Hello, everyone, and welcome. I'm pleased to report that through the year, we have continued to demonstrate sustainable growth in both our European and African businesses. I'll talk you through a short summary of the highlights before Margherita discusses our good financial performance for the year. I'll then rejoin you to provide a progress update on our organic growth strategy and operational priorities. I'll also discuss our value creation agenda to strengthen and simplify our portfolio. There are four key areas I'd like to highlight today. First, our financial performance in the year was good, and our results were in line with our expectations for the year and medium-term financial ambition. We grew revenues in both Europe and Africa, grew adjusted EBITDA, grew cash flow, and delivered an inflection point in returns with a strong increase in return on capital employed.
Second, our good financial performance in the year is a direct result of the systematic execution of our organic growth strategy that we started almost four years ago. Alongside our growth strategy, we have clear plans in place to address our shorter-term operational priorities. Third, while we're not immune to the macroeconomic challenges in Europe and Africa, we are structured well to manage them. Finally, we're fully committed to improving returns for shareholders through the ongoing and sustainable execution of our organic growth strategy and targeted action to strengthen and simplify our portfolio. Following the strategic progress we've made over the last three and a half years, I'd like to thank the whole Vodacom team for their dedication in delivering a good financial performance this year in line with our expectations.
We've grown service revenue by 2.6%, grown adjusted EBITDA by 5%, and grown pre-tax return on capital by 170 basis points to 7.2%, which is a significant step up and puts us in a strong position to meet our medium-term ambition to have returns above our cost of capital. This broad-based financial performance begins with sustainable revenue growth. We delivered good growth in Europe with 10 out of 11 markets improving year-on-year. Our consistent revenue growth was matched with operational leverage and the benefits of ongoing focus on operational efficiency to deliver a 5% increase in adjusted EBITDA with our highest margin in over a decade at 33.4%. Our full-year dividend will be maintained at EUR 0.09.
Our strategy is fundamentally focused on delivering sustainable growth in both Europe and Africa, growth in revenue, profit, cash flow, and returns. We have six core elements to our growth plan, which is designed to further deepen the trusted relationships with consumer and business customers through providing the overall best connectivity and digital services with an outstanding digital experience. Our customer-facing strategies are then underpinned by initiatives to drive both operating and capital efficiency. You can see from the snapshot of operational KPIs presented here that we have built real momentum throughout our business, and we are delivering consistent improvements across the board. However, I am not satisfied with our recent commercial performance in Germany, which I will cover in more detail later on in this presentation. I'd particularly like to highlight the growth in revenues from our digital services.
While mobile and fixed connectivity remains the core of our business, it is essential to further deepen the relationships we have with our customers by broadening the range of services that they have with us. This both delivers good marginal returns for us on those adjacent services, but importantly, increases the loyalty we have with our valued connectivity customers. While we continue to execute on our long-term organic growth strategy and have delivered another good year of financial performance, I'm not satisfied with the returns we have delivered to our shareholders. Our strategy targets consistent growth of revenues in both Europe and Africa and the growth of adjusted EBITDA by mid-single digits over the midterm. We plan to then convert these profits into predictable free cash flow growth. In addition to our organic growth strategy, we have some important areas of portfolio focus, and we have four goals.
First, have stronger assets in good markets producing predictable cash flow growth. Second, simplify our portfolio to assets that leverage our unique regional scale. Third, move Vantage Towers to a co-controlling position that has the optimal capital structure. Finally, strengthen our balance sheet further. This is a large agenda within a challenging macroeconomic period, but the board, the management team, and I are focused on delivering good outcomes that strengthen the group and create value for our shareholders. Later, I'll cover our strategic progress and portfolio ambitions, but first, I'd like to hand over to Margherita to outline our financial and commercial performance for the year and set out our expectation for the year ahead.
Hello, everyone. As Nick has already outlined, our financial results this year have been good. We have reported growth in revenue, profits, and cash flow, already delivering against our medium-term financial ambitions as well as our guidance for the year. Throughout FY 2022, we have delivered consistent service revenue growth across both Europe and Africa, with trends recovering well post-pandemic. EBITDA grew by 5%, and we have maintained our strong track record of margin expansion. We have delivered a further 50 basis points improvement year-on-year, with margins now back above pre-COVID levels. We grew adjusted free cash flow to EUR 5.4 billion, ahead of our upgraded guidance for this year, with CapEx in line with our expectations.
I'm pleased to report that our good financial performance has been underscored by a significant step-up in both pre- and post-tax return on capital employed, which has been a primary focus for me over the last three years. Group service revenue growth reached 2.6% in FY 2022, with growth across both Europe and Africa. Service revenue trends in Europe improved, while growth in Africa remained broad-based. Roaming revenues began to recover as lockdown restriction eased, but this benefit was broadly offset by significant MTR reduction across our European markets. In Q4, we grew service revenue by 2%, moderating from Q3 given the lapping of strong pandemic support measures in South Africa in the prior year, as well as MTR cuts in Europe.
Our commercial performance weakened in the quarter, in particular due to customer losses in Germany, which I will turn to now in more detail. In Germany, we have delivered continued service revenue growth throughout the pandemic, and this year we grew our top line by just over 1%. Excluding the drag from wholesale, our retail service revenue grew by 1.6%. The main drivers were our continued good performance in mobile, as well as higher broadband ARPU as we drive penetration of our gigabit product and good business growth. However, our commercial performance this year has not been satisfactory, reflecting first the impact of the pandemic and now the implementation of the new telecoms law. The new law has two main effects. First, it has created a period of higher customer churn across the market.
Second, we have had specific operational challenges with our customer journeys, resulting in a lower number of new connections. As Nick will outline later, addressing this is a key operational priority. We have taken a number of actions that will support a gradual improvement in our commercial performance from Q1 onwards. However, financial performance was good in Germany with EBITDA growth of 6.5%. This was driven by top-line growth and continued strong cost synergies. As a result, margins increased by 2.1 points to 43.2%. We've now achieved our cost and CapEx synergy targets for Unitymedia integration more than two years earlier than planned. Looking ahead, we still see opportunities to deliver further savings over and above the original targets.
A key driver of this outperformance is our integrated supply chain management, where we have delivered on average double-digit savings on the acquired spend. In Italy, our financial performance has been resilient despite the challenging market backdrop. Service revenue trends improved throughout the year, supported by higher MVNO revenues as well as good growth in broadband and business digital services. In consumer, market pressure has remained intense, but our dual brand strategy is enabling us to compete effectively, and we continue to outperform the established operators in the market in both service revenue and EBITDA growth. We are now progressing with the implementation of a radically simplified product portfolio for our consumer base, which will enhance transparency and enable more effective upselling. We are gradually migrating customers to the plans most suitable for them.
In business, we are performing very well in new digital services, growing double digit, and we are well positioned to benefit from the European recovery funding, as Nick will illustrate shortly. Through continuing to simplify and digitize our processes, we have held underlying EBITDA flat, excluding the one-off legal settlement in half one this year. In the U.K., we have maintained our strong commercial momentum in consumer, adding a record number of contract customers in the year with our best churn for over a decade, and have continued to materially outperform the market in both revenues and EBITDA growth. In April, we implemented CPI plus price increases on our back book, as well as taking the lead in moving up front book pricing across both mobile and broadband.
Moving on to Spain, while competition remains intense, we have now been able to maintain EBITDA broadly stable for the last three years. As anticipated in November, we have seen a slowdown in quarterly service revenue growth in Q4 as a result of the lapping of price increases last year, a lower contribution from business, whose revenue can be lumpy from quarter to quarter, and MTR cuts this year. After the restructuring of our sales channels earlier in the year, we are seeing a gradual stabilization of our commercial performance, supported by our second brand, Lowi. In business, we are leading the market on the first tranche of the European Recovery Fund Digital Toolkit program and expect material benefit to service revenue for the next few years. Nick will expand on this together with the broader operational transformation in Spain later on.
In other Europe, service revenue trends have remained strong over the last year. Overall, the competitive dynamics across these markets have remained stable, and we have continued to make strong progress on integrating the Liberty Global assets. In Vodafone, we continue to see strong demand for data as well as significant growth in our financial services platform. Service revenue trends slowed in Q4, reflecting the significant benefit to prior year telecom spend from social grants and alcohol sales bans in South Africa, as well as the reinstatement of person-to-person fees in the DRC last year. Despite this and the Tanzanian levy headwind, M-Pesa has continued to grow strongly. In March, we acquired 110 MHz of spectrum across multiple bands in South Africa, which will now enable us to significantly enhance our network capacity and coverage.
Our Joint Venture, VodafoneZiggo, is continuing to perform well with good EBITDA growth and has just reiterated its guidance for the full year. Q4 commercial performance was impacted by the loss of Formula 1 rights. However, underlying trends remain robust, and we are continuing to further enhance our leading network and product portfolio. Moving to costs, we have continued our progress in transforming our cost base through our industry-leading digital transformation and efficiency program. We've now delivered EUR 1.5 billion of net OpEx savings in Europe and common functions over the past four years, a 16% absolute reduction of our cost base. EUR 700 million of this was delivered in the past two years, with EUR 200 million as planned in FY 2022, following the exceptional step down last year during the pandemic.
These savings have been achieved through three interdependent cost levers that you are all now very familiar with, digital, scale, and simplification. Firstly, digital. Our care operations are a good example of digital transformation. As you can see, we have driven a dramatic reduction in the number of contacts overall and human contacts in particular. Second, group scale. Increasingly, we have shifted operational activities to our shared service operations, where we have been able to digitalize and standardize processes at scale. We now have delivered 8,200 role efficiencies in shared services through automation. Third, simplification. Maybe the best example of this is our 25% absolute reduction in support function OpEx, underpinned by zero-based budgeting. Our good top-line performance and focus on efficiency have driven an acceleration to 5% EBITDA growth in FY 2022, including the Italian legal settlement that I referred to earlier.
Roaming EBITDA grew by EUR 0.2 billion this year, but is still around 40% below pre-COVID levels, a gap we expect to close over the next two to three years. Net ANR has picked up post the pandemic, both in terms of P&L and cash commissions outflow. However, cash commissions in Europe are still over EUR 150 million below pre-pandemic levels. Stepping back, EBITDA margins are now back above pre-COVID levels, which puts us in a good position to face the current macroeconomic challenges. Adjusted free cash flow for the year was EUR 5.4 billion or EUR 5.5 billion on a guidance FX basis. This is slightly ahead of our updated full year guidance of at least EUR 5.3 billion that we provided in November. There are a few movements worth highlighting.
First, financing costs were EUR 300 million lower year-on-year, largely due to the bond liability management program executed last year. Second, cash tax was lower than expected this year, reflecting the deferral of circa EUR 200 million of payments into FY 2023. Third, we are now past the peak in terms of Liberty integration costs, having spent around 80% of the planned cost to date and will be almost complete by the end of this fiscal year. Last but not least, 5G spectrum auctions are now largely complete across our footprint. With the final cash payment of the Italian auction already fully reflected in our net debt, we expect this to be supportive to our deleveraging in the coming years.
Total capital additions for the year were EUR 8.3 billion or EUR 8 billion excluding Vantage Towers growth CapEx, which was in line with our guidance for the year. The step-up in investment year-on-year can broadly be split into three main categories. First, we accelerated our investment in network capacity and coverage, largely in response to the surge in data traffic. Second, we increased our investment in high-return growth opportunities in Vantage Towers. This is also reflected in the coverage and capacity line. Finally, we increased our investment in new products and digital services in order to maximize our growth opportunities, particularly in Vodafone Business, also considering the new EU recovery funding. These increases were partially offset by a reduction of our IT transformation costs following the completion of a number of projects across Europe and lower CPE spend.
As a result of our EBITDA growth, combined with the conclusion of part of our 3G license amortization charges, we have delivered a robust step-up of 170 basis points to 7.2%. While this rate of increase may moderate in the coming year, this first step puts us in a good position towards our midterm ambition of exceeding cost of capital. Let me conclude by setting out our guidance for FY 2023. The macroeconomic environment does present challenges for our sector, which Nick will discuss shortly. In particular, we are facing a greater than normal level of inflationary pressure across our business, particularly on energy costs. Considering this, we are targeting EBITDA growth with a range of EUR 15 billion-EUR 15.5 billion through a combination of ongoing service revenue expansion, as well as the continued execution of our productivity plans in Europe.
We expect to deliver around EUR 5.3 billion of adjusted free cash flow with capital additions for the year, expected to be around EUR 8 billion, excluding Vantage Towers growth CapEx. This is based on the current prevailing assessment of the global macroeconomic outlook. I will now hand you back over to Nick for an update on our strategic progress.
Thank you, Margherita. Now I want to discuss three key areas. First, we're delivering our organic growth strategy, and in addition, we have clear plans underway to deliver on our operational priorities in Germany, Spain, and Vodafone Business. Also, while we're not immune to the broader macroeconomic challenges, we are structured to manage these challenges well and have a comprehensive plan with a number of tangible initiatives already underway. We have structured the group to deliver a number of midterm opportunities and some more immediate portfolio actions to improve shareholder returns. As I outlined earlier, we've made systematic progress with our organic growth strategy. Our strategy starts with providing our customers the best connectivity products and services, combined with innovative digital services and a truly outstanding digital experience.
During the year, we've made good progress with next-generation connectivity products, including our new flexible contract structures that we first launched in the U.K. under the name of EVO. These flex contracts allow customers to choose the right contract length for them, up to 36 months, separating handset from service, allowing flexible customer upfront payments, and the addition of digital services and insurance in a simple, easy way. We also launched our Super WiFi and Broadband Pro products in four countries. These products use the latest Wi-Fi 6 and mesh Wi-Fi technology to deliver a stronger signal to the whole of the house. We've also partnered with Amazon to have smart speakers built into our Wi-Fi extenders. On top of this, for the rare occasions that your fixed line connection is interrupted, we have backup mobile connectivity built into the modem to deliver a seamless experience.
In addition to our customer-facing strategies, we continue to strive to improve the operating and capital efficiency of our businesses. You've already heard from Margherita on the progress we've made with our efficiency program, and I'll shortly cover the encouraging start we've made with Vodafone Business in targeting EU recovery fund opportunities. While we've made good and broad progress with our organic strategy, I am not satisfied with our commercial performance in Germany. The connectivity market in Germany is one of the most attractive in Europe, with a large addressable customer base, sustainable pricing environment, and a compelling opportunity to drive convergence. Since the acquisition of additional fixed connectivity assets in 2019, we have delivered consistent financial performance with improved EBITDA growth. We've also delivered the planned cost and CapEx synergies ahead of schedule.
However, our commercial performance has weakened over the last 18 months to an unsatisfactory level. There are a few significant contributing factors, including the impact lower footfall has had on our retail store sales during the pandemic, and specific operational issues related to how we implemented new customer journeys to fully comply with the new local EECC requirements. We have a clear understanding of the issues and the work required to improve our commercial performance. First, we're addressing the specific customer journey issues, and we'll continue to make further enhancements, delivering improvements throughout H1. We can already see improving trends in April on the run rate of net customer additions in both fixed and mobile. Second, there's more to do to ensure that our consumer customers in Germany are attracted to our digital channels to the same degree as consumers in other markets.
Third, the roadmap for our fixed network that Johan, our Group CTO, and I have outlined to you over the last year is progressing well. We've made significant improvements to the bandwidth, latency, and reliability experienced by our customers through our hybrid fiber cable network, with customer tickets related to technical issues now back to pre-pandemic levels. We've also spoken with the vast majority of our larger housing association customers about the transition plans to individual billing. Given the strong sentiment of partnership we've established, they're looking to us to manage a smooth process, and the vast majority are happy with their current connectivity. For the minority of housing associations that are interested in the transition to Fiber to the Building, we've engaged as their natural partner.
We think the best approach is through a targeted joint venture that will enable off-balance sheet investment in fiber for these housing associations and the surrounding catchment area. We are currently evaluating investment and build partners, and I look forward to updating you further on this project through the year ahead. This overall German plan will be led by Philippe Rogge, who joins us from Microsoft in July, along with a strengthened German team. At our first half results back in November, I outlined some of the challenges in the connectivity market in Spain, driven by intense competition over a number of years. We've made significant progress over the last three years to stabilize our financial performance, improve our commercial positioning, and right-size our cost base.
You can see from just a small selection of operational KPIs presented here, we've made consistent improvements, but there is further to go to not only stabilize, but improve the return on capital of our Spanish business. We've also continued to explore opportunities to enhance the extensive network sharing arrangements we have in place for both the mobile and fixed networks. While we have not been able to participate in the recently proposed consolidation in Spain, we remain open to pragmatic alternative structural solutions that create or unlock value for our shareholders. The NextGenerationEU plan is a landmark funding program that will invest over EUR 800 billion in member states. Through a coordinated program, we're ensuring Vodafone Business is in a prime position to support Europe in achieving its digital decade ambitions.
While we are still only in the first year of the EC's five-year funding program, we are starting to see wins in a number of areas. For example, in Spain, we are performing well through the first tranche of a program that enables SMEs to benefit from fully subsidized digital services. So far, EUR 500 million of a total EUR 3 billion has been made available, and the scheme will be extending to SOHO business customers in the summer. Meanwhile, in Italy, we are also performing well in a scheme that enables business customers to access vouchers of varying sizes for broadband connectivity, totaling almost EUR 600 million. In addition to the direct revenue benefits through support to businesses, we are participating in a number of major public sector tenders across Europe.
Earlier this month in Germany, we announced we had been awarded a significant subsidy to deploy fiber to the building in Main-Kinzig for up to 75,000 homes. Remember, this is only the start of the NextGenerationEU, and we will continue to update you on our progress. Over the next couple of minutes, I want to outline how we're responding to the growing macroeconomic challenges we and our broader sector face. Energy prices, rising inflation, and the impact this has had on both consumer and business confidence is well reported. All sectors have to manage supply chain disruption and have seen firsthand the impact of growing cyberattacks, resulting in a heightened expectation of governments for secure and resilient digital connectivity infrastructure.
This set of challenges leaves me with no doubt that to perform well during this period, we need to be sure we have the optimal balance between commercial agility and operational efficiency delivered through scaled shared service centers and robust processes and systems underpinning everything we do. This is exactly the set of competitive advantages we strive to deliver. We have a deep-rooted culture that seeks to balance the commercial benefits of in-market autonomy with the efficiency benefits of regional standardization. To ensure we empower our teams to compete effectively locally, we give them full P&L accountability. This is matched by full control over pricing, consumer products, marketing, sales channels, and customer journeys. This leads to a tailored positioning of Vodafone in each market. However, in many markets, we do have a local scale disadvantage against the historical local incumbent.
To bridge this gap, we can leverage our regional scale to standardize technology, procurement, and back-office operations to deliver tangible productivity gains. Margherita outlined earlier the evolution of our cost base in Europe, which has allowed us to significantly improve our productivity over the last four years and now lead industry efficiency benchmarks. We're leveraging our model to manage the macroeconomic challenges with a series of actions underway to optimize both our local commercial agility and ensure we derive further operational efficiency benefits from regional standardization. This is just a snapshot of the work already underway, and I'll highlight a couple of priorities. With cost inflation coming through at these levels, we're of course even more focused on the pricing actions I've outlined in previous presentations. Investment and inflation-linked pricing structures are essential for our sector to have a sustainable investment environment.
We've embedded direct inflation terms into consumer contracts in five markets already, including the U.K. We also have other actions underway in Germany, Italy, and Spain to improve both headline pricing and promotional discounts. On the input side of inflation, we're focused on energy costs and are expanding the use of longer-term power purchase agreements. The work Margherita and the team have done with our shared services operations also has inbuilt flexibility, which enables us to migrate processes to and between our centers of excellence in lower-cost locations. Within our supply chain, we've developed a unique set of advantages within our industry that give us structural resilience to shorter-term pressures, such as deflationary long-term contracts, first rights of access to inventories, and framework agreements with the supplier of components to our suppliers.
These actions and many others have given us the confidence in setting our financial guidance for the year despite the macro challenges. Now, while we have the shorter-term operational priorities and actions to manage the current macro challenges in focus this year, we also remain fully committed to our longer-term strategy. As Margherita and I have already outlined, the execution of our strategy over the last three years is delivering the operational improvements needed to drive our ambition of increasing our return on capital. This year, we delivered a real step change in return on capital, but there is more to do. I'm confident the ongoing delivery of our organic strategy, plus execution of our portfolio priorities, will systematically improve returns. As I discussed a few months ago, we have structured ourselves to deliver on our growth ambitions and both create and realize value for our shareholders.
We currently hold over 80% of Vantage Towers, which has a market cap of around EUR 16 billion. Vantage Towers has significant growth and structural opportunities ahead, which our shareholders can benefit from. We continue to own and operate our active mobile and fixed network infrastructure within Vodafone. We set out our approach to our network infrastructure and shared network operations as part of a detailed investor briefing back in June last year. We then have three significant growth platforms that are each EUR 1 billion revenue businesses in their own right and growing fast. We explored the growth opportunities for each of these at a detailed investor briefing in September last year. You'll also have heard from Shameel at Vodacom about the successful launch of VodaPay in South Africa this year.
Our connectivity services and digital growth platforms come together in our retail and services business in Europe, Africa, and Vodafone Business. Following the announcement last November to transfer our holding in Vodafone Egypt to Vodacom, we will hold a 65% position in Vodacom that currently has a market cap of around EUR 16 billion. We remain fully committed to our more immediate portfolio priorities that we outlined a few months ago. First, the transfer of Vodafone Egypt to Vodacom has been approved by Vodacom's minority shareholders, and we are now in the final steps of local regulatory clearance. We're also making progress with our other two priorities, which are to strengthen our in-market mobile positions in Europe and move Vantage Towers to a co-controlled structure whilst monetizing. We're actively pursuing a range of live opportunities, and I look forward to updating you further on these at the appropriate time.
Beyond these three priority areas, we're also making progress in supporting the growth ambitions of our global IoT business and leading fintech business in Africa. We have opportunities in both to accelerate growth through separation. As I mentioned earlier, we're in the midst of evaluating partners for an off-balance-sheet joint venture that would support investment and build a Fiber to the Premises for housing association customers in Germany. It is a large agenda with a complex macroeconomic backdrop, but the management team and board are focused on delivering good outcomes that strategically strengthen the group and generate material value for our shareholders. Today, we have demonstrated that our strategy is delivering sustainable service revenue growth, good EBITDA growth, and we are on a clear path to returns above cost of capital. This performance is in line with our medium-term financial ambitions.
As part of our strategic execution, we have clear near-term operational priorities that are in focus for the year ahead. Alongside these priorities, we have a number of initiatives underway to manage the current macroeconomic challenges, both at the local and regional level. In addition to our organic growth strategy, we have a clear value creation agenda to strengthen and simplify our portfolio. While some of these are in a more formative stage, others are more near-term. Our growth strategy and portfolio actions, together with our commitment to the dividend, will improve returns for our shareholders. Finally, I hope you will join us for our live video Q&A session.