WEBVTT - Vodafone CEO Margherita Della Valle Talks £15 Billion Mega Merger

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<v Speaker 1>Margaret to the deal has been approved. The merger has

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<v Speaker 1>been approved. Man. We will take that as validation of

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<v Speaker 1>your strategy. What does it mean for the outlook for

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<v Speaker 1>Vodaphone in the years ahead.

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<v Speaker 2>Let me first say Tom that today's announcement is great

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<v Speaker 2>news for the UK because the CMA has given us

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<v Speaker 2>screen light to create this new force in UK telecoms,

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<v Speaker 2>a force that will increase competition and investment and ultimately

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<v Speaker 2>give the UK the infrastructure that it truly deserves. For

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<v Speaker 2>Vodafone specifically, it's the final move for us in reshaping

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<v Speaker 2>Europe for growth. When I became CEO last year, I

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<v Speaker 2>said that we were addressing three markets Italy, Spain and

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<v Speaker 2>the UK. And we are now completing in this era

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<v Speaker 2>of transition our strategy and we will look forward to

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<v Speaker 2>next year in which you will see the new reshape

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<v Speaker 2>Vodafon in Europe, geared for an acceleration of our growth and.

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<v Speaker 1>You will be the biggest company, the biggest telecoms company

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<v Speaker 1>in the UK by revenues. Give us a steer if

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<v Speaker 1>you can, Margarita a ballpark figure in terms of what

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<v Speaker 1>you think this does to the uplift for revenues for

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<v Speaker 1>roaud Defone for twenty twenty five twenty twenty six.

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<v Speaker 2>I would say Tom, this is not about revenues. The

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<v Speaker 2>rationale of the merger is to unlock investment, infrastructure investment.

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<v Speaker 2>With the combination between Vodafon Entry, we unlock scale in

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<v Speaker 2>our networks, which is what will allow us to build

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<v Speaker 2>the biggest, the best network in the UK, reaching ninety

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<v Speaker 2>nine percent of the UK population. That's what we do

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<v Speaker 2>for a living. We want to invest. We want to

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<v Speaker 2>invest to give a better service to our customers and

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<v Speaker 2>we want to invest to drive growth in our markets,

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<v Speaker 2>which is where revenues come from. But the most important

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<v Speaker 2>point for the financial set top of Vodafone is that

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<v Speaker 2>all the markets in which Vodafone will operate next year,

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<v Speaker 2>including the UK, will be growth markets where our own

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<v Speaker 2>scale will allow us to drive growth with good returns.

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<v Speaker 1>And you focused on that investment piece, eleven billion pounds

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<v Speaker 1>of investment. When does that investment start, Margarita, and how

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<v Speaker 1>will you be financing it?

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<v Speaker 2>It starts as soon as we complete We still have

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<v Speaker 2>a few weeks to go as we go apply the

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<v Speaker 2>final legal touches with the CMA and our partners, we

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<v Speaker 2>will complete in alf one twenty twenty five, and as

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<v Speaker 2>soon as we complete, we will start investing, which is

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<v Speaker 2>why although typically big infrastructure projects take time, our customers

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<v Speaker 2>will already see the benefit into next year of a bigger,

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<v Speaker 2>better broader network. In terms of funding, you know that

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<v Speaker 2>the other activity we have done this year as part

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<v Speaker 2>of the reshaping of Vodafone in Europe is to reshape

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<v Speaker 2>our balancee. So we have all the funding we need

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<v Speaker 2>to execute on our plan.

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<v Speaker 1>Okay, so you fund it from the balance sheet. You

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<v Speaker 1>have the funding that you need. The deal closes in

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<v Speaker 1>the first half of next year, that's the expectation. What

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<v Speaker 1>is the timeframe for the integration between the two businesses

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<v Speaker 1>and what kind of cuts maybe you might be looking

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<v Speaker 1>at in terms of efficiencies between the two businesses.

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<v Speaker 2>Sure, it's clearly early days to talk about this because

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<v Speaker 2>the two companies won't be allowed to operate together and

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<v Speaker 2>therefore design the full detailed integration plan until we complete

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<v Speaker 2>in the first half of twenty twenty five. But specifically

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<v Speaker 2>on the points of jobs, let me be very clear.

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<v Speaker 2>This merger, as we've just discussed, is about investment, is

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<v Speaker 2>not about cost cutting. What that means is that of course,

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<v Speaker 2>with an eleven billion investment plan, thousands of jobs will

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<v Speaker 2>be created, and more broadly, outside of the telecom ecosystem,

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<v Speaker 2>you will have businesses across the UK that will get

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<v Speaker 2>the benefits of a better network for their own growth.

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<v Speaker 2>Of course, as always as we combine two companies, there

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<v Speaker 2>will be areas of overlap, but the net result of

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<v Speaker 2>the merger is going to be an increasing employment across

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<v Speaker 2>the UK.

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<v Speaker 1>Okay, but specifically for Vodaphone. As you look for those synergies,

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<v Speaker 1>but also that investment, what does that do for headcount

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<v Speaker 1>in the years ahead.

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<v Speaker 2>This is something we will be working on with our

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<v Speaker 2>partners as soon as we are allowed to complete. In

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<v Speaker 2>the grand scheme of think think about it as small

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<v Speaker 2>as the impact of the merger. Of course, to give

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<v Speaker 2>you an example, there will be duplication in the heads offices,

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<v Speaker 2>but they have nothing in comparis reason to the investment

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<v Speaker 2>plan that we have in mind.

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<v Speaker 1>What will it mean? Critics of course have suggested it's

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<v Speaker 1>going to mean higher prices for customers. Mobile prices will

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<v Speaker 1>be capped for three years as a result of this

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<v Speaker 1>deal with the CMA and this merger, but post that

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<v Speaker 1>three year period, the prices go up for consumers.

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<v Speaker 2>This is a really important point you are raising because

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<v Speaker 2>the CMA is really establishing here a very important point.

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<v Speaker 2>They have established the link that we all know exists

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<v Speaker 2>between investment and competition. What that means is that more

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<v Speaker 2>investment will drive more competition on investment itself across all

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<v Speaker 2>players in the UK, which will be good for customers.

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<v Speaker 2>But also with a bigger a better network, we will

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<v Speaker 2>have more capacity that will mean more competition on the

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<v Speaker 2>retail front. Let me remind you that in the UK

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<v Speaker 2>market we are in one of the most competitive retail

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<v Speaker 2>market across Europe. We have tens of brands competing for customers.

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<v Speaker 2>That is not going to change. What is going to

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<v Speaker 2>change is now these retail brands will have a much

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<v Speaker 2>better infrastructure to support them.

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<v Speaker 1>Margritter, you've pointed to the key markets outside of the UK,

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<v Speaker 1>Italy and Spain. Do you expect this deal to be

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<v Speaker 1>a catalyst for consolidation, further consolidation in the European market?

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<v Speaker 1>And what do you say to governments in Europe, some

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<v Speaker 1>of them who are reluctant and are cautious about consolidation, this.

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<v Speaker 2>Deal could represent a good precedent for the rest of Europe.

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<v Speaker 2>I think all governments are now aware of the fact

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<v Speaker 2>that Europe is falling behind in terms of its technology infrastructure,

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<v Speaker 2>and that for investment in infrastructure, exactly as we were

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<v Speaker 2>explaining this morning, you need scale. Europe is also rethinking

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<v Speaker 2>about its position at this point. It's a critical year

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<v Speaker 2>with a new commission, and you may have seen there

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<v Speaker 2>have been reports like the Drug Report that have called

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<v Speaker 2>out the need for Europe to accelerate investment in infrastructure.

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<v Speaker 2>That's why the link that the CMA is doing today

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<v Speaker 2>between investment and competition and why investment is good for

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<v Speaker 2>customers and for competitors is so important. If you go

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<v Speaker 2>back eighteen months when we launched this project, I state

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<v Speaker 2>that it would be great for customers, great for competition

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<v Speaker 2>and great for the country. It's fantastic that we are

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<v Speaker 2>now in the position to make this reality for the UK.

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<v Speaker 2>I think other markets could take inspiration for this voter.

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<v Speaker 1>If I will have the majority stake fifty one percent. C. K. Hutchinson,

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<v Speaker 1>the owner of three, will have forty nine percent, We'll

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<v Speaker 1>see how long that last and whether you buy more

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<v Speaker 1>of that state maybe you can give a nod to that.

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<v Speaker 1>How do you do address that the national security concerns.

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<v Speaker 1>This is a Hong Kong based company. They have ties

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<v Speaker 1>to paging that the Hong Kong National Security Law that

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<v Speaker 1>compels C. K. Hutchinson at some point to pass on

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<v Speaker 1>data from this entity to Hong Kong, Too Bay. How

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<v Speaker 1>do you mitigate that?

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<v Speaker 2>First of all, let me say as you mentioned that

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<v Speaker 2>Vodafon will be in the driving seat of the new company. Second,

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<v Speaker 2>our partners, which as you say, are based in Hong Kong,

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<v Speaker 2>have been operating telecom infrastructure in the UK for over

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<v Speaker 2>twenty years and are involved in a range of sectors

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<v Speaker 2>in this country. As you would expect, we have absolutely

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<v Speaker 2>made ourselves comfortable that our partners have been respecting all

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<v Speaker 2>applicable rules and regulations. But besides what we can say,

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<v Speaker 2>all authorities and regulators in the UK have gone through

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<v Speaker 2>a very thorough analysis and have confirmed now months ago,

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<v Speaker 2>their approval to this initiative.