Welcome to the Vodafone Group analyst and investor conference call. Your host today is Vittorio Colao, CEO of the Vodafone Group. Please go ahead, Mr Colao.

Good morning everybody. Welcome to our interim management statement for the first quarter of ’14-’15. I will take you through the highlights and update you on our strategic and commercial developments and our views on the current regulatory environment, then Nick will update you on our financial performance and take you through the trends in our six key markets. He will also provide some country by country detail on the progress of Spring. We’ll then close and move to Q&A for which Nick and I will be joined by Philipp and Steve who are here with us. So I will start with Slide 4: highlights for the quarter. Group organic service revenue was down 4.2% compared to 4% in the previous quarter, excluding mobile termination rates, was 2.9% in Q1. We continue to see strong growth in our emerging markets driven by continued customer growth and data usage. Growth in AMAP was 4.7% or 6.2% excluding MTRs. This growth rate was, as expected, slightly down on the previous period due to the lapping of prior year prices rise in India and the impact of MTRs in South Africa. In Europe, conditions remained challenging due to continued competitive and regulatory pressure. As a result, service revenue fell 7.9% year-on-year. However we are beginning to see encouraging signs of stabilization quarter on quarter due to our commercial actions on Red and 4G and investment in the network. Our actions are attracting a higher quality of customers. We now have 6.7 million customers with 4G and 14 million with Red. Our 4G and Red plans to continue to drive strong data usage. Data traffic growth accelerated to 73% year on year across the group and 53% in Europe. Project Spring. Our Project Spring program is gaining speed. Our European 4G coverage increased that…

Thank you, Vittorio. Good morning everybody. I will start on Slide 11 by giving you an overview of the group performance. But before getting into the detail, I'd like to point out that the slide includes Italy at a 100% for all periods, which is a statutory basis moving forward. I’d also like to add that we’ve included Cable & Wireless in Q1 of this year but not restated Q4 in the organic growth rate. If we were to restate Q4 to include Cable & Wireless, the group service revenue growth add would be down 4.1% and Europe down 8.4%. Group service revenue in the quarter was £9.4 billion which was down 4.2% year on year. If you remove the mobile termination rate impact, it was down 2.9% which is stable on Q4 performance. In Europe, service revenue declined by 7.9% reflecting continued competitive and regulatory pressures. However we are seeing evidence of commercial execution in a number of markets, particularly in terms of stabilizing ARPU and improving in churn rates for consumer contracts. The momentum in mobile contract and fixed customer additions in the second half of last year has continued into Q1. AMAP continues to grow strongly at 4.7% driven by good customer growth and strong data usage with active data customers up 31%. The pace of growth slowed as expected due to lapping of price increases in India and the 50% MTR cuts in South Africa. Turning to revenue by service. Mobile in-bundle revenue increased 4.7%. This growth was driven by our Vodafone Red plans which are now used by 14.3 million customers, up 2.3 million in the quarter. We now have 61% of European mobile revenue in-bundle, a rise of 5 percentage points year on year. Enterprise service revenue fell 2.9% which reflects ongoing ARPU pressure…

Thank you, I’m on the last page, so key points, performance in Europe stabilizing quarter-on-quarter in several markets. Strong customer growth and data take-up in emerging market continues. We are pleased with the progress on unified communication strategy. Progressing NGN plans in Germany; that is Spain, Ireland, Portugal, as I mentioned earlier. KDG and cable and wireless integration on track. Ono just completed, so we’ll start integration now. Project Spring really at good speed, about 25% completed thanks to the work done in the previous years on modernisation and therefore enabling the network for this new wave of investment. We maintain a strong balance sheet as Nick has indicated and we confirm the outlook for ’14-’15. I think I will now take your questions, asking Philipp Humm who runs Europe and Steve Pusey who runs technology to join us.

(Operator Instructions) First question is from the line of Akhil Dattani of JPMorgan. Please go ahead with your question. Your line is now open. Akhil Dattani – JPMorgan: Good morning, from JP Morgan. A couple of questions please. Firstly, if we look at the revenue message, it does sound from what you said, Vittorio, that you're much more confident with a number of markets, particularly in terms of this quarter-on-quarter stabilization. And if we look at your ARPU trend specifically, it does look like we've seen that across quite a number of markets. Could you maybe help us understand what you think is driving that? Is that a sense of easing pricing pressure in markets, or is that simply the dilution from bundling starting to unwind? And I guess if we think about the overall revenue message for the next few quarters, Nick mentioned that you expect an improvement into H2. Could you just help us understand how MTR freezing improves and helps into next quarter? And more specifically, when you talk about improving revenue trends, are we talking about something more than just that MTR unwind? Is this actually a fundamental underlying improvement in Europe? And then secondly, if we move onto data, two things on data; firstly, in Europe, we have seen quite a marked improvement this quarter versus the run rate of the traffic growth in prior quarters. Could you just help us understand what's driving that? Is that a strategic change in how you're pushing the data? Is it just to compound the impact of the 4G adds growth that you're seeing at the moment? And then adding to that, you've talked about a number of content deals you've structured across your major European markets. Any data that you might have around anecdotally how that's driving uptake; and also, the economics of data as you look forward would be useful as well?

Yes, Akhil, good morning, thank you for your question. Let me answer the first half of your, the first half of the first question and then the second and then give to Nick the detailed, the answer on -- more factual based answer. So first of all, what’s going on is really your question and how confident we are the things are improving. I would not like to call now a change in trends. I think we said that the second half of the year is when we expect more improvement. I think that what we are seeing today is some positive impact of the actions that we have taken and particularly I want to go back to your question on data. We are clearly seeing that moving from 32% to 50% coverage of 4G is starting to push 4G, which now we have and we have with the good frequencies, with 800 frequencies, and bundling with content is clearly accelerating data usage. And again here I can tell you that clearly the availability of content, the richness of content, and the ease of access to content is very important because of course gives a strong motive for getting also higher packages. And again this is anecdotal evidence, but going around the shops asking to my colleagues who are there, you know the ones we used to say, well 1 gig is that I think, now they say 2 gig or 4 gig is that I think to advise the customers in terms of adoption. So that is the good thing and of course frankly credit to Steve Pusey and my colleagues who also have done tremendous work on network. If you think that we are already 25% of Spring, if you think that we are already improving the number of sessions -- I mean three quarters of our sessions are at the speed of 3 megabyte and up, which again gives a good experience and this is just the beginning. I think these are early signs. I don’t want to call it in financial terms yet because I think we still have a lot of competition. I still see a lot of silly promotions here and there and therefore I would revert to Nick for a well informed comment about trends.

What I would say is the MTR unwinds effects of Spain, Italy, Turkey, in Q2 is about 0.9 percentage points. So that will be a benefit, and just to build on Vittorio, I would argue whether we’re sort of seeing five factors feeding through into our numbers. So first of all contract ARPU and just in Europe, especially Germany, U.K. starting to stabilize, South Africa as well. Good ad performance churn across the piece. So just that contract consumer performance. Secondly the data acceleration as Vittorio mentioned is happening not only in Europe, but across the emerging markets. Fixed revenue went positive, so 0.1% versus down 1.8% in Q4. And then of course you’ve got both enterprise with VG starting to grow at 1.6% and [indiscernible] obviously growing with customer growth, pricing opportunities including India and data. So these would be I’d say the engines that are underlying the performance.

The next question is from the line of Tim Boddy of Goldman Sachs. Please go ahead. Your line is open. Tim Boddy – Goldman Sachs: Thanks for the question. I wanted to ask a bit about your progress in the fixed-line markets. And in particular, it'd be really helpful to understand where you see the best opportunities as a wholesaler, given that while there's good progress in owning your own infrastructure, you're still mostly a wholesaler across the continent. So it would be great to understand where you think the gap between retail and wholesale prices is most attractive for you to take share. Secondly, whether your strategy as an attacker is going to be to use this as a loss leader, to try and secure some of your mobile contract customers through bundling, or whether you think there's really a scope to take incremental EBITDA. Lastly, you didn't mention fixed in your slide on regulation. And I wonder whether you see scope for stronger protection, for example, in terms of margin squeeze regulation as being on the EC's agenda.

Yeah, good morning Tim, I’m not sure I can answer in great detail to the first question but let me start to give you a little bit what I think. First of all the loss leader theory, I don’t like it structurally. We are not here to ruin somebody else’s business, we are here to make money ourselves and quite frankly it is an opportunity. We have very good offers where we start with fixed line and we have good traction and good credibility, of course different levels and different markets. We will try to basically create value in the fixed business not simply defend the value of the Mobile 1. In terms of wholesale and owning infrastructure, clearly it’s a trade-off between a capital deployed and the margins. We have a variety of arrangements. In general, they are all, I would say, decent arrangement that allow us to do business for sure and this kind of transitions in the third part of your question. For sure, the regulatory and the legal activity in the countries will have to be stepped up in order to ensure that no margin squeeze can take place. So philosophically more for seeing this as a great opportunity, Vodafone has access to 40 million homes today in Europe. We have 11 after the Ono acquisition with us. It’s an opportunity to create and as Nick said we’re already -- a quarter of the company is already not purely mobile anymore. It’s an opportunity to create value to build value more than a defensive thing as you indicated. On the regulatory front, it’s going to be more market by market given the different regulations still in place in Europe. We would support clearly the harmonization of regulation across Europe, but I think it will take quite a bit of work with the new commission to go there. Tim Boddy – Goldman Sachs: Thanks very much. I think just in terms of the first part of the question, I guess, when you talked about this previously, you were looking at Spain and Italy, for example, as markets where the wholesale prices were high relative to retail price, which made the business case more challenging compared to, say, UK and Germany. Is that still how you're seeing it, or are there signs of change?

In that market I didn’t want to give you -- I knew you wanted to go there. I didn’t want to give you a specific answer on any specific country. Clearly, the preservation of a decent margin between wholesaler retail is essential to allow us to compete there and the special arrangement, the special contingent deals with the large incumbents are very important for us and for them to preserve healthy markets and again I don’t want to comment on specific situations today. We will make sure that this is a case everywhere. When it is not the case, increased investment is the other alternative.

Our next question is from the line of Nick Delfas of Redburn Partners. Please go ahead with your question. Your line is open. Nick Delfas – Redburn Partners: Yeah, thanks very much. I just wanted to follow up on your comments, Vittorio about stabilizations. We are seeing much flatter performance quarter-over-quarter, for example, in Italy and Germany. Are you saying that you’re not confident about that will continue into the next quarter and the one after or.. that you are? And then secondly on content, you obviously got the creation of Sky Europe today. Could you talk us a little bit about how you see content, what your role in the content market is going to be long term? Thanks.

Why don’t I pass the first question to Nick and I take the content one?

Yeah, I would say, Nick, that our initial reaction is obviously it’s good to have stabilized revenue trend on both of those countries quarter-over-quarter, but of course as you know that Italy has been going through some aggressive pricing. So it would be a bit bold of us to call that at this point in time. I think we have to see what the summer promotions and activities in each of the country is, how that develops over the next quarter and see, but what we’re saying is there is good pricing action being taken by us and the incumbents and also we’re seeing good consumer contract performance with data uplift, so some encouraging parts of the commercial execution but not guaranteed yet.

On the content question, it’s very interesting what has been announced today. Clearly, it’s another proof that in a more and more digital world scale cross country will become important, which is where we are today. We are very pleased with our cooperation with a number of content firms including of course Sky and I would say I see this as positive because it gives us the possibility given our scale and given who we are to cooperate more with them, as much as we are cooperating with the other top players like Netflix or like Spotify. So for us in this phase, it’s a great opportunity to really boost the perception of the value of 4G and the value of our access to homes and to the leaders at the same time. So we are great distribution partners for these guys and they are great boosters of the value of our networks.

Thanks very much. Our next question is from the line of Justin Funnell of Credit Suisse. Please go ahead with your question. Your line is open. Justin Funnell – Credit Suisse: Thanks. Yeah, just a follow-up firstly, on the data growth question. It was quite a big pickup in data volume growth in Europe on, obviously, what is quite a large base these days. Do you have any more stats on upselling and whether you are seeing a higher percentage of customers buying a bigger tier of data? And is that, in anywhere at all, turning into more revenue, or just being given away through competition please? And just as an add-on; are we starting to have to think about capacity issues in the network a little bit harder now if volume growth's actually accelerating in Europe? Are we going to have to start thinking about more capacity CapEx over the next few years? Secondly on the Drillisch question, obviously you've been part of the remedy setting process in Germany; also Drillisch are I think an important service provider for Vodafone. What is your understanding of the likely effect of the Drillisch wholesale deal in Germany next year?

Why don’t I pass the first question to Philipp, the capacity question to Steve Pusey and maybe Philipp you can also comment on the real issue of the comment on Germany given that you are close?

Yeah, good morning Justin and talking now first on data, so we have clear evidence in data growths in different markets. However, it’s market specific and different from market to market. The best example is for sure in the UK where we were able to up-sell our customers as they moved from 3G to 4G tripling the data consumption they then have and increasing our net ARPU by more than 5 pounds. I think that’s probably the strongest case, but in every single market we have similar case like, for example, in Germany we’re trying up-sell customer from a 3G smart tariff into a RED 4G tariff, which then again add another tenure to it. So that’s what we are doing on the data side and the improvements were there.

Good morning. Hi Justin. Good question. Certainly, traffic is increasing at a healthy rate. Last quarter it was at 64% year-on-year growth, we’re now up to 73% and that’s very healthy and from a number of the sources that you had content and extra usage, etc., so that’s very pleasing. In terms of the stress on the network cost, we were planning for this and we are planning for it through spring. So our network statistics in terms of those that we measure average utilization, busy hour stats on busiest sales, etc. remaining pretty constant. You have to remember that with its capital program of this nature, there is inherently more capacity going into the back call and the transport networks as we rolled out every 4G sites and its agencies. So we are increasing capacity and we are quite comfortable that we can manage this and it’s not putting any extra strain on us and in terms of extra capacity investments now it’s happening naturally through this investment program as we upgrade to carry more 4G. I think what you might find is an accelerated growth of this nature may well put extra stress on some of the 4G players as traffic grows so aggressively, but we are very pleased with it, we are accommodating and I think it should be viewed as good news.

And Justin to build on Philipp’s point on data monetization, obviously for emerging markets since we are expanding 3G and the data is growing over 100% year-on-year, India’s browsing revenues increased 62% year-on-year in the last quarter, South Africa’s data revenues grows 18.5%. So emerging market’s really been able to monetize the 3G roller. Justin Funnell – Credit Suisse: Okay.

Our next question is from the line of James Ratzer of New Street Research. Please go ahead. Your line is open, James. James Ratzer – New Street Research: Yes, thank you, good morning. Two questions please. First one is just regarding the CapEx spent on Project Spring and you’re saying you spent about £800 million last quarter. I think about it’s about £500 million booked in the last year. So it looks like you spent about £1.3 billion on Project Spring and you’re now seeing that project is about 25% complete. I mean that would imply Project Spring might end up costing around £5.2 billion, the guidance was 7. So do you think there is now a chance of Project Spring can be delivered more cheaply and more cost effectively than the initial guidance you’ve given? And secondly, I had question regarding Italy. You’ve mentioned the FTTC Network build is on track and you’re starting to build that. Could you please give us some more details on that? How many homes have you actually passed with that at the moment? How many municipalities are you actually building out on what will be the cost quarterly run rate in terms of homes being added on to that network? Thank you.

I take just a piece of the question. The 25% is a -- and I’m responsible for that. It’s not a financial measure, is the measure of what we have achieved in terms of workload and it’s what we use internally to say that’s where we are operationally. Nick, any comment on the CapEx?

Yeah. James, you’ve quoted a lot of numbers there very fast. Basically, our CapEx program is in line with expectations. So we’re talking 19 billion over two years. When we’re talking about that, that includes number of components, mobile network, fibre, enterprise, store rollouts, etc. or IT program, so just not mobile network. We were 1.9 billion for the quarter, which was an 850 million year-over-year. So what I’d say is “well, well” within the envelope that we are planning to spend all of the 19 billion.

Philipp, on Italy?

Yeah, Italy. We are well on track to achieve our 6.4 million household plan. We now basically started and build our first own cabinets and we have 170 cabinets up and running already now and plan to increase that to 600 by September and then multiply that times household per cabinet and then you are there.

And keep in mind that here is fibre to the curve and therefore we measure by cabinets necessarily first more than homes. It’s not that fibre to the home project. James Ratzer – New Street Research: How many -- I know you measure it by cabinets, but how many homes would be covered by those first 170 cabinets please?

Yeah, we’ll give you that one maybe separately but typically you run in the 400 to 500 homes per cabinet. James Ratzer – New Street Research: Great. Thanks very much.

Our next question is from the line of David Wright of Bank of America. Please go ahead. Your line is open. David Wright – Bank of America: Hi, good morning gentlemen. A couple of questions from me. First off all, I think on Project Spring you mentioned high capacity backhaul sites and that’s one of the metrics that you have there and you’ve given a target. I think, Vittorio, if I’m right you said 22% of backhaul sites are currently fibre-ed. When you say high capacity backhaul sites, do you mean fibre and can you give us maybe just sort of an idea of where that 22% goes over the next year and couple of years? And then my second question is just on Spanish fixed. Clearly, you mentioned there is some recovery in fixed line growth. Revenue growth in Spain house is one of the biggest absolute line growths I think over the last 12 months, although you’ve sort of grown your lines 26% revenue’s only grown 7%. So is that sort of indication of a kind of deflationary pressure we should sort of build in to convergent services within Spain and maybe even thinking about some of the European countries? Thank you.

Yeah, I’ll speak the first one and pass the second to Nick and Philipp. When we talked high capacity we mean two different things. We mean fibre or we mean high speed microwave. And the 22% that you mentioned is only the fibre component. Is that clear? So... David Wright – Bank of America: Yeah, that is clear. And you have any sort of indications with the Spring plan of how that would evolve on the 12 and 24 months here?

Yeah. On the fibre build we expect to take fibre to the sites beyond 30%, possibly more than that, but at least a 30% of sites physically connected with fibre. One should assume that’s all of your urban sensors and metropolitan facilities. The high capacity beyond that will take that to over 90% in total including the fibre. So the residual taken into 90% and then what we mean by it is that capable of at least a gig. We don’t need anything like that right now, the busiest 4G sites anywhere in the world are only carrying about 250 megabit connection requirements maximum, but we put the capacity and capability and we’ll just add in bringing up to the full levels as we need. So those are the sort of metrics 30% and over 90 in total.

David, the Spanish fixed, I mean quarter-four service revenue for fixed grew 6%, grew 7.3% in quarter 1, so it did accelerate. Bear in mind this is revenue to do with that sort of DSL product. So obviously, as we start to sell high fibre to the home product, that will have a higher ARPU and therefore drive an acceleration and obviously we have the benefits of the Ono network as well. I don’t know Philipp if..

Yeah, I mean adding to that was the higher ARPU on FTTH. I think overall the market in Spain is still competitive. So we has still quite some aggressive price moves which we erected on the mobile site, but also on the fixed site which is why also our ARPU year-by-year is still down on broadband. We have taken measures across the board from our side to further stabilize ARPU and increase prices on some of the rate plans and we would expect going forward, let’s say the market also here to stabilize and improve a bit on the price side. Now you asked whether we can take Spain and then basically use Spain as a model for other markets. We believe not I think Spain. There has been quite unique was the Fuziune [ph] move from Telefonica at the time and the only other market that has followed was Portugal and we don’t believe that the move was a very good move for the overall profitability and revenues of the market and we believe that the other markets will behave a little bit more rational and better on the price side.

Yeah, I would say more in general.. I think we said it many times. What happened in Spain was that an integrated product that was supposed to create value actually has triggered competitive reactions in both the fixed and in the mobile segments. So the fixed guys have lowered the prices of mobile, the mobile guys have lowered the prices of fixed, the converged guys had to lower everything in order to be competitive. This has been particularly typical of Spain and to some extent Portugal but mostly Spain because of the presence of stronger cable guys and because of the presence of strong mobile guys. Now we bought one of them consolidation and more pricing discipline hopefully will not replicate the same results everywhere else. David Wright – Bank of America: Okay, thank you guys.

Our next question is from the line of James Britton at Nomura. Please go ahead with your question. Your line is open. James Britton – Nomura: Thanks very much. I've got two questions, one on Italy and Germany. On Italy, I guess this is a follow-up on the convergence proposition. Italian convergence actions [ph] are being promoted again in the summer campaigns. So could you just comment on whether you're happy, you're competitive today with the rival convergence offers? Are you also happy with access to TI's fiber so that you can compete for higher ARPU convergence customers? And how quickly do you expect the Italian market to embrace convergence in general? And then secondly, on Germany, I just wanted to get a little bit more perspective on why contract customer adds -- sorry contract consumer adds were a fair bit weaker this quarter despite the heavy investment. And in this context, do you think Vodafone Red price points do need to be rebased to become more competitive in the market?

Philipp, your turn.

Yes, let me start with Italy. I don’t think we have seen really great traction for the converged offer from TIM and we don’t believe that Italy if we compare again the extreme case will move in any direction like Spain or Portugal has moved to. So I think from that point of view we feel quite confident the market will continue to behave in the right direction. We have a good and competitive offer in the markets. We use the TIM DSL and bundle part of it ourselves and we noted another contingent dealers pretty similar to the one in Germany with TIM for another 100,000 households. So I think we have overall now good wholesale access there. That being said, we are economically incented to do our own rollout, which is why we are trying to reach FTTC households with 6.4 million in total. So we have with all of these measures, I think, enough possibilities to be competitive on the fixed line space. Coming to Germany, consumer net adds were a bit weaker in the first quarter compared to the first quarter of last year. We think overall from our portfolio we are competitive in the market. So we don’t see a need to change our pricing portfolio. We see a need here and there maybe to ramp up a little bit more promotions to generate more traffic, which we are doing currently in the marketplace, but not much more than that. We think the market overall is a bit calm right now as people waiting for the iPhone to come later in this quarter. So overall we’re quite happy where we are. We’re ramping up also our second brand, Otelo and we should see some positive development then in the coming quarters as well. James Britton – Nomura: How much you’re paying for fibre-to-the-cabinet wholesale access?

Well, which country? James Britton – Nomura: It’s actually in Italy. Can you disclose the terms of the fibre access with TI?

No, the regulated, one I can tell you which is a bit stream one which is 21.5 and the Otelo [ph] is 6.2. These are the two regulated ones. The negotiated one I can obviously not disclose.

Our next question is from the line of Simon Weeden at Citigroup. Please go ahead. Your line is open. Simon Weeden – Citigroup: Yes, thank you for taking the question. Good morning. Three short questions if I may. The first is regarding Ono and the deal with Orange. You're putting 1 million Ono homes into that arrangement and I just wondered why not -- I mean basically, why is that the right decision? Why didn't you do all of Ono homes, or indeed, none of them? But doing 1 million of them suggests that there's something in the contract with Orange that you were trying to satisfy through this mechanism. Second is on, particularly with India in mind, but emerging markets in general. How do you feel yourselves in terms of positioning for over the top risk? As data does pick up and browsing gets bigger and more handsets get capable of connecting and providing a good data experience, what is the risk to the text volumes and indeed, text revenues, particularly thinking about India? What can you do about that and what are you doing about that? And then finally, in Germany, whether you think you could use the further fiber network infrastructure and whether, therefore, Versatel might be of interest to you, or whether, in fact, it overlaps to start with what you have already?

Yes, Simon. Let me give you a little bit of answer to the third question and half of the first and then pass to, I would say, Philipp for more detail. All these questions about because they also link to James’ question before and also the opening question of.. who was it? Of Tim Boddy. All these questions of retail versus wholesale and would we buy new infrastructure, are the wholesale price good enough, are the negotiated prices good enough – they all at the end of the day are all very difficult to answer because the reality is that we are in a constant make or buy alternative and in a way this is the beauty but also the difficulty of our unified communication strategy. The beauty is that we can quite frankly optimize in a smart way country by country and at any point in time we can change the decision and the Ono 1 is a good example, but we couldn’t in theory. I mean you mentioned Versatel, we’ll not comment on Versatel specifically but of course we’ll always look in any country at available infrastructure, compare the available infrastructure, the footprint, the overlap with our customer base with the negotiated or regulated conditions and make it make versus bias case and so yes, be ready to see that our name will be attached to any infrastructure because by definition we will look at all of them. Now, the make versus buy works also in the other direction, when we buy Ono we had an agreement with Orange to build the reason why we give access to a million houses is because we save money versus what have been in them and it was a good partnership as I said from the beginning and we are sure that we would find with Orange a mutually satisfactory way to reach our own original objectives both of us saving some money. You want to add something, Philipp?

Yeah, maybe just to add to that. Besides saving significant CapEx and generating additional NPV, one advantage of striking the deal now with France Telecom is that we have less homes with three fixed infrastructures but was two, which is obviously much better also for the long term and we reduced significantly the overlap. So we are able to harmonize the build-out program, which I think is very positive. And as we were committed from the outset with Orange to do 3 million homes, I think we found out very intelligent way of sticking to our commitment at the same time being much more economical for the long term. On Versatel, maybe just I can’t commit anything specific, just to say that Versatel basically has two activities, one is city rings [ph] near the one is DSL and we today have very good long-term access of fibre deals with Versatel but obviously we wouldn’t comment whether we are or not contemplating for further acquisitions.

Nick, in your older role as head of the emerging markets, you want to say something about the OTT, this intermediation risks in emerging markets?

Good morning, Simon. So what I’m saying is a couple of facts as we have look at the several times in terms of developing our commercial strategy, first of all bear in mind tax revenues are fairly as a percentage of service revenues relative to where Europe was. Secondly, voice pricing is tremendously lower versus where European pricing was. The third thing is 3G data packs, if you look at the ARPU over – so it’s like Rs.250 for a gig in 3G. So therefore the ARPU you capture by someone going on to a 3G data packs, and then use smartphones, we’re already securing a high ARPU from the customer. We are developing message plus, voice plus services so we can expand the functionality that we can offer customers. And what we've been doing is driving an integrated bundles and offering greater value faster than Europe did at this stage of the cycle when they were more obsessed about, I would say, metered charging.

Our next question is from the line of Robert Grindle at Deutsche Bank. Robert Grindle – Deutsche Bank: Good morning. Sticking with the first question on the AMAP theme. The extra price competition in South Africa, has that been a direct result of the recent MTR cuts, or has competitive pricing deteriorated further as the quarter progressed as competitions reacted to those MTR reductions? And then moving to the UK, any updated thinking on the need to offer consumer convergent products there, I guess the silence is almost deafening on the subject. Are you just waiting to see what other participants in the market plan to do?

Yeah, I will take both questions and maybe Nick, you can, if you want to comment also. The price moves in South Africa clearly have been the result in my view of two things. One, the original move, MTRs reduction clearly has – and the change in symmetry has clearly enabled Cell C to start aggressively. My judgment, there has also been a little bit of an overreaction from MTN. It's always good to react to competitor's offers but if you force them with the shoulders against the wall, then there is a further reaction. So I don't know whether you call it increased competition or all linked to the original move. But I would say there has been something that started with MTRs and then the market has gone new a bit – a little bit probably excessively at the low point. I don't know if this is sustainable long term, I doubt and I believe that I – my colleagues in Vodacom are doing the right things and being selectively very responsive but leveraging on their great ability to use a flexible pricing, dynamic pricing and all the smart pricing and marketing tools that they always used to, have a reaction but not have a reaction that puts anybody with the shoulders against the wall. Second question, I was really surprised it took so long – I mean 40 something minutes without the question on UK fixed. It was really remarkable -- as we said – as I said that our strategy in unified communications is country by country and I think we are --by now we have given proof to analysts and investors that we are serious and that in any country we have made the best move which you know surprisingly included even powering – sorry, partnering with a power company and finding myself along power lines for the first time in my life to see fiber hanging from poles. In every country we work for the right thing. In the UK, we are 50% in enterprise players, So in that sense we are pretty solid and pretty competitive. It’s interesting to note that BT has launched OnePhone when Vodafone has One Net, we don't call these things phones anymore. But clearly this is an interesting -- an interesting move on their side. We don’t feel that we have anything which is not competitive there. On the consumer side, we keep our options open. We're working on some of them and we will give you all the details when we are ready and we clearly want to be competitive in the consumer sector as well.

Our next question is from the line of Andrew Beale at Arete Research. Andrew Beale – Arete Research: A couple of questions. First of all, could you give us a bit more on the early cross-selling impact you’ve seen since May between Kabel Deutschland and Vodafone Germany? And perhaps if you could update us on the Kabel integration opportunities and challenges now that you’ve got that purchase underway, that would be very helpful? And then secondly, on the roaming regulations, in the presentation, you highlighted the need for a bit of clarity on the fair use policies and so on. I just wanted to double-check that you're still confident that the risk of roaming competition from low-cost, low-price markets is firmly back in the box or are you flagging it as an issue that still needs to be properly addressed?

Andrew, unless my colleague Philipp has more, the answer to the question is no, I cannot give you more details on the Kabel integration because to be honest it’s early but maybe Philipp has more – I mean anecdotal evidence of it but personally I don't have any financial information on that. Philipp, welcome to comment if you want.

Yeah, maybe just to say that we are selling into each other's bases. And we created the umbrella brand Vodafone Zuhause Plus which is doing very well. We have now more than 700 Vodafone shops which are involved. We have another 200 KD shops which are involved, which are all fully trained to be able to cross sell both products. And I think the overall reception from our employees, the numbers and the reception from our partners, franchise partners has been very, very positive. That’s it.

No financial details, right. Okay. On roaming, now that's an important question. I mean I never give promises in this field. My sense from the contest I have got, both are at the high level and also the operating level in the commission is that the risk that you are referring to, which is the classic contamination from the low-cost low spectrum environment into the big countries risk is very well known by the commission and there is -- and also by parliament and there is a strong desire to avoid it. And my engagement -- our engagement as Vodafone has been very productive with the commission in the last four weeks on the topic and we – the type of proposals that we have put forward and the type of reasoning that they can read in their position, I would say is -- is in that sense positive. It is important that we define what fair usage policy means because the time it takes to implement technical solutions across countries, across operators and so on, I mean is not something that we do overnight. So we raised the issue at them and we found them prepared and aware of both the risk – the risk to be avoided and that the time that it requires to provide solution. Having said that, as Vodafone we keep pushing take your home tariff aboard. We have the high-end users all very happy because of it. We have now included the US which was my obsession, my personal obsession, India, and the Pacific. At the end of the day I am not so sure in two years time this would be such a big issue. But we are working for making sure that the risks are stay in the box as you said.

Our next question is from the line of Jerry Dellis at Jefferies. Jerry Dellis – Jefferies: Yes, good morning. I have got two questions please. First, the increased level of cost that you are running at, presumably delivers kind of lot of benefits in terms of the quality and volume of your customer intake, and also helps to reduce the churn, and those are all things that will be helping revenue trends. So the question really is what evidence do you have that – where do you get your comfort, if you like, that these revenue trends will continue when you start to ease back all levels of commercial investment? And then my second question is just really to understand the full process behind some of the tariff adjustments that you have been making recently in the UK and also in Spain, we’ve seen amounts of data allocated to Red bundles that increased in the UK, at broadly the same price, I think in Spain, prices came down actually a little bit. And I really just wondered how that’s consistent with the ambition of like getting customers to trade up through the data tiers and sustain more?

Philipp, you want to comment on this?

Yeah, I would comment on the second one. So on the price side, nothing we had in both cases, we reacted to the markets as the market was evolving from a data usage point of view, into bigger buckets which is in particular now the case in the UK. And as we have seen ourselves quite strong traction for our 4G proposition we decided to increase all data buckets there. In Spain, it was a bit the other way around where we had to adopt our pricing again to competition and lowered our price points in some areas. In the meantime we have taken quite strong mitigating action trying not to drive customers also here into richer content 4G bundles also in Spain, which is showing very good traction now, and we launched that, I think was four weeks ago, so we see some very, very strong development also in this direction. So it's always adopting yourself to the competitive environment you are in and then continuing to actively steer your tariff mix in the right direction so that we continue to be ARPU positive and not ARPU dilutive.

First one maybe Nick, maybe.

Yeah, I mean the sort of simple version would be that yes, we monitor the quality of their in-flow by market. So the consumer contract ARPU stabilization you will see in a number of markets like Germany, UK and also what we’re seeing in terms of Red, European consumer contract ARPU stabilization is all the result of just higher end plans, high quality customers. You have seen churn consistently reduced across-the-board in all operations and of course we talked to the monetization of data. So I would argue these are all positives for – we’re connecting the right type of customer going forward. In terms of commercial costs, we remain at normalized level, neither aggressive in the market, so are uncompetitive. And so therefore we would remain in that position going forward.

Our next question is the line of Lawrence Sugarman at UBS. Lawrence Sugarman – UBS: Good morning. Firstly, could we just return to India. There have been some political changes and also some press comments around potential regulatory changes. Just wanted to get a view whether you think there is some encouraging progress in this respect? Secondly, [indiscernible] a major launch of the iPhone and potentially that’s been one of the reasons that could be why there has been a bit of a slowdown in customer contract net adds. I am wondering whether going forward you have any thoughts about how that might impact in any particular market from a margin perspective? And then just finally, maybe you could give us a few comments around the Dutch opportunity, because I am thinking it’s a big market in terms of your own performance but it has been historically quite an interesting market in terms of over the top impact. So I just wondered how that has been developing?

Yeah, let me take the first two and then maybe Philipp, you can talk about the Dutch market developments. On India, what I can say is that – it’s two different comments . One, the general mood is clearly positive because the early statements and moves of the new government seem to be pro-business, that would be very welcome, and of course we would be very pleased to operate in that type of environment. I think again in India there is an awareness now, a very strong awareness that reigniting growth or re-accelerating growth in the country and having more stable pro infrastructure policies is essential for the future of the country. So positive vibes, yes that a more constructive approach to regulation as well. Of course, the other side of the story is our tax issue. The government has -- new government has indicated that for the past cases the intent to let the processes run, our processes in arbitration, we have appointed our arbitrator. They have appointed theirs. We will have to appoint the joint one and then this story will take its own course. And that was question number one. Number two was – no, the Netherlands was three number. Sorry – Lawrence Sugarman – UBS: The iPhone, sorry.

How can I forget that? Now iPhone, again I can give you anecdotal evidence by going around the shops myself and asking my colleagues, we have the impression that there is a big pent-up demand and that some customers are not upgrading or renewing their phone. Now because they are waiting for the iPhone 6, there is the perception that the wider screen will be an important thing. So our expectation and what we're prepared in our commercial plans for is that when it comes there is going to be a big flow of people taking advantage of the wider screen and the new features. Is this a bad thing? Not necessarily because big screen goes together with video and entertainment and as Philipp has said our policy is now clearly -- our strategy is clearly aimed at bundling content and pushing for higher allowances of data. So if the iPhone 6 has the good characteristics that reports indicate, this is going to be for us another opportunity to push for upgrades, for real upgrades, not just the phone upgrade and for higher usage. Netherlands?

Yes, to the Netherlands, we have seen in the Netherlands quite a strong impact of all the top player in particular WhatsApp and I think one of the reasons -- and that has been over the last years one of the reasons was that the Dutch market has been pretty much a metered market in particular in prepaid. So SMS for us overall down there significantly, the minus 27% in prepaid, as a result also was pretty much down. That being said, as the market has now evolved and we are actively working on its evolution from a prepaid market to postpaid market and from a metered market into a bundled or more unlimited type of market, or very free market, we are seeing very strong improvements in particular in the Netherlands now quarter by quarter. So if you take the fourth quarter, we were at service revenue minus 6.4, Q1 we are now at minus 4.0 year-over-year and that includes already an 0.5 MVNO impact. So you see a significant improvement there, driven really by post-paid growth, volume growth and in ARPU which is starting to show also here – show signs of stabilization.

Our next question is from the line of Adam Rumley at HSBC. Adam Rumley – HSBC: Thank you very much. There is always more that could be done by regulators to improve the investment environment. So two questions on that please. Firstly, what would your priorities be in terms of the spectrum harmonization that you mentioned, indefinite license durations look like a bit too big of an ask [ph]. But I was wondering what you thought might be feasible? And then secondly, what opportunities do you think are presented now that we’re moving towards the new European Commission, especially in light of Jean-Claude Juncker’s well-publicized priorities?

Yeah, I'd say – first of all, clearly Juncker’s statements, or reported statements seem positive, it seems to put the development of digital infrastructure at the core of the European policies. It was already the case before but it’s very encouraging that this is mentioned as the first priority, or an early priority. On what can be really achieved here on spectrum, I have two opinions. First, indefinite – you’re absolutely right, indefinite is probably not feasible. But I think we can start a good 25 years and we can start to go to different and more harmonized rules for assigning. We need to avoid auctions being structured in crazy ways. We need to start thinking on how to align the timing of the auction. The very important point that I always raise is that this is not about countries losing jurisdictions, this is about aligning dates for release of similar spectrum so that companies can have homogenous industrial plants across Europe. And I think these two objectives, the duration, a reasonable extension of the duration, not the indefinite and a reasonable alignment of dates and the methods for auctions, so that long-term industrial multi-country players like us can play that on strategy accordingly, are the two most important things that -- if I were this new commission, I would put as targets for this cycle. And of course the implementation of the previous things that I discussed before.

Our next question is from the line of Paul Marsch at Berenberg. Paul Marsch – Berenberg Bank: I have two questions. Firstly on Germany pricing, some of the questions to the earlier one on Spain and the UK, in Germany, it looks as if you’ve added 50% more data volume into the Red tariffs across-the-board in Germany in recent days. And if our analysis is correct, that brings you in line with 3G [ph] tariffs below the 1 GB level. Also, if you could just elaborate on the rationale for that move and how you’re expecting consumers to respond? And then a more general question on regulation and CapEx, We saw Almunia twice now, to challenge the argument that CapEx is suffering in the industry due to regulatory attitudes to end market consolidation, he clearly does not believe it, obviously we make it a change to personnel under the EC president. So do you think that the EC has just got its frame of reference wrong in terms of the CapEx levels in the industry, the CapEx levels required to drive mobile broadband deployment forward and to achieve the usage objectives. And do you think there is a potential deal here between the industry, I know that EC under the new stewardship which could result in CapEx perhaps increasing across the industry and staying high for the medium term in order to help the EC to achieve those objectives?

Philipp, you want to comment about the recent price changes?

Yeah, I mean the price changes you're referring to in Germany are not price changes, it’s promotions. So we always do promotion in all countries at different times of the year. In Germany, we do typically summer promotion. The objective there is to drive up consumption so that our customers who have Red plans really get used to high data consumption and then hopefully will continue to want to stay on larger plans. So that's the idea behind it. But you'll see similar and different promotions across all footprint if you look at the different countries.

Yeah, the best promotion we did in Germany was the one that gave a 100 meg per goal scored by the Germany team. That was 1.8 gig to the customer as a result. And it will not cost much in Italy or in the UK. On the second and more serious tone, on the second question with a more serious tone -- I think Paul, you raised a point which is correct but slightly off the mark. The real work that I and – I am sure also all the other GSMA members wouldn’t have to do with this new commission, it’s really on return on capital, more than CapEx per se. And again as much as I was positive on the comments, on my comments on their understanding of the roaming things, I have to say that we still have to do some work to commence regulators in the member states and in Brussels that return on capital employed is the metric that you should use, and that in order to have CapEx you need to have return on capital employed exceed your cost of capital as you learn in finest [ph] 101, not manipulating what they calculate as a return on capital just to prove their point. And so a lot of work we're doing internally at Vodafone is to prepare accurate documentation of what the return on capital should be in order to create positive conditions for return on a very important investment. This is a work that Vodafone has to do with the new leadership. This is a Vodafone that we have started already doing with the odd ones. I agree with you, vice president Harmonia [ph] did not agree with our points. And we had even recently an exchange of views, it is very clear that the old administration under him was clearly not in agreement on some of the fundamentals. Again new administration, new people we can work to make sure that this important concept is understood at all levels.

Our next question is from the line of Ottavio Adorisio of SocGen. Ottavio Adorisio – Societe Generale: A couple of questions, the first on the free cash flow, the second is a follow up from a previous one. On free cash flow, basically free cash flow for this quarter, they have been impacted by CapEx, they came 1.5 billion below the level that you recorded quarter last year. Half of it was the increase on CapEx due to Project Spring. Then you mentioned but you didn't quantify the impact coming from working capital, and the fact that page one EBITDA looks to be below the trends you expect for the full-year. So I would be grateful if you can just, if not quantify, please give a bit of color on what the components of the other 800 million cash absorption?

Look, I think it’s fairly straightforward. I mean first of all, working capital is very lumpy quarter to quarter. And the second thing I'd say is that we did ramp up very quickly for Spring in the fourth quarter, and what I made in my commentary was just pointing out that some of that flowed into Q1. So if you remember, we said we were spending around half a billion on CapEx last quarter, which was non-cash impacting. So that flows into this year.

The second question. Ottavio Adorisio – Societe Generale: On the working capital is clear, so I was asking if you can just give a number. How much this quarter?

We don’t sort of give out those numbers. Ottavio Adorisio – Societe Generale: The second one is a follow up from a previous – now during them, a reply to that question, I think probably Steve, that quantified that, the company is [specifically happy] about the high capacity backhaul you have and you plan to have over at the end of the Project Spring. And so my question is to Vittorio, how that’s reconciled with the lobbying that at the moment Vodafone is doing with the commission to basically include the backhaul as a relevant market, how the onsite advantage that the incumbents are currently enjoying. Do you really need to access that backhaul, or basically you don't?

How does that reconcile, Ottavio, is a pretty – requires a pretty obvious answer. Everything I can get at the cheaper price than what I have today is still good. So don’t confuse a technological requirement and Steve can talk about it with the economic requirement. If I can success the incumbent fiber at lower-priced and then what they give me it’s already better. So at any point in time it’s a bit like the same answer I gave before between – are the wholesale prices good enough for your margin, I think that from our life, by definition I will always say that they are not good enough, because even one penny is one thing penny. Steve, from a technical point of view instead –

Actually from a technical point of view, of course, fiber has a larger capacity and we drive all of our infrastructure on a cost and economic basis to get more fiber versus the microwave. But technically, microwave can absolutely carry the capacity that we need both now and into the future, some of our suppliers are testing 40 gig microwave. Now that might take three or four for years to deliver but the microwave part is well documented now and is being set into standards. The reason that we try and get more fiber is the longer-term cost, and have many years to upgrade microwave continually to higher speed is technically a higher operational cost than a fixed fiber that is permanent.

Okay. We have time for one final question, and that is from the line of John Karidis at Oriel Securities. John Karidis – Oriel Securities: Actually just two quick ones if possible. The first one is are you still comfortable that you can get access to Telefonica’s content at reasonable prices and soon enough, and if you are, why are you confident? And then secondly, throughout this call you emphasized how Q1 performance compares relative to Q4. Is it still the case that you are hoping to keep up with other first tier competitors such as Deutsche Telekom and Telecom Italia possibly going forward?

John, I am not sure I understand the second part of the question, the way you formulated it, because the answer is a obvious yes. I mean – and it’s not the fact that we compare to one quarter or the other that makes our reference competitor difference – our reference competitors are always the same and still the same the whole company looks at them and everything including our incentives is geared at doing better than what they do. What makes me comfortable that we will have access to Telefonica’s content, I mean again same answer in a little bit as before. For the time being their position, their statements are very much in favor of resale agreements. We are of course keen to get into those. Of course, we will need to continue to watch. A little bit like I said that in the previous answer that their price continues to be reasonable and that the conditions and packages are fair and allow us to do a good competition. But to be honest that's valid for Telefonica, that would be valid for Sky tomorrow, that would be valid for everybody who owns content and sales content and is at the same time a partner and a competitor. So we will watch that space very carefully as you would imagine.

Okay, as that was the final question, Vittorio, may I please pass the call back to you.

Thank you very much. I will not go through a long slide, that will just have two closing remarks for you to go away with. One is a strong progress on many fronts, I have to say, deployment of the size of Spring, 4G coverage, unified communications strategy, I mean real advancement of our strategy on many fronts. And second, signs of commercial improvement quarter on quarter but again I want to re-emphasize still a lot of work to do and still the markets are competitive. Nick and I will attend a number of conferences in September. So we really look forward to meeting you there and then for our results presentation in November. Thank you very much for your questions. Thank you operator. Enjoy your summer.