No quick fix to German headwinds Vodafone continues to see European service revenue growth fall well short of inflation (-1.1% in 3Q22/23 vs inflation of c. 8.5%) with their biggest and most important market of Germany seeing deteriorating KPI''s and top-line trends. Talk of MandA and pricing measures dominates much of the discussion, but the core issue facing Vodafone is German underperformance - where as detailed below we see no quick fix to their issues. What do we know today that we didn''t on Tuesday? Vodafone now expect the energy cost headwind to be c. EUR400m in FY24 vs EUR500m previously, but are now c. 80% hedged, meaning they will not benefit from the current lower spot prices. Having resolved their IT and other issues in Germany, Vodafone now have fallen behind competitors in terms of go to market proposition (e.g. family plans), necessitating another tariff refresh. Has the investment case changed? No - still in need of a reset We downgraded Vodafone off the back of our STAMP survey data that suggested the growth outlook for Vodafone in Europe (and German in particular) was deteriorating (Warning Signs). Recently we argued that the turnaround in Germany embedded in consensus would be difficult to achieve (Nebenkostenprivileg a big headwind). We think Vodafone is in need of a new capital allocation policy - necessitating a c. 50% dividend cut in our view (see Time to push the reset button). Change in estimates We also update for FX and latest results, with small cuts to our German estimates (that were already meaningfully below consensus - German Telcos: Are the good times over?). We now see FY24 EBITDAaL (ex-Vantage and Hungary) at EUR13.23bn (down from EUR13.3) some 9% below consensus. We also cut our VodafoneZiggo associate dividend income expectations from EUR265m to just EUR100m in FY24 and onwards given pressure on the JV''s FCF (cost inflation, capex and tax). Our Vodafone defined FCF (again ex Vantage/Hungary) stands at...