Good morning, everyone, and welcome to our Q3 trading update. I'm joined by Margherita. Morning, Margherita.
Hello.
We have an opportunity just to go through the results and Q&A with you. We attached a short presentation on our IR website. We're not going to go through page by page on that, but what I thought I'd do is just give you a one-minute summary of the key messages. First and most importantly, we are back to growth. That growth was an improvement in our underlying performance and also a lower drag from roaming. We also had a very good performance in Germany, our largest market.
I was really pleased with the consistent level of commercial performance. We saw mobile European contract churn year to date down 1.1 percentage points, so continuing a trend in terms of customer loyalty and better economic model for us as a business. Secondly, we also saw good NGN fixed broadband customer net adds, 330,000 for the quarter t hat takes us to over 1 million year to date so r eally good additional momentum on fixed side.
In Germany, we added almost 100,000 cable net adds over the quarter. Importantly, 40% of our cable additions are choosing the 1 Gb plan, which is key for our differentiation as a business. In Italy, we've seen some recent improvements in the pricing landscape at the lower end as of the start of January, so not in the quarter itself. Importantly, we're starting the migration process of our new MVNO contracts onto our network, which will be a positive for next fiscal year.
In the U.K., we continue to maintain good commercial momentum. As you saw, we put through in December our new pricing of CPI plus 3.9% for new customers. In Spain, our service revenues continued to stabilize further, so quarter-over-quarter improvement. We managed a price increase in the month of November in what was a highly promotional and intensive quarter. I think we landed that very well.
In Vodacom, good, strong performance continues in South Africa, and i mportantly in the international markets, the zero rating of peer-to-peer has now ended in the month of January for all of our markets. We are now charging again for M-Pesa. Vodafone Business, which is about a third of our business, really good growing share, strong demand for our products, and high usage given the pandemic so w e've really seen a tailwind for business for us.
Good overall performance therefore underscores our confidence in our full year outlook. And we reiterated our guidance of over EUR 5 billion of free cash flow. Importantly, we continue to make progress on our strategic initiatives w e were able to commercialize the joint venture with Telefónica in the U.K. on towers, and therefore allowing us to move our 50% underneath Vantage Towers, which is firmly on track for early this year IPO. On that, let me hand over to you all to ask questions of Margherita and myself.
Thank you very much, Nick. Our first question comes from Maurice Patrick from Barclays. Maurice, you are now live. Please go ahead.
Yeah. Morning, guys. Thanks for hosting the call today a question maybe on the trajectory of service revenues, if that's okay. You saw an improvement this quarter, as you called out. Much of that seems to be the lower roaming drag, as it's traditionally a lower quarter, I guess, than this quarter.
I guess the question is, I'm not expecting you to give guidance for the quarters ahead on service revenues, but maybe you could give us a hand with some of the puts and takes for the Q4 and maybe for next year. I'm sure you'll talk about the continuing roaming drag in the Q4, but given you are growing by 1.8% now, EPS, and as we see a gradual recovery, the hopes are there that you'll see accelerating growth into next year so m aybe thoughts on that would be helpful. Thank you.
Maybe Margherita?
Sure. Hello, Maurice. Yes, we're very pleased to be into growth, back into growth, and I would say firmly back into growth. We have good momentum. Nick mentioned the fact that our growth rate, excluding roaming drags, is now 1.8% for the group. Worth noting that we are also back to growth in Europe, excluding roaming. I think you were right.
On quarters, I prefer to avoid giving specific guidance a s you know, a 0.1 is less than EUR 10 million for the group so w e would avoid that. We are definitely looking into next year as a year of acceleration for this growth, and I would call out two reasons for that. The first one is the strong demand for our services that Nick mentioned. Vodafone Business is today back into growth, including the drag on travel.
It's growing 1%, and if you exclude the drag from roaming, it's growing more than 3%. We see the strong demand across the whole spectrum of segments in business, I would say from the public sector all the way to SMEs. It's particularly strong around fixed connectivity and digital products. We really believe that in fixed, we are seeing a growing market in which we are also specifically growing share.
Maybe to give you more information on that, we have, as you know, an Investor Day dedicated to business coming up because it's a third of our revenue i t's an important point. Number one is demand, and number two is also commercial momentum. We have had lockdowns in Europe again in Q3, as we have seen from the results, we have maintained good commercial momentum, particularly in Germany.
As Nick mentioned, almost 100,000 connections in cable, but also similar volumes in mobile. Good performance maintained despite the lockdown. On the back of this, we are really looking forward to coming to Q1, where we will see the underlying performance emerge as the growth rate for the group. Our focus, as I said, will be on seeing this accelerating over time.
Great. Thank you very much.
I would just maybe one build on Margherita's points. I mean, a lot of momentum, as you can see from her summary. I'd also say just the pricing climate. You're basically seeing customers showing a deeper appreciation for quality networks. You're also seeing, I believe, governments, regulators starting to understand the need for investment into high-quality networks, and therefore, the industry needs to earn a return. I think there's a little bit more latitude to discuss pricing-
-in this environment and t herefore, as I said, U.K. has got the new formula, which seems to be adopted by most of the players in the industry. You've got Germany now just putting through under the draft rules, and a simpler way of doing price increasing. You've got ourselves and Telefónica increased prices over the quarter in Spain, and you're seeing the low end in Italy. I think it's a climate when people are start to appreciate the quality of networks, and that gives a little bit more, I wouldn't say a strong pricing power, but it just gives a little bit more latitude to do targeted more for more pricing.
Great. Thank you very much.
Thank you, Maurice. Our next question comes from Sam McHugh from Exane. Sam, you are live. Please go ahead.
Yeah t hanks, guys a question on B2B, actually a pologies if it does front run some of your Investor Day i guess B2B was one of the good parts this quarter. You flag out fixed B2B growing around 5%. I guess the implication is mobile still falling 1% or 2%. I wonder if you could give us some color on that mobile decline i s that just roaming? I'm just trying to understand if the core B2B mobile business has stabilized in terms of pricing and subscribers? Do you think your B2B business can outgrow the consumer business in the medium term?
Sam, you are absolutely right. The drag on mobile revenues in business is coming from roaming. Excluding roaming, we are also seeing an accelerating momentum there, and I think this is quite important w e are seeing an accelerating momentum, particularly in our main markets of U.K. and Germany. When I was saying there is strong demand, there is also strong demand for some of our mobile products.
See it as, for example, IoT, which is within mobile. We have had, I think, the highest quarter of IoT connection in Q3 since at least four years, so a record quarter. And, when we also talk about public sector demand, we see an increased demand for mobile connectivity coming from these areas. I definitely would say that mobile as well is on the up, and the only reason why it's negative is roaming.
Next year, as we lap into Q1, we will see the roaming drag fall away. At some point in the future, which I think is yet to be determined, the roaming may also become a tailwind, which will be particularly important in business.
Yeah. Again, just one quick build. I do think that a lot of incumbents are associated with legacy, whereas we're seen as more of a front modern set of products and services and so, n ow that all SMEs and public sector, to Margherita's point, are waking up to the fact they were caught out by the pandemic and they need to digitize. I think that they are turning to us because I think they see us as a modern solution set, which I think plays to our strengths.
Fantastic. Look forward to hearing more about it.
Thank you, Sam.
Thank you, Sam. Our next question comes from Georgios at Citigroup. Georgios, you are now live. Please go ahead.
Good morning, and thank you for taking my question. I just wanted to ask a follow-up on the pricing comments you made earlier. Obviously, price increase has landed very well in the U.K. because everyone followed. In Spain, it looks like there is a small increase in churn. I don't know if it's directly linked to that or maybe other market dynamics.
If it would be possible to give us an idea of how you are thinking about different markets over the next year? and the comment you made about Germany, whether it's something that could be implemented shortly or whether it takes a couple of years for the implementation. Thank you.
Georgios, what I would say is pricing is very specific to each individual market and where the price table is today, what the competitive intensity and objectives of different players are. What I'd say specifically about Spain is it wasn't really the price increase that was the key driver, it was more the fact that the market got more aggressive i think Orange wanted to reassert itself in the marketplace, and made a stronger promotional play and some repositioning.
You had a number of other low-end brands reposition as well with Virgin coming into the market. I would say it's more to do with everyone repositioning around us, and then ultimately we repositioned to those new prices, in early December so w e saw December and January, we went net positive again. All I'm saying is we've stepped the Spanish business up to be able to compete if people lower price. At the same time, where there's opportunity to do more for more, which we did.
We did. If others do them, we will take that on board as well so i consider us a very rational player. I think Italy, I'd call out as a market that wasn't able to do any pricing actions, and normally we do pricing actions. I think next year the climate could be a bit different. I think all players need to improve performance and returns. I'd say the German market has been pretty benign for a while now, so I'm not saying that you should expect headline pricing action, but I think what you will see is more for more actions wherever possible and maybe more base actions.
Thank you.
Thank you very much, Georgios. Our next question comes from Carl Murdock-Smith from Berenberg. Carl, your line is now open. Please go ahead.
Morning, and thanks for the question. I just wanted to ask about the acquisition of the Kabel Deutschland minorities. In what ways will this help to simplify and improve the efficiency of your German operations? Also kind of why now? why the decision to acquire the minorities now as it's accretive and credit rating neutral? what stopped you from achieving that previously? Thanks.
Look, what I would say is it's not really an operational impact per se. It was a lot more to do with the fact it was financially attractive. Essentially, as you say, it was both adjusted EPS and free cash flow per share accretive immediately. It was neutral to our credit rating. I think importantly, and to your point of timing, look, these disputes in Germany can run decades, as you saw with management. At some point you don't want the distraction and at some point you want to try and eliminate any possible downside scenario, which this did at an attractive price.
Maybe just to add that in terms of being able to find an agreement at an attractive price, we just had received a favorable ruling from the Munich court, which may have supported our case.
Yeah. Very true.
That's great. Thank you very much.
Thank you very much, Carl. Now, the next question is coming from Robert Grindle. Please bear with me.
Clearly, Robert gets specialized treatment.
Robert, your line is now open. Please go ahead.
Thanks very much g ood to see you both. You have decided to split your technology division under Johan into networks unit, and I think it is digital and IT. Please could you share some of your thinking behind this move? Is it about sort of costs and efficiency? or are you thinking more along the lines of you are a NetCo and a ServCo separately? If that is the case, does that apply to fixed as well as mobile? Thank you.
Yeah. Robert, I'm really pleased you asked the question because actually these are significant changes we're doing on the operating model of the business. I wouldn't describe them the way you did so m aybe if I could have a go at describing slightly differently. What we're doing is we are driving greater standardization across network and IT and digital.
Today we are organized with CTOs in each of the markets, and then we have group functions. What we are doing is vertically integrating those functions, network and IT digital, for the whole European group. They act as one organization driving a standardized roadmap. I believe what this will deliver for us is it leverages our true group scale. It drives greater efficiency because standardization drives efficiency. The third is it improves speed to market of the products and solutions we're bringing to market.
There are four components f irst is, it's a new group product development process. Imagine we will have one group roadmap for products. Let me pick an example, consumer IoT. You are seeing us develop one platform for the group and one set of products that then can get launched across the footprint. That's where the speed to market comes from.
The second thing is we are focusing on platforms, and we are going to place platforms as centers of excellence so y ou might have consumer IoT as one center of excellence that coordinates in a distributed model across our European footprint. The third is we're going to insource IT development engineering capability versus what has been historically outsourced. We already have a significant insourced activity, but we're really going to scale that to develop our own IP going forward to make our differentiation stronger.
Finally, we're going to use those standardized platforms and Integrated European Organization from a technology perspective to make it easier for third-party strategic partners, the Microsofts, the Amazons, et cetera, to connect with our platform and go across our footprint seamlessly and at speed. An example would be AWS and Edge Computing as an example, or Accenture and their security product.
This is really turbocharging Vodafone to deliver on our bigger vision of a next generation telco from more of a classic telco, historically. Of course, in the process of doing all of that, there are significant synergies. It will help support the EUR 1 billion OpEx target, the three year target we've talked about before, also, it provides us resources to invest in growth going forward and maintaining that balance. I think it's a really big move for us.
Yes. Sorry to add something, but I've been very passionate on all this, as Nick knows. I think it's a great move in terms of return on capital because our investments will go further w e will get more growth for our investment by wherever possible, invest once and deploy many times. I think it's a natural evolution versus where we were, but it's a great step to maximize the potential of the group.
Great. Thanks.
Thank you very much, Robert. Our next question comes from Adam Fox-Rumley from HSBC. Adam, your line is now open. Please go ahead.
Thank you very much. I actually wanted to ask about the cost implications of your new greenhouse gas emission reduction targets, please because, w hile 2040 is a long way off, I think your Scope 3 target is very ambitious, especially i wondered if you could comment on what are extra costs involved in the medium term to get that going? Does the timeframe mean that you can just wrap it into your existing operating plans? Thanks very much.
Adam, can I just say I firmly believe, and our ExCo believes that it's more a question of we can't afford the cost of not taking action, more than obsessing about the cost of action. If you think about the future, the next 10 years, 20 years, you think about carbon tax, you think about regulation, you think about government, multinational corporate bids and how you qualify. We think inaction would be very, very expensive. Our energy bill, and Margherita correct me if I'm wrong, is something like EUR 0.7 billion.
Yeah.
We are concerned that that would only escalate at a rapid rate with carbon taxes and various other things. We think this is responsible from a society perspective, but also very rational from a business perspective as well. Which is why we feel this is a win for all stakeholders.
Maybe worth adding that we are starting to win some business on the back of our environmental objectives. We have recently done a deal, probably I cannot specify which one, but you can start to see that our environmental credentials become a critical factor in winning business in Vodafone Business. Italy and Germany networks are already 100% renewable t he rest of Europe will be there by July, and this I think is an important step for our most conscious customers.
That's a really interesting answer. Thank you.
Thank you very much, Adam. Our next question comes from James Ratzer from New Street. James, your line is now open. Please go ahead.
Good morning, Nick. Good morning, Margherita t hank you very much. Great set of results and encouraging commentary about returning to growth. With that in mind, just love to hear an update on your thoughts about potential cash return to shareholders i think in the past you've talked about considering incremental returns when you got down to 2.5x net debt to EBITDA.
Is that still your thinking at this stage? or are you willing to show more flexibility around that, especially with the upcoming Vantage Towers IPO? If I could just ask a very quick extra one y ou flag in Italy the PosteMobile and Digi MVNO. Could you quantify what the revenue run rate of those will be when they're fully integrated onto your Italian business? Thank you.
I will leave both for you, Margherita.
Thank you, Nick. On returns to shareholders, as you know, James, we have three capital allocation priorities. First is invest in our critical network infrastructure. The second is de-leveraging t o your point, we have a clear intention to move towards the lower end of our 3x to 2.5 x net debt to EBITDA range. The third is provide attractive return to shareholders.
On leverage, we are really focused now on moving down. That's the priority we are thinking about and you should think about for the coming months. I think the two key levers there for us will be the return to growth. We have talked about revenues today, but we clearly see ourselves after the COVID pause to be back into EBITDA growth next year, and this will be a key driver for de-leveraging. Then also the IPO of Vantage.
Then probably, as you may remember, we have our mandatory convertible bonds approaching maturity, first tranche in March so w e'll have to deal with that. I think nothing surprising, I would say, compared to what we have always said we would do, focus on de-leveraging. On your second point on the MVNO deals in Italy, two deals, but two very different deals.
VG in Italy is very small ethnic MVNO, whilst PosteMobile is the second largest in the market if you take out Iliad, or the first pure MVNO. We have started the migrations now and, o f course, I cannot disclose precise number because these are private contracts but i n terms of phasing, I think you should expect PosteMobile to reach run rate around the half year and sort of grow between now and then.
James, just one build on the dividend point. I really feel that lowering our leverage to the lower end of the range will remove the discount I feel we're getting on the dividend we already do pay, given the dividend yield and the share price where it is. I think it's an important consideration on the share price itself.
Thank you.
Thank you, Jakob. Our next question comes from , sorry t hank you, James o ur next question comes from Jakob Bluestone from Credit Suisse. Jakob, you are online. Please go ahead.
You're on mute, Jakob.
Jakob, we cannot hear you. If you could unmute yourself, please.
Jakob, you have the floor.
There we go. We can hear you now.
Fantastic.
Thank you.
Great.
Please go ahead.
Great t hank you. I had a question on your thoughts post the acquisition of Telxius by AMT. Could you maybe share a little bit what you think it means, first of all, for the sort of towers market? but also what is your current thinking longer term about the impact from Drillisch, given there clearly is more support coming from more independent tower companies. How do you think that will impact your retail business more long term in Germany as that becomes more of a reality? Thank you.
Yeah, look, it was an interesting transaction, and it did make me reflect i think, first of all, I feel two years ago, we made the right decision to stand up our towers as a separate business with a dedicated focus cause w e took the view that consolidation will play out in the European market, that this would be an important asset in a sort of digital world going forward or a digital society.
Number one, I'm very pleased that we did the action when we did because now we're very much in a position to shape the market with Vantage Towers i think it's well-equipped to do that. I think secondly, the multiple was an attractive multiple, and so a nice reference to have out there.
I think third for me is just it really highlighted just what an opportunity the German market is, and I think Vantage Towers is very much positioned to do well in the German market. From my standpoint, these are all positives. I don't think it overly changed the competitive landscape i t was always going to stay t hese players were there already.
I think us having a dedicated team, a dedicated focus, having the high-quality assets and the ability and balance sheet to grow both organically and inorganically, I think was really important to position at this moment in time. Look, they will examine German opportunities. 1&1 will be one of those opportunities that they will actively review and participate in, as you would expect.
I think from a 1&1 perspective, look, the good news out of the draft telecom law, was that there was still no mandatory obligation on national roaming i t's still to be commercially negotiated and o f course, we are actively participating in that. They have to decide to stand up their network and the cost associated with standing up that network. Clearly, their focus is going to be in the more urban areas.
They only have a certain amount of spectrum. Spectrum will not be the same so t herefore the network quality will not be the same. I see them as participating in an area of the market where there are second brands and other value brands today.
Of course, we will have to adjust our strategy to compete on different value segments with our position but, i still think strategically, you stand back on our own position, and we have a truly unique, differentiated gigabit network now covering 22 million homes already with DOCSIS 3.1 rolled out, with high-quality mobile network. You see the momentum in our most recent quarterly results.
Thank you.
Thank you very much, Jakob. Our next question comes from Akhil Dattani at J.P. Morgan Akhil, your line is open. Please go ahead.
Great, thanks. Hi, good morning. A quick question on the topic of in-market consolidation, please. As I'm sure you've seen, there's a lot of speculation on Spain at the moment and the prospect of potential deals there. I'm sure there are limits in terms of what you can say, but some high-level comments in regards to your thoughts around the organic versus inorganic options in the market.
The only specific question around it, just to understand, if you ever were to consider a deal, is consolidation a mandatory requirement for any transaction, or would you consider other options which could lead to deconsolidation, like in Ziggo? A follow-up question, which is a bit broader. When we think about regulation, Nick, you obviously talked about regulatory issues in Europe. To what extent does the U.K. consolidation decision from the European Parliament matter? How significant is that when we think about the prospects of broader consolidation in Europe?
Okay. I think I've got the multi-level question. Look, I'd say with Spain, I'm not going to get drawn into what has been long-running speculation. I think you see from our results, our Spanish business maintains its momentum. I think the repositioning we did really did strengthen us both commercially but also from a cost-based perspective to allow us to compete at all the tiers.
Clearly, we have been still working on how can we improve returns further, and you've got digitization, you've got network sharing, those benefits still to come within our numbers within the Spanish business. I'm pleased with our organic execution. Of course, we will always examine opportunities to enhance and strengthen our business. We laid out three core principles for all of our assets.
The first principle was, do we have local scale, and then do we, in addition, leverage, does that asset leverage our regional scale? Spain, we are now number two on retail in the Spanish market w e have scale in Spain, and it leverages a lot of the European regional scale. Going back to the question around our new operating model, very much driven benefits for Spain.
I'd say secondly, are we sitting with a credible and actionable plan to get return on capital above market WACC? You've seen the progress we've made. We think there's additional benefits still to come. I'd say the third is then, are we the best custodians of the asset, or can someone else derive more value? And of course, we've always said we will look pragmatically at the situation of any situation in any market to ensure that we're doing the right things for our shareholders.
Look, I don't eliminate anything. We evaluate, we consider as to what's the best for our shareholders. Importantly, understand that the intrinsic value of the business in Spain and the value that's brought through the synergies that we have as part of the overall group. I'd say secondly, just so that your point about the U.K. and regulation. Actually, this week alone, Monday, I spent an hour and a half with the director general of CERRE, the policy setting of EC. Yesterday, I was with GSMA, and another eight CEOs through Europe, talking to Commissioner Breton about importantly two things.
One is, how do we improve returns in the telecom sector to encourage more private investment to match the public investment so w hat are the things that would unleash investment, one of which was consolidation at the Europe level, at the in-market level, and at the infrastructure level so you know d iscussing the importance and differences of those three as one of the aspects. I'd say the second thing we were talking about was b y the way, that was one of several things that we felt needed to be done.
The other important topic is where are the areas that the EEC should be investing with the member states, the EUR 750 billion recovery funds and the 20% going to digital, of which I've talked about the five areas before t hings like rural coverage, Open RAN, things like digitization of SMEs and public sector w e've been clear about the different areas. I think we're making really good progress on the allocation of funds from the recovery to the right target areas.
I think the European Commission is really trying to understand how these components like consolidation, collaboration, more cooperation amongst the industry could be a better model to ultimately encourage more private investment and so i would say it's early days. I think that's more important than per se the U.K. decision i don't see the U.K. It was incrementally positive, but it's more this conversation that we're having is more shaping, if you allow us to do the following things, this is what it's going to mean in terms of investment coming into the sector.
That's super interesting. Thanks.
Thank you very much, Akhil. Our next question comes from John Karidis. John Karidis is from Numis. Please go ahead.
Thank you. Good morning to you. If I may, I wanted to ask a question about unlimited tariffs. Simply because in the U.S., every quarter Verizon and AT&T highlight the various net present value benefits of getting more of their customers onto unlimited tariffs. I've got two parts to it o ne, I'm after some numbers, and two, I'm after some words, o n the numbers, I'm trying to understand in your top four markets, probably not Italy, but the other three, what proportion of your contract customers are on unlimited now.
Secondly, what I'm trying to figure out is whether the intensity of competition for customers on unlimited tariffs varies meaningfully versus the intensity of competition for customers on metered tariffs. I appreciate that's not the case in Spain, but could it be the case in other markets?
Margherita, would you like to?
Have a go? Yes.
I'll build?
I'll start from the numbers, John. You asked what proportion of our customers are on unlimited y ou know the overall number is around 10 million now, and it's growing fast. In terms of offer, slightly different position across our main markets. Unlimited is not a feature of the German market, as you probably are already aware of. Across the other markets, about a third of the eligible base of postpaid contract has now taken up unlimited.
This varies from Spain, which is at the highest level of penetration of around 70%, then slightly lower in Italy and the U.K. I would say Italy also growing very strongly, for us in Italy, it's a great more for more initiative that customers pick up and move on to. Good progression in terms of number quarter- after- quarter, also in terms of ARPU.
We've not put it on the slide in this quarter because we wanted a short presentation, as you know, we do get ARPU uplifts. Whenever we move customers to unlimited. From a competition perspective, I would say the key feature of unlimited probably is customers want it. It's a very simple proposition for customers also in terms of interactions with us.
You don't have bill problems. You don't have all the sorts of questions that you can have with other offers i t's a great simplification, which drives good Net Promoter Score. And then we focus our activity more for more in an unlimited environment, which is to move customers across tiers-
-from the lower end of 2 Mbps to the upper end of unlimited. Overall, we really see this as a key driver of our acceleration in performance w e were talking at the beginning of the call about the fact that our underlying performance has kept accelerating throughout the year. In mobile, unlimited has been a great driver for that.
Thank you.
John, I would also just, one last bit, which is I think unlimited opens up a bit of a gateway. We talk about that we want a multi-product relationship with our customers and therefore to have an anchor of unlimited is helpful for then building other products and services on top of that. In an ARPU accretive way to Margherita's point. It's strategic.
Lovely.
It is just we would like to go as quickly as possible, depending on market conditions but M argherita has correctly said, we're doing it in an ARPU accretive way, and then having the speed tiers allowing us to then take the customer on a journey of ARPU accretion over the years to come as well as we roll out 5G, et cetera.
Thank you both.
Thank you very much, John. Our final question comes from Andrew Lee at Goldman Sachs. Andrew, please go ahead.
Great. Morning, everyone i had a question o bviously, you showed strong commerciality in the quarter j ust wanted to ask about the efficiency improvements on those sales and specifically the digital sales as a proportion of the total. I think it's 26% in the quarters. Is that as high as you would've hoped given lockdowns? How is the underlying trend going here? Is it better underlying than you would've expected? The same? worse? any comments you could give on that would be really helpful. As a follow-up, just any comments to a similar question on churn and how you're seeing that go. Thank you.
Margherita?
Sure. Andrew, we do many underlying. I was trying to think how do we do the underlying on the digital share i think it's quite difficult to split the impact in a very analytical way. But we are pleased with the progression. As you said, 26%. I think the most notable results are in the U.K. where it's now almost 40%.
With the iPhone 12 launch, where we have been very successful in the U.K. recently, we have seen 55% of those sales happening online, which is an absolute record. Clearly, to your point, part of this is driven by the lockdown but i f you look at the U.K. performance, we have sold 33% more iPhone 12s this year than when the latest iPhone launched a year ago, despite the lockdown, and therefore it's not just gain of share online, but it's also gain of absolutes.
We see this as continuing w e mentioned that when COVID started, we immediately sat down with all the markets to ensure that we had plans in place to make sure that the benefits of COVID and the changes of customers' behavior would become locked in our own plans and t his is what we are progressing towards at the moment. Clearly with benefits in terms of efficiency, I talked about the fact that we were seeing the opportunity now to see commissions in our P&L to stabilize and then start decreasing over time and t his is a key element in driving this.
You were seeing in retail a kind of fundamental shift in how consumers go and buy their products elsewhere in other sectors a re you surprised it hasn't shifted more in telco?
Well, I would say retail has not been as aggressively impacted this second time through. I would say that people still need to interact with retail for different activities. I think if you look at what we're trying to do, we're trying to drive a standardized My Vodafone app. Capturing all of the important customer journeys from a service experience perspective.
If we can capture everything you need and you can execute it through the app, that is great. We also want to have click and collect into retail. We are finding, the U.K. as an example, 230 stores are available and open for click and collect. I think you're going to see us play more into that strategy moving forward. More click and collect, more express, smaller format with very specific purposes.
We talked about, oh, I want to say 18 months, 12 months ago, about reformatting our retail estate, and making it complementary to a digital-first execution. Rather than saying we're retail first and we've got digital, we're saying, no, we're digital first in all of our channels, and that then retail complements that execution. You're seeing us pivot towards that in our current execution. Whether others are doing it, I can't comment, but that's definitely what we'll be doing.
Andrew, you also asked about churn, and I was just conscious we didn't give you an answer of that. You have seen the numbers. Any particular angle there?
No, it's just a similar question. Would you have expected that to come down more? Are you happy with the underlying trends? I realize I'm being greedy with a follow-up question there.
Yeah. No, just to say very happy with the trends. You may remember that when we gave our guidance in May for this year, we said we are not betting on structural reduction of volumes or churn because of COVID and i think in reality, we have seen that this has not really happened in most markets so t he fact that we continue to see structural churn reduction 1% down year-on-year to date is positive and w hen you look at it by driver, you can really see why it's structural, because unlimited has lower churn, convergence products have lower churn.
Vodafone Business, we were talking about the recovery in mobile. One of the drivers there is also lower churn, and it is supported by a leading NPS, which has been, again, the highest in business for a long time. I think we'll see this trend continuing as well into next year.
Thanks.
Thank you, Andrew. At this point, I would like to hand over to Nick for any closing remarks.
Look, just wanted to say thank you very much for taking the time to join us. I'm glad to see so many of you are fit and strong. Look, returning to growth is a good positive for us, and now our focus as a management team is accelerating from this point onwards. We talked through many of the reasons why we believe that will happen and the actions we're taking, and we look forward to updating you on our full-year results in May. Take care and stay safe.
Bye.