Vodafone Group Plc Half year results For the six months ended 30 September 2016 15 November 2016
Disclaimer Information in this presentation relating to the price at which This presentation also contains non-GAAP financial information relevant investments have been bought or sold in the past or the which the Group’s management believes is valuable in yield on such investments cannot be relied upon as a guide to the understanding the performance of the Group. However, non-GAAP future performance of such investments. information is not uniformly defined by all companies and therefore it may not be comparable with similarly titled measures This presentation does not constitute an offering of securities or disclosed by other companies, including those in the Group’s otherwise constitute an invitation or inducement to any person to industry. Although these measures are important in the underwrite, subscribe for or otherwise acquire or dispose of assessment and management of the Group’s business, they securities in any company within the Group. should not be viewed in isolation or as replacements for, but This presentation contains forward-looking statements within the rather as complementary to, the comparable GAAP measures. meaning of the US Private Securities Litigation Reform Act of 1995 Vodafone, the Vodafone Portrait the Vodafone Speechmark, which are subject to risks and uncertainties because they relate to Vodacom, M-Pesa and Vodafone One are trade marks of the future events. Some of the factors which may cause actual results Vodafone Group. The Vodafone Rhombus is a registered design of to differ from these forward-looking statements are discussed on the Vodafone Group. Other product and company names the final slide of this presentation. mentioned herein may be the trade marks of their respective owners. 2
Business review Vittorio Colao Group Chief Executive
First half highlights Financial performance • Q2 Group service revenue +2.4% (Q1 +2.2%); underlying momentum offsets increased roaming drag • Improvement led by Europe, +1.0% ; base growth and more-for-more actions stabilising ARPU, AMAP, +7.1% • H1 Group EBITDA +4.3% to € 7.9bn, supported by strong cost control • Non-cash impairment in India of € 5.0bn, net of tax, reflecting increased competition • Dividend per share € c4.74, up 1.9% 1 Continued momentum in growth engines in Q2 • Data: volume +61% ; driven by growth in 4G customers to 59m • Enterprise: continued outperformance, +3.3% service revenue growth • Fixed: broadband base +327k to 14.0m , of which 6.0m on-net. 31m on-net NGN households reached Strategic progress • Strengthened spectrum position in India: 4G in 17 key circles (91% of service revenues) 2 • JV agreements: Ziggo Netherlands regulatory approval received, Sky New Zealand merger approval ongoing All growth rates shown in this document are organic unless otherwise stated 1. Based on 31 March 2016 year-end € : £exchange rate of 1.2647 4 2. Targeted coverage by end FY 16/17
Continued momentum Growing customer base Stabilising ARPU in Europe Financials Customer net adds (000s) Consumer contract ARPU Service revenue growth 1 ( € ) (%) Mobile contract Fixed broadband Group Europe AMAP Group Europe AMAP 7.7 7.4 7.1 25.4 25.4 6.7 25.0 1,444 6.5 1,425 1,415 24.6 24.0 1,290 1,135 2.4 2.2 21.8 21.4 21.2 1.8 21.0 20.8 1.4 1.2 414 416 348 327 230 14.7 14.6 14.6 1.0 13.7 13.9 0.3 (0.6) (0.3) (1.0) Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 • Contract customer growth, supported by • Benefiting from more-for-more offers • Growing revenue despite 0.4pp lower churn roaming regulation drag • Fixed net adds +42% due to Europe NGN 5 1. Q4 15/16 shows underlying growth (excl leap year impact and accounting changes). Reported organic growth rates are Group +2.5%, Europe +0.5% and AMAP +8.1%
Enhancing customer experience: network Mobile network improvement Fixed network improvement European NGN homes reached (m) User experience (%) 90% 53% European data sessions >3Mbps Total AMAP dropped call rate On-net 4G coverage across NGN coverage in Europe, 90 Europe (+10pp YoY) matching incumbents 82 88 66 1.16 37m 69% 0.99 37 31 of European urban sites 82 0.68 on-net NGN coverage 27 22 with fibre 1 pro-forma for Ziggo Q2 14/15 Q2 15/16 Q2 16/17 Q2 14/15 Q2 15/16 Q2 16/17 Largest NGN Best data network in 15/20 footprint in Europe, markets #2 on-net 6 1. Big 4 European markets (Germany, Italy, Spain, UK) 4G sites
Enhancing customer experience: CARE Network ‘guarantee’ Real time monitoring Personalised offers 24/7 live help 13 17 14 17 markets 1 markets markets markets 90% EU data My Vodafone App penetration Consumer contract churn First contact resolution 39% (+13pp) 17.0% (-1.2pp) 66% (N/A) sessions >3Mbps (+2pp) Percentage point improvements are YoY 7 1. My Vodafone App is available in 21 markets, with 13 markets offering real time monitoring
Enhancing customer experience: Net Promoter Score Consumer NPS 1 (points) Consumer NPS Example CARE actions Gap to next best Gap to third Challenger Lead/Co-lead Spain, mobile network 14 13 12 guarantee 11 Network NPS +6 points Apr - Sep 16 2 1 1 '4G try me here' (2) Mar 15 Sep 15 Mar 16 Sep 16 Score not improving YoY Score improving YoY Germany, legacy migration to Red Giga tariffs to reward loyalty • Gap to third maintained despite • Lead/co-lead in 18/21 markets; NPS +16 points more-for-more actions 78% of revenue May - Aug 16 1. Gap to next best based on 21 markets, gap to 3 rd based on 20 markets and represents the simple average of the difference in Consumer NPS between Vodafone and the 3rd ranking competitor. 8 In markets where Vodafone is the 3rd ranking competitor the negative difference between Vodafone and the 2nd ranking competitor is used.
Growth engines: data take-up Increasing 4G penetration Growing data usage Further growth opportunity 4G customers (m) Mobile data traffic Mobile customers (% of base) Group Volume (PB) 4G data users Europe Growth (%) 3G/2G data users 75 700 80 58.9 67 64 52.5 70 62 670 46.8 4 600 60 39.3 36.0 61 34.8 32 33.4 30.1 50 28.1 Europe 34 569 AMAP 24.3 122m 348m 500 40 498 30 417 455 400 20 Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 • 4G now 57% of EU data traffic (+19pp YoY) • Strong data growth driven by 4G • Smartphone penetration still only ~50% • Rising smartphone average usage: • 3G/4G capacity utilisation up only +1pp – Europe 1.4GB, +48% , AMAP 0.9GB, +37% 9
Growth engines: data monetisation ‘More -for- more’ actions... … lowering unit data prices … and stabilising ARPU Examples European ARPU per GB Consumer contract Germany Italy 1 UK (local currency) Spain 29.8 28.5 28.1 • Personalised CVM 40% + € 2 25.8 • 4G, dedicated CAGR decline 24.8 23.9 customer service over last • EU roaming allowance Feb 2015 onwards two years 23.4 20.1 • EU & US roaming 19.0 + € 1-6 allowance 11.8 10.8 10.1 • Extra 0.5 - 1GB April 2016 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 • Unlimited EU roaming H1 13/14 H1 14/15 H1 15/16 H1 16/17 + € 5 14/15 14/15 14/15 15/16 15/16 15/16 15/16 16/17 16/17 • Extra 1 - 2GB • 4G max April 2016 More value to More value +£1-4 • EU roaming allowance subscribers • Up to an extra 5GB to operators May 2016 10 1. Consumer prepaid
Growth engines: enterprise Leading network and service Improving in mobile Growing in strategic areas Service revenue growth (%) Q2 service revenue growth (%) Q2 16/17 ~30% Q1 16/17 1 of Enterprise service revenue 4.7 4.6 of H1 Group service revenue 21.3 3.3 NPS leader 2.8 2.5 14.7 1.7 out of Enterprise markets 3.8 Largest 4G IoT footprint Total Enterprise Fixed Mobile VGE IoT Cloud & Hosting Platform • Fixed outperformance; IP-VPN +7.6% • VGE: lower growth; roaming impact countries in • Mobile improvement; ARPU decline • IoT: 45m connections, +39% IP-VPN global networks in easing , customers +7.5% countries 11 1. Q1 16/17 service revenue growth has been restated to take into account the reallocation in Germany of certain customers from Enterprise SoHo to consumer
Growth engines: fixed and convergence - momentum Customer momentum NGN self-build progress 31m (000s) Group fixed broadband net adds Germany households • Market leading 400 Mbps passed +4m Total broadband launched June YoY NGN Spain 416 415 414 • +0.6m HH in Q2 381 374 354 348 327 294 Italy 230 • +0.2m in Q2. Enel rolling out in 5 cities, 250 longer-term Portugal • +0.1m in Q2 Greece Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 • Commenced fibre roll-out • 51% of broadband customers on NGN (+6pp YoY) Ireland • 65k Siro HH to be passed by year end 12
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