process. I'll be interested to hear your views on that and whether you are thinking around something similar for Vodafone?
And then secondly, more broadly, by focusing on returns on capital employed, you will be picking winners and losers on returns as you deploy capital in the long term. So do you think politicians or regulators are starting to understand the importance of fairer regulation in order to attract more capital from the Group? Thank you.
Nick Read
Yeah, Georgios, a very good question. Maybe I'll start with the latter and then go into the first question, which is I talk all the time about social contracts. I talk about what we bring to society, what we're willing to invest, what our investors want to deploy in terms of serious capital, because we - in a COVID world, the demand is even greater for the products. But what I reinforce is a contract and the contract is, we want to invest but we need the right conditions. And I talk about we need to create a healthier market structure and healthier is about saying that our shareholders need to earn adequate return. And we will deploy capital where we see governments supporting that principle.
And so I have been actively engaged with European Commission. I mean, I was with Commissioner Breton last week, Vestager, about three weeks before that, so very actively engaged. We got another industry meeting in a couple of weeks' time talking about what makes a healthy industry structure, and what things we need to have facilitated. So I'd say very much leaning into that. And they are listening because they understand the criticality now of connectivity. If they want a digital society, if they want a digital, sustainable, inclusive society, they need to provide a healthier structure. And I think they're acknowledging that. I tried to put in the presentation, a number of evidence points. Of course, this is early days.
But then I turn to Portugal. And so Portugal's a really good example where we're saying that that spectrum auction structure was not providing a healthy industry structure. That essentially with no market testing, with no evidencing of market failure whatsoever, a new entrant was being given advantageous terms, both in terms of lower prices spectrum and no real obligation to roll out and can just do national roaming. And we said, where is the incentive for people that are really investing into markets? And we had planned to put a center of excellence with 400 FTEs into Portugal, and we put it on pause. Because we said, we are not going to support governments that work against existing operators in that way, especially when we were there for the crisis.
Now we've engaged, the regulator and government have changed the conditions, they have improved the conditions, now the new entrant will pay full price, and we'll have to roll out network, fine. But in my opinion, in my team's opinion, they have not gone far enough. We still believe this is a state aid. And we still believe that it contravenes European Telco law. So we are going to continue to litigate against them. And while we do that, we will have to consider the investments that we're making. Yeah, governments have to realize, if you want a healthy investor community, there's a balance.
Georgios Ierodiaconou
Clear, thank you.
Operator
Thank you. Your next question comes from Polo Tang of UBS. Polo, your line is open.
Polo Tang
Good morning, everybody. Thank you for taking the question. I just really have a question on Germany, because I think you mentioned in your presentation that about a quarter of your broadband base was taking one gigabit speeds and I think that the ARPU uplift was round about €5 a month as people upgraded. But can you clarify how we should think about the trajectory in terms of fixed German service revenues going forward? Can I think they were kind of almost stable in Q2, so should we expect a pick up over the coming quarters? And given that you have such a speed advantage in terms of German broadband and given that you've been promoting your one gig speed at €40, €50 a month, do you think your broadband net-adds in Germany should accelerate from here? So any color around Germany in broadband? Thank you very much.
Nick Read
So let me just do the high level and then maybe if you want to provide any sort of outlook type comments. But we sit back and we say we've done a really good job of upgrading our gigabit network. 22 million homes now pass with gigabit speed. So we're pleased with the execution in that respect. We've had a decent run rate that accelerated in the quarter in terms of fixed broadband net-adds. So especially on our cable performance, so I would say, we've got momentum.
I think, two things we call out in Germany that we'd like to see some improvement and that is retail performance in the Unity area. We show a graph in Margherita's area where they have not been quite as good as we've been in the KDG. We had to harmonize some of the sales processes. And I'd see the roadmap, of which we've got a clear TV roadmap this year. We've now harmonized the TV premium product. We've got OTT product coming and then Vodafone TV product coming in the fourth quarter.
So I'd say we're definitely focused on gaining more momentum and a higher acceleration in the second half.
Margherita Della Valle
So just maybe adding a technical point, the reason why you see the growth flattish in the quarter is wholesale. Wholesale has been a negative drag in Germany because we love the point in which the ULL fees were increased by Deutsche Telekom and this affects the total growth rate.
Polo Tang
Can I maybe just pick up on something, you talked about TV but how important do you think TV is in a converged bundle? Because if we look at Spain, you obviously moved away from football in terms of Champions League and La Liga, we are actually seeing accelerating commercial trends. So overall, how important is TV in a converged bundle?
Nick Read
Now, I think it's very important. I think that over the long run, but the question is, what type of bundle what we aren't keen on is paying huge fees for football within the bundle. What we would rather do is have commercial arrangement with someone open within the market, like Sky for Germany as an example. And then we focus on ensuring that we bring, I mean we have Vodafone TV simply is bringing what a 4K experience, €60 box with linear Plus apps with harmonized search across all channels to surface the content. You're looking for voice activated, so it's nice and easy for consumers to find what they're looking for, cloud storage for your recordings. So we think that is the new execution for TV and we are scaling our position. We're in seven markets already, Germany launches as the eighth market in Europe in quarter four. And then we will migrate customers to that experience on from the Horizon box and the Giga TV box.
Polo Tang
Right, thanks.
Operator
Your next question is from Maurice Patrick from Barclays. Maurice, your line is open.
Maurice Patrick
Morning, guys. Yeah, so a key thrust of the presentation seems to be around boosting job returns and returns overall. So a question on balancing the sort of retail wholesale side, and you talked about is on a capital employed only 5% and actually falling slightly. And you said you were satisfied about it. But thinking about Germany and outside the role areas because you have a slide talking about lots of sharing and monetization, I think you've done across the portfolio and not really Germany.
If I think correctly about your utilization network in Germany is about 30%. It's not obvious how you grow the retail base that much over the coming quarters. So I guess your thoughts on wholesale in Germany? I know you've got cable, which had Deutsche line coming up. Is that enough? I mean, would you think about using truly, for example, more the [storage plan] of yours, it looks like you need a new partner. So, thoughts about balancing the retail and the wholesale mix and asset utilization in Germany? Thank you.
Margherita Della Valle
Maybe I just was reacting to your points around German growth more broadly first, before coming on to wholesale, which is German growth is flat at the moment. But it is suffering from the headwinds of COVID as well as obviously the exit from the one-on-one wholesale deal. As I was mentioning earlier with Akhil, I think as you move into next year, you will see that the roaming headwind will go away and then over time, also the wholesale one.
There are definite areas of growth into our German business as you would expect, right? Because we are driving convergence, we are driving cable penetration, we were mentioning earlier, the up-selling of cable to higher speed. All these are reasons why the retail revenues of Germany which are already growing in the quarter by 1.8%, if you exclude roaming, are expected to continue to grow nicely, I would say in the coming in - the coming future. I was just reacting to that before moving into the, then what do we want to do with wholesale.
Nick Read
No, we have clearly considered wholesale. So we wholesale to tech, we've been very focused on bringing that into action. And I would say that generally we wanted and what we like about that wholesale arrangement is, it does provide utilization of the asset but still protects our differentiation in the marketplace. Still, we're focused at the high-speeds and we're completely differentiated at the high-speeds. You know, clearly, we'll engage and consider various options in the future and we'll always look at opportunities as long as differentiation is maintained. And let's say the economics are acceptable.
Maurice Patrick
Great, and as a quick follow up, someone just pinged me on Bloomberg, and asked how big the internet revenues are, at the moment, so the service revenues at the moment and since then?
Margherita Della Valle
So we have both fixed and mobile revenues in the mix. And the drag that they create on our service revenue growth at the moment is around one percentage point. The total amount, I think [AR] can be more precise, but call it around €300 million between fixed and mobile.
Maurice Patrick
Great, thank you.
Operator
Thank you. Next question comes from David Wright of Bank of America Merrill Lynch. David, please go ahead.
David Wright
Okay. Thank you very much, guys, for taking the question. I was going to ask about the portfolio management side, once again and I think it seems like Egypt has wobbled a little bit. So I was just looking to get maybe an update on progress there. And just second of all, relating to portfolio and going on to the whole ROCE debate that I think has been, fairly intense with some of the questions today. And one of the things that was notable about Spain, Margherita, is that you chose to write down the asset I think as you did that quite significant review of strategy. You do run across the Vodafone Group, right now, a fairly high level of intangibles and goodwill against your actual PPE asset base. So it does feel like are there or should I say, are there some opportunities to actually consider some of the values of assets acquired over the last 10 years when you're actually doing some of this return on capital analysis? You know, to get a more fair picture, as it were, for instance, you've you acquired the Cable & Wireless asset some time ago. Is that the kind of asset that you could reconsider the valuation of? So, how are you actually thinking about the potential value of some of these significant goodwill and amortization drivers that are holding group ROCE back? Thank you.
Nick Read
Okay, well, let me be very quick on Egypt, the due diligence is effectively complete. And now STC are engaged with TE Telecom Egypt. Why? Because, you know, Telecom Egypt is a significant shareholder, we have a shareholder agreement. Clearly, there needs to be a shareholder agreement between the two of them. And therefore, it's an important consideration on the go forward relationship. So we're not really a party to that conversation that's really between the two of them. And we will see how they progress.
Margherita Della Valle
And on the goodwill point, I would say that we see it very much as, can I say, strict accounting process that we need to follow. And we will keep following on the framework of rules aligned with our Audit Committee and our auditors. So it's very much driven by the mechanics of the accounting, don't read into it any real, broader considerations. We just want to make sure that we are, I would say, balanced and conservative, from that perspective because it's an area of attention obviously for all regulators, from a financial perspective. So this is what we are focusing on really, it's a very transparent and balanced accounting exercise.
David Wright
It is just following on a little, if I may, Nick on the whole sort of Spanish outlook. Okay, so you began two years ago. Can you just give us a little bit more insight into that mid-term sort of trajectory that you're really considering? We have seen one or two of the major Telco's in Europe, maybe even Spain, well they talked about looking at return on capital employed and the assets have continued to deteriorate now, they might even have to give them away. So, are we talking, is it a five-year trajectory, a 10-year trajectory? Is it just anything more you can you can give us on that kind of timeline that you're giving these assets to really deliver?
Nick Read
When we talk over the long range plan, we're talking three to five years. So that's the time horizon we look at. For Spain as an example, we took structural actions and I think - I think sometimes people don't fully appreciate how many structural actions we took, in terms of the digital side, the transformation of the cost base, the network sharing, of course the network sharing is yet to really show in the - that five year time horizon, but will increasingly be a benefit going forward.
One of the other things we did which is not so obvious, is we did something with Spain, that we are adopting increasingly through our markets, which is we wanted to get - we wanted to simplify the business inside from an IT perspective, cost perspective, etc. To do that, you have to migrate your base on to forward book pricing and forward book tariffs. And so Spain is a really good example where the base is on [indiscernible] unlimited now. That's important because it means that we don't have this long legacy of lots of historical pricing, tariffs, etc. Makes the tariffs people are on today's pricing. So we are less vulnerable to today's pricing and promos.
Yeah, another thing that we did an investment on was to drive in commitment. So there's a substantial step up of, in commitment on the base versus two years ago. So there's a number of things to make the actual customer base more resilient, which is why I think over the last five quarters, you're seeing a good customer base performance, which we can build on going forward.
David Wright
Okay, thanks a lot. Thanks for that younger, healthier looking picture. Thank you, guys.
Operator
Next question comes from James Ratzer of New Street. James, please, go ahead.
James Ratzer
Yes, good morning. And thank you very much indeed. We'd like to go back, if possible, please to the point around EBITDA growth and the phasing of EBITDA. In the full year guidance you've given, you pick out I think on Slide 17 headwinds from roaming and then what you call other COVID impacts. I was wondering just specifically, kind of what you're thinking about those other COVID impacts because the commentary you've given so far actually sounds quite encouraging around B2B. So really trying to get an idea of what you see underlying EBITDA growth ex-COVID at the moment? And in terms of the phasing, just wondering what you can say about the synergies from Unity? Because I noticed in the German slide, you said I think €83 million of synergy gains. But then in the commentary later in the presentation case you talk about I think it was €257 million are now locked-in. So does that mean we're actually going to see the phasing impact from the Unity synergy start to accelerate from here on EBITDA? Thank you.
Margherita Della Valle
So James, I'll start with Liberty and the synergies and then move on to EBITDA. From a synergy perspective, when we talk about having locked-in over €250 million, which is around 50% of the target over four to five years, essentially, we mean that we have already negotiated, for example, in procurement, the contractual condition that will deliver the savings or establish the plans in the business to deliver those savings, these will come through gradually over time. You have seen in the - I think in the slide on Germany, the exact amount that has contributed to the German EBITDA, in this year, and we will continue obviously to report on that going forward.
As I mentioned earlier, we are very pleased with the speed at which the synergies are being delivered at the moment. We are about six months ahead out of the first 12 months of execution. I need to say the teams have done a fantastic job there. But clearly it is - it's a multi-year plan, four to five years to get to the final goal. So I think we have a long road ahead of us. And again, we will continue to report regularly on it. As far as then your question was around EBITDA, what do we see going forward from COVID and is there something beyond roaming? For roaming specifically, as I probably mentioned already earlier, less of a drag in the second half, maybe worse volume then in Q2, because of the lockdown.
And the other most significant impacts for us potentially are from the support that governments can give to businesses or consumers in the case of Africa, for example, on the crisis. And this support has been constant, so far and therefore we just want to draw out the fact that that's what has been driving the trends that we have seen. So for example, if you're thinking about the debt, we have called out that we didn't see a material impact on businesses so far.
Clearly, I think our customers are also prioritizing our services in the current crisis, and we would expect this to continue. But there may be also a support that is coming from these packages. And therefore we need to be conscious of the fact that if some of these packages were going to stop or change significantly, that may affect our performance. That's what we wanted to call out.
James Ratzer
Thank you. So would you be able to give an estimate in H1 of what you think your organic EBITDA growth towards ex-all COVID impacts?
Margherita Della Valle
I think it's probably simpler to stay on, on the ex-roaming and visitors. We've internal debates as well on how to portray this. And I need to say, I think it's always easier to point to a single line in the P&L that you can see without adding judgment elements to it. So you have seen that EBITDA was minus 1.9% in the first half, and the drag from roaming was €270 million. So it would have been positive around to just under 2%, ex the roaming drag. Just narrowing it down to this, as you say, it wasn't the only impact because clearly the lockdowns affected us in Q1 but I think it's the easiest metric to look at also because it will then pull off.
James Ratzer
Right. Thanks very much.
Operator
Your next question comes from Sam McHugh from Exane. Sam, please go ahead.
Sam McHugh
Good morning, guys. Just a quick one on Enterprise, if I can. So you flagged they retained the growth this quarter. So when you look at European markets, where do you think you see the best scope for growth? And on Enterprise mobile, maybe you could just give us a bit of color about KPIs. And the reason I ask is increasingly we do see corporates installing apps on phones and substituting the Enterprise phones for maybe the consumer phone. How should we think about deflation of the overall Enterprise mobile market in the medium to long term? Is that something you worry about or are you pretty confident that you've great relationship with that [indiscernible]? Thanks very much.
Nick Read
Sam, that's probably a question that could take an hour to answer. Let me try and sort of pull a couple of points. But first of all, I would say that we are seeing big demand from businesses, small and large. And large customers predominantly wanting to upgrade capacity, wanting to upgrade next generation connectivity that plays to add strength because we don't have the legacy products, we're more front book selling. So that's a positive for us. Of course, we've got a very differentiated European footprint, that's another edition. We're the player you go to, to start that conversation. So I would say we are definitely gaining share. You can see that in the UK numbers where you see large corporate movement more substantially, I would say.
And take the second area, where it's about SMEs have all woken up to small - so housing space, all woken up to digitization of their business model being critical. And you're going to see part of the EU Recovery Fund targeted purely at SMEs and digital. So we see like vouchers, for instance, in Italy is the first example. There will be many more of those. And we want to stand for the champion for SME digitization. So if you look at what we're doing on our website, etc., is leaning into that long-term trend. So we think that that's an advantage for us going forward.
And then I'll take, third is just our own digital experience, and the cloud and digital services. So what some of the incumbents do is they try and create their own products. What we said is, no, we need to get the very best of breed of those cloud and digital services, partner with the best in the market, bring it quickly in a suite and we put a Vodafone wrap around that, and then sell it in as total solutions. And I think it's more agile, it's more front foot and its lower capital need on us, going forward. Well, do you have anything?
Margherita Della Valle
No, nothing specifically.
Sam McHugh
Thank you.
Operator
The next question comes from Nick Delfas of Redburn. Nick, your line is open.
Nick Delfas
Yeah, thanks so much. Indeed. Just one question from me on Net Promoter Scores. You mentioned the Net Promoter Scores for business, what's going on in consumer and in particular, maybe country-by-country? Thanks very much.
Nick Read
Yeah, Nick, I am pleased you asked actually, because what we've - I think we had a very strong COVID response. I think it was really acknowledged that we were - showed leadership for our sector and just generally sectors. We did all the right things, I think, well, vulnerable for SMEs etc. And so for the first time ever, we've seen such a big step up on NPS. So for both business and consumer, on average, across the European Big Four, we've seen a six-percentage point gain. So it's been systematic. Africa is systematic, so, I think we're really delighted that not often you always get an immediate recognition of everything you do, but I think we landed it.
Margherita Della Valle
Yeah, I think also, the fact that we were at a certain stage of riding our digital transformation helped. Because if I look at some actions that we were running across our markets, particularly in Southern Europe, our apps had become really the anchor point, for example, for customers.
Nick Read
Yeah.
Margherita Della Valle
And we had already developed full customer journeys through the app and through online that they could refer to when we could also somehow train the customers who were in, for example, used to top up online to just go to the app and do it. And I think the ease of use came across really strongly.
Nick Read
The final thing I'd say is, I've never had so many business customers turn to me and say, the speed at which you got organized yourself working from home, and then reached out to us to help us through what was, for them, a big challenge of getting into a position of working from home. And that's really, that's ingrained in a lot of very, C-suite people, Vodafone was there to help them because they were in difficulty.
Nick Delfas
Thanks so much.
Operator
Thank you. Your next question comes from Robert Grindle from Deutsche Bank. Robert, please go ahead.
Robert Grindle
Yeah, good morning and thank you. I'd like to take you back to H1 results last year, if I might, which seems like a lifetime ago, but not so long in Telco terms. Back then you flagged near term CapEx on cloud, tower sharing, digital transformation, but raised the prospect that for full-year '22 that we might be seeing CapEx fall. So could we post next year, see the double whammy of raising revenues, falling - at least falling capital intensity, maybe even a triple, if that might stir up as well? And a very quick follow up on David's question on Egypt. Nick, are you exposed to the cashing out for spectrum that just happened for the business? Thank you.
Margherita Della Valle
Now, whammies on CapEx, let's say that you are pleased that we are progressing well this year with the 5G rollout and no impediments from COVID and we are executing within our €5 billion of free cash flow guidance well. If I look into FY22 and beyond, I would say maybe I can call out a couple of moving parts. I would say, on one end, I think we need to take into consideration, the implementation of the toolkits on Huawei which we don't have clarity on yet. On the other end, I think you will see tomorrow through the presentation from Vivek, the impacts of Vantage. Vantage, I won't steal the thunder of Vivek but have some very exciting growth opportunities that we want to take in terms of, if you want, growth CapEx. This opportunity will in turn, generate good predictable cash flows for Vodafone. And in total, I would say not a very significant amount in the scale of our CapEx but we'll need to take those into consideration when we do our next plans.
And then on the other end, I think there are two other elements that will be at play. First of all, network sharing deals. Probably as part of the discussion we were having in the past, you know that they have a ramp up phase, we are going through. And so we will see the benefits of the network sharing deals coming into play on our capital intensity, soon. And then probably worth mentioning also the EU Recovery Fund. You know that a substantial portion of that is earmarked for digital, or for also for green initiatives. So we may have opportunities also coming from the European Fund. Now, all these, we'll put into our next long range plan. We will prepare a new plan for March and we will update you in May on how the next three years will look like.
Nick Read
Yeah and Robert, just on Egypt very quickly, I would say that, like you know that in Egypt we're the number one player. We have about 40% market share in that market, the other two players sort of in the high 20s. So considerable leadership, you saw in the auction that we skewed more spectrum than the others. So what we're doing is extending our leadership in the market. It enhances of a long-range plan and spectrum was a specific item in our discussion with STC.
Robert Grindle
Thank you.
Operator
Your final question comes from Jakob Bluestone of Credit Suisse. Jakob, your line is open.
Jakob Bluestone
Hi, good morning. Thanks for taking the question. I had a question on operating leverage within the business. You obviously talked a lot about how the synergy realization is coming through faster than expected, and how you're sort of running a bit ahead of plan on some of the other cost saving projects. But if I look at your service revenues, it was down by about €120 million in the first six months, and your EBITDA was down by about €80 million. There's now a huge difference between the decline in your service revenues and your EBITDA. And if I look on Slide 15, it looks like there's a sort of €100 million increase in other costs. And so can you maybe comment a little bit on what are some of these other cost pressures you're seeing? And is that something you expect to continue? And more broadly, should we be expecting to see more operating leverage going forward, given the various cost measures that you've got in the pipeline? Thank you.
Margherita Della Valle
Sure, Jakob, I think we'll have the opportunity to have all the reviews when we can go into maybe more details of all the moving parts. But let me just say that through COVID, we had some revenue movement, which were high intensity of direct costs implications that may not be the - I would say, normal revenue movements. So for example, in the lockdowns in the first quarter, there was a sudden jump in incoming traffic, which generates revenues but no margin because clearly, it's reciprocal.
Equally, we have talked about roaming and roaming that, if you want, is still happening is very much intra-European roaming which has revenues but equally costs. And therefore ratios which are not the normal ones that you will see in the business. So we do have a number of areas which are a little bit skewed from COVID which is why your equation revenues minus OpEx is almost missing a part but we can go into the actual numbers if you want with the actual numbers in front of us.
Jakob Bluestone
Great, thank you.
Nick Read
So, given that was our last question, can I take the opportunity of thanking you all for joining Margherita and myself. We'll have the opportunity to spend more time with you and our investors over the coming weeks. Look, today was about demonstrating the resilience of Vodafone, the commercial momentum that we have off the back of the actions that we have taken to strategically transform Vodafone. We are two years into our long-term strategy but we are making progress at speed. Clearly, more to do but we look forward to that continued dialogue.
Take care and stay safe.
