You'll see on our website that you have the full detailed presentation. Now we will go into Q&A. Before we do, I just thought I'd just take a couple of minutes to just go through the key highlights. I'm pleased with our resilient performance in FY21, despite a very challenging period for everyone. We met all of our guidance, generated EUR 5 billion of free cash flow pre-spectrum, confirmed a stable dividend of EUR 0.09. We've delivered 10 consecutive quarters of lower churn, added over 1.4 million NGN fixed broadband customers this year, exiting this year with growth. We'll also continue to drive it. We're ahead of our plan on integrating Liberty assets and have successfully IPO'd Vantage Towers. I would say a strong delivery across our strategic priorities.
The world has changed around us. You have the EU recovery funds that are going directly to digital, further accelerating these trends. I feel the hard work and the focus that we've had as a management team over the last three years has really ensured that demand and our focus is being a new generation connectivity and digital services provider. Today, for the first time, we've provided midterm ambition targets within service revenue, importantly in Europe as well as Africa, growth in EBITDA and free cash flow, and growth in return on capital, ultimately above WACC over the medium term. We have a will to invest more. Our incremental investment in 5G will continue to be funded through internal efficiencies, we do plan to step up investment in high return opportunities, particularly Vodafone Business and Vantage Towers.
Underpinning all of this is a firm commitment to our dividend. With that, Margherita in Vodafone red colors and myself will take your questions.
Thank you, Nick. Our first question comes from, and please go ahead.
Great. Thanks for taking the question. If I just pick up on that final point around CapEx and investments. I guess the CapEx is the main reason today that the free cash flow guidance is a bit below consensus. I think if we include the Vantage growth investments, your CapEx would be around 5% above consensus for FY 2022. I was hoping you could maybe just expand a little bit on the CapEx. Where is it going? If we look at FY 2021 in particular, you had a sort of quarter or will you see it continuing to rise from here? Thank you.
Well, Jakob, maybe Margherita, you want to go through where we're investing the CapEx, and then maybe I'll return to the important subject of growth.
Sure. Jakob, I will for simplicity to FY 2020 and where we are planning to go post-pandemic. You have seen in my presentation a slide that was effectively doing the bridge to FY 2022. If you look at the increase between pre-pandemic and post-pandemic, different areas. The first one, which you mentioned, is network performance, it's connectivity. We have seen our customers' behaviors changing significantly this year, and it's a change that we now see as structural in a number of areas. I mentioned earlier in the presentation that fixed traffic is growing at a rate which is 50% higher today than it was before. We are spending more to service our network performance, which in turn will support our commercial momentum at a point in time in which customers have never been as focused, I would say, on quality.
Increase in CapEx, I would say about a third goes into this network performance investment. The remaining two-thirds are going into new growth areas. The first third is going to be focused on digital platforms and services because we believe we have some really in the background, mostly see these as areas such as Vodafone Business, where Vinod explained in the capital market day that we have recently had what type of opportunities that we believe we have. The second growth area, so the final third of the spend, is going into Vantage growth CapEx. Again, another area that as business is going to give us returns in excess of our cost of capital and therefore support our target to deliver returns above WACC in the mid-term. You also asked, where are you spending in the networks? Is it capacity? You have seen a step-up in FY 2021.
As we move into FY22, the capacity investment will go back down, but also we will have an acceleration of the 5G investment that will sort of compensate for that. That's why also in the mid-term, I see this third additional CapEx going to network performance.
Maybe just building on the growth and sort of confidence in growth. I think it's really important to understand we are exiting in growth and actually excluding roaming. Quarter four is a 1.7% growth rate, which of course will come through as we move into quarter one and start lapping the roaming impact. We have momentum. We are growing. This is not CapEx to create growth, it's CapEx to accelerate our growth profile. I look at it in three ways. First of all, Vodafone Business is about 30% of the group. Vodafone Business, excluding roaming, growing at, let's call it, around 2% and accelerating. I really think Vinod highlighted that we have a very unique position. It's really important to understand that there's only two players in the business segment in each of the market, us and the incumbent, and we are taking market share.
We're taking market share because we have a unique scale. We have a unique scale in terms of footprint, in terms of platforms, in terms of strategic partners, in terms of e-government initiatives, smart cities, and various others, e-health, and therefore we can also play a significant role in that. You go into what is just over 50%, which is European consumer. We see that moving into growth. We see it moving into growth because we have effective second brand strategy on top. We're also looking to the U.K. change, which has moved to a CPI/RPI model, and we are taking that model and putting that condition into our contracts through Europe to provide us optionality to move towards a more investment-led pricing model. At just over 15%, which is emerging consumer. Here we're obviously going through a path of upgrading from 2G, 3G, 4G penetration.
That moves ARPU up through higher usage of data. Of course, we've got financial services, digital services and financial services combined, over 10% of the service revenue of our emerging markets and growing in double digits, which we see as a really differentiated position versus other players in the market. Then, of course, you've got roaming, which we lap, and then will start to contribute to growth secure. We have many drivers of that top-line growth that gives us confidence. Thank you.
Thank you, Jakob. Our next question comes from David Wright from Bank of America Merrill Lynch. David, please go ahead. Your line is now open.
Thank you very much, guys, for taking the call. I might just have to follow a little on from Jakob there. If we think about those moving parts, the Vantage growth CapEx on the BTS is obviously, there's a hump to that. You've got the build of the towers maybe sort of coming through FY 2024, FY 2023, FY 2024, that should slow. I guess the question is whether the digital services and platforms investment is a little more accelerated up front. Ultimately, the answer I'm trying to find is whether this kind of EUR 8 billion CapEx that seems to be broadly baked into the midterm guidance is now the level to run from that we could see that CapEx level sort of dipping beyond there. I guess just the obvious follow on your comments on the fixed line CapEx.
That is surely quite focused in Spain, and I'm still struggling to understand how Spain looks like it's going to meet your return on capital framework. Obviously any comments on what may or may not have happened with MásMóvil would be super interesting. Thank you.
Well, maybe I'll cover the latter Spain points, and you want to cover the former?
Sure. As we look to the midterm, we have been giving you two important reference points. Our expectation of EBITDA growth, mid-single digit, and free cash flow growth, also mid-single digit. The CapEx that we are investing into growth. Growth CapEx for Vantage, which of course will be lumpy by nature, and also the growth opportunities in the digital services, which in turn will depend on our business cases. If you want to sort of work out a little bit the financial equation, mid-single digit EBITDA growth, and you bridge it to the free cash flow growth, you will realize that once you take into account tax, of course, as EBITDA growth, it will be taxed. Also the gradual unwind of the working capital support that we have had in the year just gone.
Maybe what we can call out today is, yes, there could be scenarios going in this direction. I would say mainly for two reasons. One is, again, the business cases of the growth. I mean, we will invest for as long as we see this significant opportunity. As Nick mentioned, I think this is a really important point in time for that. We will have to see in the long term what happens. Also in terms of technology cycles, I suppose at some point we will move over the 5G cycle and we will need to see what's the next technology there. Again, it's a bit of a long way away, and I think it's worth noting that we have been, for the first time, detailing quite clearly what our overall midterm ambition is, and I think this gives you some pretty clear goalposts overall.
Just maybe, David, just turning to Spain. I mean, look, I'm not going to engage in a narrative around market speculation. I don't think you would expect us to. What I would say is that we have made it very clear that we are always shareholders and we actively engage with players throughout the whole of Europe and our markets. What I would say is that, obviously, MásMóvil has gone for a, let's say, very logical, very safe option in terms of consolidation with another value player. I see that in Spain. We worked very hard with the team in terms of always going through the local plan. What I would say is it's a number of elements. First of all, we will be accelerating Vodafone Business. We see it, as you see that in one of the charts in the presentation.
That plays very much squarely into our advantages as a company. I would say we've got a very effective dual brand strategy in consumer. Lowi has been very effective at the low end, and what we've done at the higher end with the Vodafone brand is really drive Unlimited into the base and in commitment into the base, and convergence. We have a very resilient position. I think that's showing in our commercial performance. I'd say the other added extras that we've been working on is engagement with government. I went to see the president, the economy minister. Very good meeting. They really understand the criticality and importance of our sector and our business, and they've been very proactive in terms of coming up with initiatives. You will have heard discussions around extending spectrum from 20 years- 40 years. Also some tax concessions to support the sector.
I think these are really positive moves to improve returns. That was my point to the President. We need to improve returns for the sector. You need our services to be competitive as a country. Finally, what I'd say is network sharing. We've yet to see the benefits of network sharing. We continue to look at ways we can share more and accelerate our digital capabilities so that we drive more efficiencies in channel mix and various other things.
Just maybe, David, coming back to a point you made just to reposition. You said we may invest significantly more into Spain on the back of this additional envelope. I think it's important to point out that's not the case. Our capital allocation is clearly a process, very much driven forensically by returns. The majority of the additional investment is essentially going to two areas. One is Germany, as it should, of course, and then the other, for platforms and of course for Vantage, is central activities. You will have seen that we have recently changed our operating model in technology to have a single team driving Europe technology. We want to make sure that this new development, these new investments, are done once for the benefits of all the markets. Just wanted to point out it's really Germany and central development.
That's super, view. You've kind of been lagging two, three years since you really made ROCE a core hurdle for these regions. Do you think Spain is a cost of capital plus business on a two-year view if you're putting a five-year envelope around this kind of return on capital ambition? Is Spain there, or does it need some kind of additional restructuring, do you think, to make the grade?
I think it needs three things. It needed, first of all, digital acceleration. We're going to get that post-pandemic. We've revised our plans in terms of the pace at which we're moving on digital. It needed network sharing and deeper sharing, and we're engaged on that. The third, it needed a little bit more support from the government and funding, and we're getting both of those things. What I'd say is we're tracking well for the plan.
Very good. Thank you.
Thank you very much, David. Our next question comes from James Ratzer at New Street. Sorry, James. There you go. Your line is now open.
Great. Yeah. Thank you. Good morning, Nick. Good morning, Margherita. Two questions, please. The first one was just regarding your medium-term growth ambition, mid-single digit, and tying that in with the accelerated investment you're making at the moment. I think your guidance for this year would imply around 3%-5% organic EBITDA growth. To hit mid-single digit growth and tying in with the incremental investment you're making, is it fair to assume you're baking in EBITDA growth beyond FY22 going above 5% to start seeing the return from these new investments that you're making? Secondly, just on a point of detail around the Vantage growth CapEx for this year that you're taking out of the free cash flow guidance. I'm thinking that should be around EUR 200 million. Could you just give us some steer if you think that's a sensible number for this year?
Could you explain to us what's the logic for taking out the build to suit CapEx out of the free cash flow guidance? Given Vantage, I think, is doing all of its build to suit for Vodafone, I would have thought you'd have been making that investment anyway, whether Vantage had been an independent company or not. Just keen to understand the logic for stripping that out of the official free cash flow guidance. Thank you.
James, I'll let Margherita handle your three-part question.
If we start from maybe the last question, and actually thank you for asking about this today, because I think it's an important point. It's a change of perimeter on our free cash flow guidance, so it's helpful that we have a full discussion. First of all, the reason why we are doing this is because clearly we now have a tower company in our midst, and we need to adopt the standards of the sector of the tower companies, because the growth CapEx are by nature lumpy in the towers world, and we can have new opportunities of build-to-suit or ground lease buyout programs. Clearly, this will vary over time, and in that sense, it is appropriate to give a guidance before this variability.
I'm specifying guidance or ambition in this case before Vantage growth CapEx, because clearly as we will publish our results in actuals, you will always find our free cash flow net of everything to the bottom line. Clearly full transparency there. We want the flexibility for Vantage Towers to invest when the good business cases come up, essentially. You also asked about why do you include build-to-suit in the growth CapEx, given it's mostly dedicated to Vodafone. Again, following in the guidance and in our targets. What is out is again its project activities, and typically it's build-to-suit and ground lease buyout and lease renegotiation. See, these are the sort of three big buckets.
If you think about it, as I think I already mentioned previously, when Vantage will make its investment choices, if we prioritize areas where Vodafone would behave differently, I think it's perfectly clear when we talk about ground lease buyouts, we would never have prioritized this in our CapEx envelope. Also when you think about Vantage is now doing for Vodafone. In the pre-Vantage world, we would have chosen a different type of mix on delivery of the coverage expansion, which would not be just build new sites, but would also, of course, include, and I think you have seen us doing that, include third-party approach now that Vantage is there. I think you will also see it when you look at FY 2021, where Vantage started operating but still didn't accelerate, and the growth CapEx, the similar definition were effectively immaterial in FY 2021.
We see this as clearly positive and we want Vantage to invest because it allows us to take a greater share. I want to take that opportunity. I think you said what numbers should we expect? Here may be two reference points. At the capital market day, Vinod, I think, showed a very clear slide on the plans that he was foreseeing on build-to-suit, GLB, and the like. I think if you take the numbers in that slide in aggregate, you come to a conclusion of around EUR 300 million per year of run rate.
Please keep in mind that on top of that, we have given Vantage the ability to, within its leverage, have another EUR 1 billion of additional investment pot that can be either dedicated to inorganic, so M&A, but equally could go if the right opportunities come up for build-to-suit for many other operators to go towards organic. Of course, this will be phased over time. Going back to your previous question, I think it was around how do we read the midterm and mid-single-digit EBITDA phasing. On the first year where we have the traditional guidance, actually the growth rates are slightly higher than the one you mentioned. The lower end of the range is 3%. The higher end of the range is above five. It's around 5.5% if you work out the math. I would say we are getting clearly into the trajectory.
How you read the trajectories, we're not giving annual guidance with this midterm ambition. We are rather setting, if you want the view you should have if you come to maybe a little bit lower, I think we have already given quite a lot of visibility in these numbers around how we see the trajectory unfolding.
I think that's just going to be given new investments you're making, you'd have high levels of confidence we could hopefully get up towards the higher end of that range over the medium term.
I think actually you're right. I wasn't completing your question. I think in terms of phasing, you were right when you were explaining how you imagine in terms of sequence, in the sense that we are growing to invest to grow, in a way, in our plan. We have high confidence on the short-term growth because it's happening now on the back of the execution of the strategy. We will use some of this growth to invest, as we have just described. In turn, these investments will drive further growth, which of course will come in two, three years' time, depending on the term.
Your line is open. Please go ahead.
Great. Thanks. Two questions, sorry. One is very short. Just on tax, I don't know if you are planning to make use of these goodwill amortization schemes in Italy, and what you're assuming for cash tax in FY 2022 and then maybe next year as well. Secondly, just big picture on Vantage. Now the IPO is done with the growth CapEx. How do you feel about being the majority owner, still, of Vantage? It does feel like deconsolidating it could be more leverage. You wouldn't have to recognize the growth CapEx. Have your views changed at all in the last six months around that?
Maybe for tax reason, restart the depreciations of assets which have been fully amortized already, and we are looking into it. The only thing I would say at this stage is as very material as an opportunity. I think the best way to look at our tax projections is, you start from this year, you have seen EUR 1 billion of cash tax in our free cash flow and see this as growing over time together with our EBITDA growth. We've been quite specific in the press release in terms of our expectation on effective tax rates, and we see this in the sort of high 20s going forward. I think you can easily do the math from there.
Vantage Towers, I think it's a short answer, really. Look, whether it's control or co-control like we have down in Italy or what we've done in Spain, we see the towers and Vantage Towers as being an important strategic asset for us. Mainly because of two things, I would say, look, this is still a fairly immature market in terms of towers, mainly owned by other operators. Of course, that will change over time. The second thing is obviously technology visibility past 5G. We would like a little bit of clarity. Again, that's a matter of time. What I would say is, look, we're focused on ensuring we don't miss any growth opportunities for Vantage Towers. We're firmly behind them. I don't think we're concerned.
It's because we see the opportunity of these business cases, which will deliver good returns, that we are doing what we are doing in terms of obviously guidance and mid-term ambition.
Thanks a lot, everyone. Thank you, guys.
Thank you, Sam. Our next question comes from Robert Grindle at Deutsche Bank. Robert, please go ahead. Your line is open.
Thank you. Good morning, both. In your presentation, Nick mentioned shareholder returns are a key focus on your next strategy phase. Are you thinking about the bottom of your leverage range as to be when to start talking about raising the dividend? Second question is, Airtel Mobile Commerce did an interesting deal with Mastercard, which put a big value on their African payments business. Could you look at doing something similar with M-PESA? Thank you.
You want to cover the first and I'll cover the latter?
I take the first.
Yeah.
Yes. In terms of relationship between leverage and dividend, in the near term, you will see us very focused on deleveraging. As you know, it's one of our three capital allocation priorities. In this evolution through growth, you have seen us maintaining leverage stable at 2.8 times net debt to EBITDA in FY 2021. Clearly, we have had the COVID affecting our EBITDA, but we have been able to maintain the leverage ratio stable. Looking forward, we see opportunities to deleverage through growth as we deliver on the mid-single-digit EBITDA growth ambition. This will be the near-term priority in terms of it as EUR 0.09 in the near term.
As we move beyond this phase and to your point, we progress on the deleveraging, of course, we will reconsider our dividend distribution, again, in the context of our capital allocation priorities, invest in infrastructure, deleverage, and deliver attractive returns to shareholders.
I think in terms of mobile money or fintech in Africa, I think you're right to point out it's a huge opportunity. We've believed in this for now a good 10+ years. We are a clear number one in the African market. We have a base, if you include all of our markets on mobile money, of over 60 million active customers. We're about three times the size of Airtel. What I would say is that we are absolutely focusing on investment in the platform. That's the M-PESA platform. How the M-PESA platform evolves from what I would say is a feature phone world into a smartphone mini app would deal with, for instance, loans or insurance. In other words, how do we build additional financial services? You're going to see from Vodafone the launch of VodaPay as a brand in South Africa.
Ultimately, we want to evolve a super app strategy, and I will leave Shameel to talk about that a little bit more. It's a scaled priority investment, unconstrained at the moment. We are separating those assets out into separate legal entities because we think that the business will grow at a significant pace. At this point in time, we are funding that expansion of the business. Clearly, there's intrinsic benefits between the fintech and the telecom business because things like distribution, churn, et cetera. Look, let's see how it evolves over the coming years. Super exciting space.
Thank you.
Thank you, Robert. Our next question comes from Carl Murdock-Smith at Berenberg. Carl, your line is open. Please go ahead.
Morning. I just wanted to give you a bit more chance to talk again about the social contract, particularly with regards to the U.K. spectrum auction, which yielded a very good result, largely due to your decision that you were comfortable with Three gaining one gig spectrum. Can you talk through your approach to that auction and spectrum more broadly, and the thought process that caused you to take your foot off the gas so early within the auction process? Thanks.
Carl, I would explain it, if you don't mind, slightly differently for that strategy, because actually you have to back up what was nearly 18 months, two years of a process. Originally, when that auction was designed, it was going to be bundles of spectrum. You were going to have the low band bundled with the higher band, so the 700 with the For us, that was an artificial construct that would have driven up the auction pricing and the capital commitment for us, and was not optimal for the industry. What we did, we did actually show leadership here. We went to the rest of the industry and we said, "Look, really what we want is the bands to be auctioned separately, but we understand what the government want from a policy perspective, which is coverage. Why don't we come together and offer proactively coverage?
If we offer the coverage, what we're asking in return was to separate the bands out and drop the coverage obligations against the bands." We engaged with Ofcom on that basis, the industry, and everyone was supportive. I think that's what, as a sector, you government, your policies. I think this is a way of achieving the goal in a more efficient way for the industry and allowing us to optimize and improve our returns. As a result of that, they were de-aggregated. We could bid on individual bands. We already had a lot of low band between 800 and 900. We didn't need the 700. If it had been combined together, we would've had to have bid for the 700, which would've been suboptimal.
Really what we did was we optimized our ability to go into auction and get exactly what we wanted. Now we have the second largest spectrum holding in the country, both high and low band. We'll launch 5G on 900 very effectively. At the same time, it meant that the auction didn't get overheated. I think that's a really good outcome. I could also say Greece has been a really great outcome. Netherlands has been a good outcome. Hungary's been a good. There's only one country this year that I've been unhappy with, and that's Portugal. We're at around 515 or whatever it is. Of course, it's still about half of the European benchmark on pricing. Generally, every other European country is heading in a good direction in its conversation with the industry.
That's great. Thank you.
Thank you very much, Carl. Our next question comes from Nick Delfas at Redburn. Nick, please go ahead. Your line is now open.
Thanks very much. Two questions, please. The first one is on Net Promoter Scores and customer engagement. You haven't been publishing those recently, and obviously the KPIs in Q4 were a little bit on the weak side. Could you talk to us a little bit about how you're seeing customers, and how they look at the Vodafone brand? The second question I had was, thinking about other ways for you to spend CapEx, what about out of area spending in Germany to extend your network into new areas? Is that something you've been thinking about or something you might do with a partner? Thanks very much.
Yeah. Thanks, Nick. What I would say is, in terms of NPS, actually, what we are increasingly doing is, NPS has got a lot more sophisticated now. There's relationship NPS for large corporates. We're doing journey NPS, which I'm really excited about. Point in time questionnaire. Whereas now journey NPS is measuring end-to-end journey of a customer. I would say the reason why we don't report, because we have lots of definitions that we're trying to target different outcomes. If I was aggregating a picture, what I would say is Vodafone Business NPS, really good performance, strong across the board. I think people have really seen us really help in the pandemic. We were proactive, supportive, and available with great product. Really good. I'd say our second brand NPSs are really competing very strongly across the board.
Pandemic has been a bit flattish over the rest of the year. Obviously, we continue to work. I wouldn't say it's either positive or negative. I'd just say it was in a solid position. I would say the broader community view Vodafone, and that has positively lifted throughout the year because of the way we dealt with the crisis and the way we've leaned into our social contract with society. I would say positive trajectory on the brand, and of course we did Together We Can, I think you see it here. I think, again, resonated well tonality-wise with the mood. Money and CapEx. We are looking off footprint at various opportunities. Whether that's, as I said before, consortiums, is something that we look at that are doing fiber builds. Obviously, that can either be as a strong anchor customer or it can be as.
Okay. Thanks very much indeed.
Thank you, Nick Delfas. Our next question comes from Georgios at Citigroup. Georgios, your line is now open.
Good morning. Thank you for taking my question. It's on Germany, just in Nebenkostenprivileg and also ramping up of fiber deployment. My question has two parts. The first one is, there will be some headwinds from these changes. If you can talk us through what other things and action you are taking to offset those in the coming years. The second element is you are the only player that's both an infrastructure owner and occasionally a reseller of Deutsche Telekom's fiber. I'd be interested to hear your views about the commitment model that Deutsche Telekom has put forward, and whether you believe it balances the protections to infrastructure ownership in the way the wholesale rates are designed. Thank you.
In terms of the actions we're taking, clearly the priority for us was always to turbocharge our network. We have now got gigabit network to 22 million households, over 90% of our footprint. It's really important to understand that that is fiber. It's like a hybrid fiber network. It's getting closer and closer in terms of fiber builds as roadmap. The next step for us is high split DOCSIS 3.1. High split delivers a 1 gig upload speed, 3 gig down. As I said, to Nick's question, outside our cable footprint, we're open to consortiums, either as a customer or as an investor, to accelerate fiber builds. I'd say on top of that, we're also working on strengthening our TV proposition. We've launched Apple TV, we've launched Vodafone TV.
I think we've got a good roadmap for the rest of the year coming through in terms of what we can offer on the TV front.
A particular area of focus, I think it's some model we're familiar with and which was fully expected, from a wholesale perspective. Clearly, our focus today is in penetrating our own infrastructure. We've added one percentage point of penetration there. As you know, we have put in place a number of measures specifically in terms of integration of the Unitymedia footprint that we couldn't see the impact of because of the lockdown. That our ARPU growth in cable in Germany has hit 4.5% in Q4, and this is really driven by our approach to drive the mix of value in fixed broadband in Germany is really penetration of our own infrastructure with the best possible value mix.
Thank you, Georgios. The next question comes from Polo Tang at UBS. Polo, your line is open. Please go ahead.
Yeah. Hi. Thanks for taking the question. I've actually got two quick ones. First one is, can you remind us what the key triggers are for your LTIP, going forward, and have they been changed, given that you've got new? Do you think you have sufficient scale in Ireland?
Well, two fast answers to your two fast questions. First of all, in terms of our LTIP, essentially it's this high convergence mix, and importantly, stable leverage and then bring in dividends, excess cash back to shareholders. Look, we really love the business. We launched our second brand, and immediately the response was pricing moved up on second brands, which is a healthy development, I would say.
Thanks.
Thank you, Polo. Our next question comes from Andrew Lee from Goldman Sachs. Andrew, please go ahead. Your line is-
Look as a context, you're also guiding to revenue growth in Europe for the first time that certainly I can remember. I just wonder if you could talk a bit more about the opportunity from network investment linked pricing, with a note maybe to, or nod to the inflation linked pricing in the U.K. and whether there's scope for that elsewhere. The second question, just had a bit of, from certainly the investors that have been around for a while today on CapEx is, I know that it's basically about your outlook or confidence in your outlook on CapEx or visibility. I know there's some success, the same growth outlook is limited. Thank you.
Well, maybe I handle the first and you handle the second. Just on pricing, I think the important thing here is, goes a little bit back to the need to earn the right returns, that we can start to have a conversation with policymakers and regulators to say this is a constructive way to move forward. I think it's landed well in the U.K. You get a lot of value for money compared to any other industry. I think it's about the service that's being provided now going forward. What we've said is, okay, given that, why don't we go through competitive environment and responses? We think that the industry really should reflect on this moment as an opportunity to go in this direction.
On the CapEx point, let me say that this is really very, very different from spring. We are not talking about an exceptional program to establish a different positioning in terms of network leadership. We are very, very happy about Europe. The reason why we are investing more, as I was saying in the beginning, is to respond to the changes that we have seen in our environment and to take the opportunities that we have from that. You have heard me say that two-thirds of the extra spend deliver strong returns, and therefore as such, clearly, we also have optionality. It's again, the equation of we grow, we invest part of this growth in order to accelerate capital allocation framework that we discussed already a year ago, which is invest in our infrastructure, delever, and deliver attractive returns for shareholders.
You will always see us taking the opportunities of growth as the option to accelerate growth. Very different set of circumstances.
Okay. Thank you.
Thank you, Andrew. The next question comes from Maurice Patrick from Barclays. Maurice, your line is open. Please go ahead.
Yeah. Hi, guys. Thanks for taking the question. It's a question on just maximizing returns from your existing assets in Germany. If I'm not wrong, you have one of the lower footprint market shares in cable in Europe and Germany. Looking at the numbers, it seems like operational momentum is slowing, such as if you look at broadband net adds on cable, ex migration has been cut in the last 12 months. I think Georgios just talked a bit about improved momentum because of the IP migration. Maybe some thoughts in terms of why that sort of ex migration momentum is slowing. Does that impact your thoughts towards wholesale? I know you've got a wholesale deal with Telefónica, but is your attitude towards wholesale shifting? Thanks.
Maurice, I think the simple answer is that we've had a bit of an exceptional year with the pandemic and a very exceptional lockdown situation. Of course, we are the challenger in the market, and therefore we need retail presence to keep the engine of growth going. We're very much looking for retail opening back up again in Germany and regaining the sort of momentum and numbers we were doing before. Clearly, lockdowns and shut retail, the lockdown. We look forward to them contributing. Clearly, this is always something that is open to us, and clearly we will always assess the opportunity.
Hi, good morning. Thanks for taking the question. Two please for me as well. First is on return on capital. If you could maybe just disclose for us what the return on capital in the and I'm sure there's some P&L versus cash flow elements to that as well. The second piece is just, you talked to Nick earlier about potentially being interested in some infrastructure or even other partners. Can you just help us understand what the merits of that might be? In a lot of cases, that doesn't give you preferential wholesale terms, so it could create a lot of why you might want to do those sorts of deals. That'd be interesting as well.
Yeah, sure. Maybe I'll just cover the last one first and then Margherita . The reason why you would entertain them is, number one, wholesale. That's why I talk about an anchor tenant or an anchor customer. We don't have to invest in this. If there's enough infra funds coming in, and they just want us as an anchor customer to drive the penetration. We're very happy to do that because we want penetration outside of our cable footprint. I agree with you. If we can go that route, we will go that route. We did CityFibre on that basis as an example in the U.K. I'm just saying there may be examples where people would like us to invest something, yeah, and we would be happy to do that.
At 3.9%. Clearly, obviously, still very much below cost of capital in terms of dynamics in the last year. If I take the pre-tax control, we went down around 80 basis points, 6.3- 5 points in EBIT, therefore changes of perimeter really affecting us, this was the first 12 months in which we consolidated Liberty Global in full, as well as we moved some assets into INWIT, which is obviously not in the control perimeter. That explains the trend. Looking forward, our midterm ambition has really been built around return on capital and the need and the possibility now to deliver return on capital above WACC. This trend, I would say for four reasons.
First of all, service revenue growth, clearly in Europe as well as in Africa, accompanied number two by continued work on our digital transformation and cost efficiency. You can see clearly from our midterm ambition that we are talking about margin expansion on the back of that. Really, how can I say, obsessed internally in finding opportunities of business cases that give us a leg up in terms of returns. This is where the two-thirds of new CapEx investment we are talking about are coming from. Really support from the capital. We get a little bit of benefit from that. Really, significant opportunity, plan built around returns, and not just at total level, but as usual, you hear us saying this a lot, also initiative to drive that. This is really our key objective.
On that, can I say, thank you very much. Always thoughtful questions. Thank you for taking the time invested in us to understand. I look forward, along with Margherita, to seeing all our investors over the next couple of weeks. Take care. Bye.
Thank you.