Good morning, everyone, and thank you for taking the time to join us, Margarita and myself, at our Q1 trade in results announcement. You'll find on our website hopefully a comprehensive set of materials to help you understand our results. But I thought I'd just take an opportunity just to touch very briefly, 30 seconds on just the key highlights before we then go on to questions. We are back to service revenue growth in Europe as well as Africa with over a 3% growth in the quarter And we're growing in both consumer and business. Around 1 percentage point of that growth was clearly a lapping effect of COVID-nineteen last year that obviously suppressed our results.
But even excluding that, I would say that is a very healthy growth rate for us as a business and we are firmly on track on our guidance. Now clearly, we're not back to normal yet on our trading activity, our commercial activity and sales volumes. Footfall in the big 4 European countries in aggregate was around 40% below pre COVID levels. So we've yet to see that retail pickup that we are looking for. And this was particularly evident and heavy in Germany.
We have seen In more recent weeks, as retail stores have started to open up, volumes increasing and therefore we look forward to the back to school season that we're going to see. Obviously, if activity was low, you can see from our churn numbers that in Europe mobile contracts, if we exclude Spain, which had a specific legislation adjustment in COVID last year, you see that we were down 1.4 percentage points year over year. So we have good churn trends across the vast majority of our markets. In business, we saw service revenues grow 2.7%. We saw good growth rate in our digital services.
Clearly, the 2.7% was enhanced slightly because of obviously again the COVID impacts of last year. But we definitely expect and have been engaging with governments in terms of the EU recovery funds, which we should start to see coming through in the second half of this year. In Europe, more broadly, we grew Service revenue in all markets except Italy and we had a particularly good rebound in the UK and our Cluster Europe Other Markets. Vodacom maintained strong momentum and particularly in Financial Services, which were up 34% in Q1. And we are due to launch our Vodacom Super App or Vodapay Super App in the coming months in South Africa.
Clearly more to do, particularly in accelerating and improving shareholder value. And we remain still very focused on optimizing our portfolio moving forward to ensure that we keep shareholder very much in our forefront of things that we are focused on. And on that Margarita and I will take your questions.
Our first question today comes from Andrew Lee from Goldman Sachs. Andrew, please go ahead. Your line is now open.
Yes.
Good morning, Nick. Good morning, Margarita. I had a question on the revenue growth outlook. In the Q1, There's great trends with easy comps, but suppressed commercial momentum, and particularly in Germany. So the question is, Is the Q1 'twenty two growth rate a high watermark for growth during the year?
And how should we think about commercial recovery through the year, especially in Germany?
Well, I'll let Margarita answer in terms of service revenue sort of outlook or view. I'd just say in terms of trading, I mean, clearly these remain challenging times. I'm not just talking our industry challenging times for everyone. And it was always very clear that this would not be a linear recovery. So we should expect bumps in the road.
We are expecting bumps in the road in terms of how we're looking at things. Clearly, as I said, I'm pleased with the 3% growth and the underlying growth rate that we had and we're firmly on track on our guidance. I'd say in terms of commercial activity, if I look, it's clearly has been pressed. If we pick Germany as your example, what we saw in April, May was a footfall down 80%. It did then start to improve to June but still down 50%.
So we are by far not there in terms of normalization. If you look at examples of Spain, Italy on mobile net ports, These are still down year over year. So I would say overall, you're just seeing a lower level of activity. And as I say, you see that in our churn. So I think this is a case of let's see as we move into the back to the school period.
I think that becomes a very important. We've certainly focused on the propositions, the promotions, the above the line campaigns that we will be hitting on back to school and we think that that will reignite our commercial momentum.
On service revenue growth, of course, Q1 was a very, Very special quarter. We have seen roaming moving from being a headwind to a tailwind now. And on top of that, we've had this, What I call one off effect from last year at this time seeing the Effectively shock of the pandemic in our markets. If you remember the presentation we did a year ago In Q1, we were calling out a number of effects, particularly things like business projects being delayed from Q1 into Q2 or prepaid top ups being more difficult in some markets. And I would say probably the market which was most affected By the beginning of the pandemic was Spain, where the emergency decree was particularly severe.
Taken in aggregate, these 1 offs are worth about 1 percentage points, which as we say is not going to recur as we move into the next few quarters. But we are well on track to deliver growth this year both in Europe and Africa. And we are Pleased with the momentum as Nick was mentioning on service revenue. One data point I would call out from that perspective is that now we have All the data from the last 12 months and what we have seen is that if you take the 12 months to March 2021 Through the pandemic, we have outperformed in retail service revenue growth all the incumbents And all the scaled players in our major European markets, both in fixed and in mobile service revenue growth. So we are pleased with where we are.
Now you asked about the coming quarters, of course. And I would say Different growth drivers are affecting the profile for the remainder of the year. If I take in turn consumer And business, I'd say in Consumer, near term, we are going to get the headwinds coming from the lighter sales Driven by the pandemic in the last 12 months. As Nick said, we are now focused on reaccelerating after the summer with the back to school period. And then it's very much P per Q, so volumes, But also price.
And on price, we need to see how the balance between the more for more inflationary pricing actions that we are Taking works against the competitive pressures. In business, we are set for acceleration Throughout the year, you have seen the good results already in Q1. We are also gaining market share clearly in business. And I think there the speed of the acceleration will very much depend on the European recovery fund and how it will Support our demand for, in particular, digital services. And so timing of that will be critical and in particular, how much of that will fall into the Half of this year and how much will be phased over the coming years.
But if I step back, I'd say definitely, as Nick mentioned already, on track to deliver our guidance this year.
Thank you. Lots put together. That was really helpful. Thank you.
Thank you very much, Andrew. Our next question today comes from Nick Delphos from Redburn. Nick, please go ahead. Your line is now open.
Thanks very much indeed. So just a question on African FinTech Really, obviously, you've got a fantastic business there, particularly in Safaricom, but also in Vodacom. And it could be worth well over 10p per Vodafone share. How do you think about how you illustrate that value to, I guess, the London markets As opposed to within Nairobi, where it is relatively well reflected perhaps within Safaricom? Thanks very much.
Yes, Nick, I think this is a really important topic. You know that I have spoken about M Pesa now for 10 years. I mean, I'm very passionate about the transformational nature of it. We've committed resource investment. We have never constrained the M Pesa platform and really try to evolve it, I am super excited.
I really think that the pandemic, I mean we have It's one of those platforms you have to do an awful lot of investment over 3, 4 years to gain scale and then become the default player within each of the markets. And we've done that investment over the last 10 years. We are the number one player in all of the markets that we are in. Whether it's DRC with ANZDAIR, Lesotho, as you say. So having built that position Now to the question of how you can truly scale through more, if you like, user cases going forward.
You saw that transaction volumes are materially up. I mean, you've seen that in Vodacom International, the service revenue for M Pesa was up 43 sent. I mean these are staggering numbers for a platform that's already number 1 in the marketplace. And this is because we're really breaking out of just peer to peer. This is now companies paying the payroll using M Pesa people doing their utility bills using M Pesa.
So we really do think it's an ecosystem, a platform. That's our mindset. We're investing heavily behind it. One of the things we needed to start thinking about is that transition journey between feature phones and smartphones. So we're now doing mini apps that then will allow us to do things like savings, micro loans, funeral insurance, etcetera.
And so this is a new product set that is coming to Impeza. And clearly in South Africa, the financial services component will be done through what we're calling Vodapay, which is a super app execution, so slightly different. You add all of this together, it's talking 15% of Vodacom's service revenue. So when I've spoken to Shamil and we've strategized about where we want to take that, we've said, look, we really need to start separating this business out into separate legal entities, make sure that we show complete transparency of this business and what it means to growth and margins. And then that also allows us other opportunities in organically going forward.
And so I would say at this moment we're driving hard. We're investing heavily. We're doing commercial partnerships with Alipay. We may do other commercial partnerships with other people. I think there's an opportunity to take M Pesa outside of our footprint in Africa because it's really getting traction.
So many opportunities organic, maybe inorganic in the future, separate of the platform and then think about how we drive for shareholder value.
How long would it take to separate out the platform legal entities?
We're running through that process. We have been for the last, I want to say 9 months. We moved the platform down from the group down into Africa because that was an important component as well, hosting locally. And then so it's a there's a number of parts of the execution.
Okay, fantastic. Thank you. Thank you.
Thank you very much, Nick. Our next question today comes from Georgios
Thank you for taking my question. I have maybe a follow-up on some of the comments you made around back to school and commercial momentum. If we look at these results, Perhaps the one area of weakness has been some of your KPIs particularly in fixed. So I just wanted to ask maybe a general question about What are the issues you see in different markets and particularly in some of the more competitive markets like Italy and Spain, whether there is a point in time where The KPIs take priority and you could perhaps take a bit more action in order to stabilize your KPIs and be more promotional. And then maybe as a slightly separate question for Germany, do you expect when the footfall returns back to normal levels for the KPIs to fully recover?
Or are there any other headwinds you may be facing? Thank you.
George, just maybe I have a few comments and then Margarita can do some builds. Look, I think we as a company have always been focused on value rather than chasing volume. So we are a good rational player in the marketplace. We compete in a structural way now increasingly on a dual brand strategy. So for every market from a pricing perspective, we go through an exercise where we identify the various brands that we're competing against and decide how we're going to position pricing versus those brands.
And then we hold that position. So if they move up, move down, we adjust accordingly to ensure that we have made it very clear what points of differentiation we have and where we need to match. So I'd say that we stay disciplined on that. Clearly, if shops are shut and foot falls down, The worst thing you can do is throw lots above the line marketing money into a market that's pretty quiet. And this is example in Germany.
So when we saw that the retail activity was low, footfall was low, what we said is for quarter 1, we're not going to go above the line. This would be wasted marketing resource. And what we'll do is we'll store that up for later in the year when we felt that all the stores would open. So I look as an example in Germany, as we generally this has been our approach across all of the markets. If football So U.
K. Retail has been open. We've been above the line. We've been commercially front footed because it was appropriate to do that. Clearly, we manage our base for lower churn and you're seeing that in statistics.
If I look at Germany specifically, I would turn around and just say, Look, we have clearly shaped a series of propositions and promotions for the back to school. So I mean, we're good to go as we are through the whole of Europe. We have worked our TV portfolio. I think it's a strong portfolio. We've been disappointed.
We've not been able to get the retail stores because that's a really important part of the TV portfolio stores. So we're good to go on the TV portfolio. We've harmonized our propositions and pricing. We've integrated our sales channels. These are all things we've talked about over the last couple of quarters.
It's just we haven't had the retail estate to really drive this. So our view is as soon as that retail estate is fully open, we are on the front foot again and we are confident that we have compelling propositions to drive.
Just maybe to add that fixed is not exactly the same in all the markets. I think there are different dynamics across Different markets. And there were just a couple of points I wanted to point out. 1 is related to consumer. And it's the fact that if you take a market like Italy, growth has now moved very much into FWA as a source of And for us, SWA is reported within mobile.
So just to keep that in mind when you look at the numbers because the market growth has really shifted there in consumer. And the other aspect is business. A third of service revenue in fixed are from business, which is driven by very different factors. It's as much as 40% in certain markets now in Southern Europe. And as you I've seen from our reporting in business, we are growing well and we expect further acceleration because all the areas of growth in fixed That distinguish us.
We have very little legacy products. We are focusing on SD WAN and other new products will be even more propelled by the European Recovery Fund. So I think it's just something to keep in mind when you project the fixed growth in the coming quarters. Thank you.
Thank you very
much, Georgios. Our next question today comes from Jerry Dellis from Jefferies. Jerry, please go ahead. Your line is now open.
Yes, good morning. Thank you for taking my question. I have a question really related to what you're seeing as the retail Store footfall recovers in the months of June July. How are you seeing that better footfall translating into net adds I mean, obviously, what happens the rest of the year is highly uncertain. But perhaps if you could comment on what you're seeing in June July, please, that would be helpful.
And if you could make particular reference to the German situation, please, where I think we saw about 30,000 cable net adds in the last quarter And those were essentially only migrations from TSL. It will be very interesting for us to understand what recovery you may be seeing in June, July there. Thank you.
Well, look, Gerry, I don't think it's appropriate to get down into weekly projections results etcetera. What I think On a slightly higher level, I would say that as stores have opened, footfall is not bouncing back across retail, not our retail, but just the retail full stop. And I think it's because a lot of that has been the fact that the stores have opened back up just as we're moving into the vacation period. And so I'd say people are prioritizing other things at the moment. I don't know.
But So I would say this is very much the test will be back to school period. I'm seeing it more towards the end of August in September as being a more normalized activity going forward. You've seen everyone talking about the double jab, the certificates. Yes, you've seen what's happened in France, etcetera. So I just think at the moment, We are nowhere near normalization if we look at the month of June, July yet.
Thank you very much.
Thank you very much, Jerry. Our next question today comes from Jacob Bluestone from Credit Suisse. Jacob, please go ahead. Your line is now open.
Good morning. Thanks for taking the question. I've got another question on Germany as well. Just trying to understand The weakness in net adds and a little bit more detail for FICC. So net adds are down 70% year on year and footfall in the shops is down 70%.
The retail stores aren't your only distribution channels. You've got online, you've got phone and so on. So it just seems like that the net adds drop is bigger than the footfall. So presumably there's something else going on. I presume your online sales aren't down 70% as well.
So can you just sort of help us understand, is it literally just low footfall in the shops and low conversion? Or is there something more broad happening here in Germany that explains quite why the net adds are quite so weak? And maybe if you can also just contrast it a bit with The numbers we saw from DT last quarter and DT is showing a much stronger fixed line performance. So if you can maybe just help us understand the differences In your trends versus what they've disclosed so far? Thank you.
Jacob, I would say just in simple terms, When you're in lockdowns and restrictions, it's always going to favor the incumbent because they have a base And they are constantly marketing to the base. Of course, we can market to our base, but what we're looking to do is take share in the marketplace. And that's why retail is a very important part to take share within the market. So what I would say is that effectively churn levels are down, activity levels are down. If you were a customer at this point in time in semi lock announced, are you really going to change your fixed broadband provider?
It's not going to be top of mind. So this is what I mean. We made a conscious decision. We're not going to run above the line campaigns because in the end stimulating try and stimulate demand when people are saying, do you know what, I might think about it, but I'm going to do it when we're out of lockdown restrictions. So it's a very natural thing in my opinion that people would say on that particular product, yes, I'm going to wait until I know we're back to normalization and then I may consider a provider, which case we will be very much on the front foot.
I'd say that for fixed in particular, you can subscribe online. But in most cases, you still need an engineer to come into your home to do the modification. And again, not something I think people would have wanted to do particularly in April May in Germany and probably not something you're very inclined to do at this particular point in time.
There's a real I think there's a real so you get the hard facts of COVID And then you get the sentiment around concerns. And I think the delta variant coming into Europe has if you like suppressed a little bit because people are concerned. And I think it's only when they see, yes, okay, it's come through, maybe the cases go up, the hospitalization doesn't really move, confidence returns. It's a confidence thing. So I just think at the moment, people are saying, I'm going to stick with my current provider.
As evidenced by our historically low churn in German. I mean, it's It's not like we're underperforming on churn.
Got it. Thank you.
Thank you very much, Jacob. Our next question today comes from Ottavio Adoresio from Societe Generale. Octavio, please go ahead. Your line is now open.
Hi, good morning. Could you hear me?
Yes, absolutely.
Yes, loud and clear. Perfect. Yes,
just moving away from Germany and going to another country in Italy, reduction churn in has damaged Vodafone because in a market where you win the market share that has helped you in a market where you lose the market share, particularly mobile. So I was just wondering if you can give us a bit of color what you would expect over the next few quarters considering that the economy reopen. Iliad is very likely to be to remain aggressive. And in fixed, they're going to launch and much Very likely the offering you have particularly going to use the same wholesaler. So on the other side, you've got also competition from the incumbent as recently signed a partnership with new content with DAZN.
So you've got basically 2 different drivers coming against you. So how your retention policy is going to evolve in that market? And what do you reckon will be your trends you're going to experience over the next 2 or 3 quarters given what the Sequans are today. And there is a quick one, of course, I've not been able to ask in the past, but I want to ask this one on India. India this week has filed with the Supreme Court saying that no public sector bank is willing to offer guarantee, what a fun idea.
And to the asset all the assets already secured to the old banks. Since September, they tried to raise funds. Now it's almost a year. No one has come with fresh funds because they want the controlling shareholders, I. E, Vodafone to basically help out as well.
So if you can tell us what's the strategy as it is now. You've been very firm in the past, at least over the last 12 to 24 months not bringing fresh funds, But and you're trying to look in the market, but so far nothing. And of course, the situation has been deteriorating to say the least. So how would you going to break the impact from here? Consider it could be some repercussions on the other investment in Indus, considering that you guarantee the sales coming from both from idea.
Thanks.
Very comprehensive. I tell you what, why don't you take your home market and I'll take it in the year. So do you want to go first?
Sure. Italy, very competitive, as you mentioned. We have some ups and downs regularly, particularly in the prepaid market. But I would say the last Few weeks, the last couple of months in Italy have certainly seen an increase in competitive intensity. More allowances in mobile.
We even had 1 of the 3 top Mobile network operator going on TV with the headline of $5.99 for 100 gig, which clearly we wouldn't see as sustainable. And the competitive pressure on pricing has also hit fixed. By the way, fixed is another dimension of what we were Discussing earlier in Italy, we have seen after a spike at the beginning of the pandemic in the Fixed market, we've seen demand drying up moving towards FWA. And in that context, price competition has Heightened. And to your point, I don't see this as reversing imminently given that there is an upcoming launch of Iliad.
So very competitive. Amongst the various factor you mentioned, the agreement with DAZN, I need to say, I wouldn't put in this In tense competition, football on TV as a key factor in the Italian market, Much less pay to the subscriber, even less paying for football. It's nowhere near a market like Spain and of course also football is available fully over the top as well. So I don't think this is going to be a critical factor. But back to what we see in terms of growth in the coming quarter, competition will continue to be intense.
But at our end, you have seen the results improving. We are benefiting now, of course, from lapping the roaming drag, which was particularly strong in Italy. But in the coming quarters, we will also see the benefit of our new wholesale deals coming into line in service revenue And then a little bit more in terms of medium term, the European Recovery Fund, we're mentioning it many times today, but Italy is the market that will get The largest allocation, €190,000,000,000 of which €70,000,000,000 is grant. And it's fair to say that we are very well positioned ourselves in Italy to benefit from the increased demand On business services from the European Recovery Fund, I was mentioning earlier, a third of our service revenue is business. We are consistently taking share of the market.
And therefore, we have a really great asset to get advantage from this. We need to see how it will phase in terms of timing, but a general improving trend on the back of these factors.
And just turning to India, really India is a question for Vodafone idea. So but within the going concern statement, they highlighted very clearly, they are dependent as a going concern on refinancing of debts that are coming due in terms of monetization of assets, in terms of government support, so AGR or floor pricing, etcetera, and raising funds. So I mean, it is, as you say, a highly stressed situation, a difficult situation that they are trying to navigate. I mean, we as a group try to provide them as much practical support as we can. But I want to make it very clear, we are not putting any additional equity into India.
Our next question today comes from Emmet Kelly from Morgan Stanley. Emmet, please go ahead. Your line is now open.
Yes. Good morning, Nick. Good morning, Margarita. Thank you for taking my question. So I have a question just On your introductory comments, Nick, you mentioned that you, the management and the Board are still looking at the portfolio and options relating to the portfolio to deliver shareholder value.
Can you maybe just expand a little bit on your remarks and what Options are open to you and forward, please. Thank you.
Yes. Look, I think we have demonstrated over the last two and a half years Since I've been CEO and Margarita's CFO that we are constantly optimizing the portfolio to drive shareholder value and we will continue to do that very actively. What do I mean by very actively? I mean, if I give you some sort of examples of areas. So Vantage Towers, we are really pleased with the fact that Vantage Towers is now up and running.
While the share price has moved on, what just over 20% since the IPO. So I think that was vindication of the fact we kept the initial sale quite moderate retaining approximately 82% of the interest in that company. I think we did the timing was a good timing because now we're poised to help drive 5 gs, but also consolidate in if you like the early rounds of the sector in Europe. So I think that is a really good growth opportunity for us going forward and we would want to take that. We are clearly open to, as I've said before, co control scenarios.
Were sort of like minded industrial players wanting to do combinations in the future. So we would certainly explore and entertain those type of discussions. So we definitely want to do more things with Vantage Towers going forward. I'd say 2nd space would be in Africa. Clearly, we have Egypt And you saw that we did a new shareholder agreement with Telecom Egypt that gave us the optionality, not obligation, but optionality to move it within the group.
We could potentially move it to Vodacom. That could always be a scenario. You know, we did that with Safaricom and I think that was very successful. Clearly no obligation, but it's an option for us to explore. And then finally, I would just say just in general consolidation through Europe, I still think that there's opportunity to consolidate.
I think that in terms of how governments are now viewing consolidation, I think they've seen how critical we are as critical national infrastructure. They understand the returns issue of the sector now. I really think they understand that. I'm having a series of very good conversations. I was talking to the Secretary I was talking to the Secretary of State for the U.
K. As an example earlier in the week on this particular topic. And I think they want to make sure we are a healthy sector because they understand that we enable world sector of sectors. So we enable all other sectors and therefore they need to have competitive infrastructure for the country to be competitive globally. So what I'd say is that conversation around what is the right amount of infrastructure in the country, whether infrastructure can consolidate versus retail and other permutations.
We're exploring a lot of different aspects, I would say, to see what can be realized. So I'd say Very, very active in this area and we see. Of course, it comes with complications because you've got EU competition commission. But even Westoga, Commissioner Westoga was commenting saying that she was holding a meeting in October to really sort of stand back and start the conversation around framework that exists today. Now it might not change at all.
It might be slightly moderated or they might do something more substantive. But I think conversations around things like the definition of the market in which to participate become a more relevant conversation. We argue they more too tightly define it at the moment and it's broader than it looks. And things like ensuring that they are reinforcing and enforcing competition law when needed more rigorously than they do in certain situations to stop abuse. These type of things I think could be all positives in terms of direction.
Thank you very much.
Thank you very much, Emmett. Our next question today comes from James Ratzer from New Street. James, please go ahead. Your line is now open.
Yes. Good morning. Thank you, Nick and Margarita. So a question really on your business Outlook that you are seeing and the commentary you've given there. So firstly, I suppose that the full year results you announced increase in your CapEx spend focused on business initiatives and you said some of that was going to be success based.
So I would love to hear an update On what success ratios you are seeing at the moment in some of those IoT and campus network projects? And then secondly, you talk a bit about the European Recovery Fund, which I think we all agree has the Potential to be very significant. Would love to hear kind of what you're seeing now bottom up on the ground on your ability to Then bid for some of these contracts, what are you hearing from the SMEs Who some of these funds are going towards to digitalize and your ability to then win some of the contracts from them indirectly? Thank you.
Yes. James, let me I mean, first of all, so we announced saying we're going to invest in digital services. It does Take us a while to build these digital services. If you remember, we were talking about a lot more integration of other people services onto our platform, so that we can bring those services to light. So can I give you a tangible example, because it sort of somewhat answers both Spain is a really good example, the EU recovery funds?
So they the Spanish government, I mean, I've been impressed at the speed the government had moved out. I mean, since I met them in April and I went through here's what you could do to make a difference for our sector. I mean, they have hit every single point that I discussed with them. So whether it was the good spectrum come that we have with lower pricing, etcetera, which is lower taxes that we're going to get sort of tens of 1,000,000 benefit moving forward. And the third was around where could you really make a difference on accelerating digitalization and SMEs.
So they have badged €3,000,000,000 for the digitalization of SMEs, but already have said that they will release €500,000,000 in November. They are setting up effectively a digital hub to claim your subsidy. And what they're doing is they are targeting that first half a €1,000,000,000 on companies with employees 1 to €49,000,000 So let's say Soho and Small at the S part of SMEs. And they are going to give a 90% 90 percent subsidy level on digital services. So what this will mean and we formed a consortium as had Telefonica.
So really the 2 of us, I mean, this would be the same you're going to see in all markets, ourselves and the incumbents because of our business profile tend to be the 2 operators that can form consortiums. So then we form a series of companies that come behind us in terms of offering digital services integrated with our offering that we can bring to our customer base And they can use a 90% subsidy against those services. And importantly, the 90% is paid upfront. And then we put the customer on a 2 year, 3 year contract for those services. So we're really working very hard So I mean, we've contributed a lot to the shaping of this, but also to the ensuring that this will be a seamless experience for our customers.
So I would say this is the best case we have at the moment. And what we're doing to other governments around Europe is saying, Please replicate this. This is a really good model for us and we're hearing good traction across the board. Now everyone might do it through tax vouchers, whatever. So some of the other countries might be more complicated, but this is a really good example of volume now.
I don't know if you've got some builds?
No, the only build would be the type of Services that will be bought will be bundles. You will have, I don't know, a security bundle, an e commerce Bundle, a business support systems bundle, so that it's easy for companies of this size to know how to satisfy their needs. And within each Bundle, you will have a combination of services readily available from the consortium.
So and one final Bill, because you specifically mentioned it, was mobile private networks of which again I think we've taken a real leadership position. We believe in mobile private networks. We're investing behind it. Was standardized. The key thing here is how do you make it a series of products as opposed to it's always a bespoke expensive solution.
We want to make sure that we can do this at scale. So we're prioritizing effectively through pilots. And what you're going to see I think is traction in dedicated mobile private networks. Then there's the more sophisticated version. So that's like customers, campus, factory, etcetera, manufacturing plant, logistics, support versus a sort of hybrid one.
So you've got dedicated and you've got sort of hybrid. And the hybrid then mixes the ability to use our main macro network and the dedicated. And that's a slightly more sophisticated and that needs some more technology roadmap development. I'd like to spend more time on it because these are yes, these are really I think we have a really exciting proposition roadmap ahead of us. So I think the hardest thing we have at the moment is prioritization.
It's the demands there. It's Shifting that you can hear it in what we're saying shift in our proposition prioritization and sequencing for the EU recovery funds. Where the money moves, we want to make sure we've got the strongest proposition and partners lined up. And it's a good seamless experience for vouchers or whatever. And then develop more broader strategic differentiated products over time.
That's great. Thank you. Appreciate all the color there.
Thank you very much, James. Our next question today comes from Adam Fox Rumley from HSBC. Adam, please go ahead. Your line is now open.
Thank you very much. You mentioned that the above the line I think is pretty limited at the moment. And I think the reasons you put forward there make a lot of sense. But I wondered How you think that's affecting customers' perception of and desire for 5 gs, there's not so much talking about I'm not so much talking about customers on the bleeding edge here, but more the larger pool of customers. Or do you think it's kind of unlimited tariffs where Bill Wherry and Bill Shock is being removed.
That's really the thing that's driving upsell at the moment. Thank you.
Adam, can I give a view on this? Because for a consumer customer, 5 gs makes no difference, no difference on performance, but any user case that they are using today and what we can see over the next 5 years. So 5 gs is not for consumers. I mean, it's nice to say I've got 5 gs phone and I've got an icon, But this is a business application. You heard my passion around mobile private networks, etcetera.
That's where the monetization is. And so what we're focused on is building our 5 gs network for businesses. And secondly, in cities to lower our unitary cost where it goes to your point about unlimited because it has a lower unitary cost, which case unlimited we can deliver at a lower unit cost. So we want to build the lowest unit cost factory in the industry in Europe, so that we can compete at any level against any player and earn superior margins. So we're building it for that.
So we are not doing some of these deployments that some of our other peers are doing, which is using DSS, which is just trying to run a coverage claim for 5 gs. And actually what we've seen is a predation in performance on the blend of 5 gs, 4 gs on that network with DSS. So I would say so going back to your marketing point, I think what we want to be marketing is the merits of a high quality network. That is a blend of 4 gs, 5 gs. You just want to know it's there.
You want to know it's reliable, that you've got the coverage, that you've got the performance you need, that you don't get dropped calls, etcetera. It's a seamless experience. We want to deliver that for our customers. And that's our priority. So our priority for consumers is high quality network.
The businesses we are targeting 5 gs, because we think that that is a monetization and transformational for our customers experience. Of course, above the line, we can talk about network, morbidly high quality network. We can talk about propositions depending on which quarter we're in and whether we have exciting things to talk about.
Thanks so much.
Thank you very much, Adam. So we have time for one more question today from Carl Murdock Smith from Berenberg, Carl, please go ahead.
Carl, you're on mute. But that they are impressive headset there. I mean it really you do look like you're flying sort of a spaceship.
Carl, maybe just make sure that your headset itself isn't muted. There might be a thing on the wire.
No, it's not. Now you can hear me. There we go. No idea what happened there. No idea what happened there, but I'm not giving up on my trusty headset.
I just wanted to ask about the decision to stay with Carfirm Warehouse in the U. K. And kind of what the new agreement gives you. I suppose it's particularly interesting, Nick, given your personal history with that, given that When you were CEO of
the U.
K. Business, you actually left Carrefone. So I was just wondering if you could add some comments there. Thanks.
Okay. I mean clearly it's a confidential commercial contract. But let me give you the essence to answer your question. I mean I think there was a feeling that a lot of operators have left Carfone and were exiting the indirect channels. The answer is no they're not.
It just left Carfone and went into a lot of other, I would argue, more aggressive and more expensive indirect channels. And so If you stand back in the U. K. Setting, indirect channels, I've always felt, even though I did exit Carrefone, I've always felt have a role to play to complement operators because they are offering something to a different target audience. The issue I always had was we made no money on the first life of the customer.
And secondly, there was a high churn profile. So it says those 2 together are not good economics for us. What I wanted was something where We worked together to develop a loyal base. And this is the agreement we now have with Carrefones. So the big difference is we make money day 1.
It is SIM only. So they carry on selling their handsets, but this is SIM only. So you pick your handset and then come to Vodafone on a SIM only offer. Importantly, we are working together on the base to improve the loyalty, lower the churn, give more products and services. So what I'd say is, it's a fundamentally different arrangement between the 2 of us.
I think it approved to be successful for both of us because it has the right constructs at the start which is These are our customers together and how do we take them on a journey of more products and services and embed loyalty over a period of time. And I think we do that better together. And so that's why we were pleased to move forward on that basis. And we would rather work with in direct channels that have that philosophy rather than a high sell, high churn, let's say not so ethical, what would I say, approach to commercials.
Okay. That's great. Thanks very much. Or maybe I should say Roger given the headset. Thank you.
Look, you were the last question, I think. So look, thank you all for taking the time to join us. I hope that you all take a bit of time out over the summer, because I think everyone needs a little bit of a break one way or the other. And look, we look forward to the back to school. Please, if you're not a Vodafone customer, I can't think why you wouldn't be, You need to become 1.
We're going to have great propositions in the marketplace and I look forward we look forward to seeing you all in November. Take care.