Vodafone Group Plc Trading update For the quarter ended 31 December 2016 2 February 2017
Disclaimer Information in this presentation relating to the price at which This presentation also contains non-GAAP information which the relevant investments have been bought or sold in the past or the Group’s management believes is valuable in understanding the yield on such investments cannot be relied upon as a guide to the performance of the Group. However, non-GAAP information is not future performance of such investments. uniformly defined by all companies and therefore it may not be comparable with similarly titled measures disclosed by other This presentation does not constitute an offering of securities or companies, including those in the Group’s industry. Although these otherwise constitute an invitation or inducement to any person to measures are important in the assessment and management of the underwrite, subscribe for or otherwise acquire or dispose of Group’s business, they should not be viewed in isolation or as securities in any company within the Group. replacements for, but rather as complementary to, comparable This presentation contains forward-looking statements within the GAAP measures. meaning of the US Private Securities Litigation Reform Act of 1995 Vodafone, the Vodafone Speech Mark, the Vodafone Portrait, which are subject to risks and uncertainties because they relate to Vodacom, Vodafone One and M-Pesa are trademarks of the future events. Some of the factors which may cause actual results to Vodafone Group. The Vodafone Rhombus is a registered design of differ from these forward-looking statements are discussed on the the Vodafone Group. Other product and company names final slide of this presentation. mentioned herein may be the trademarks of their respective owners. 2
Commercial review Vittorio Colao Group Chief Executive
Q3 16/17 highlights Financial Growth engines Customer Service revenue experience €12.3bn Consumer NPS 4G driving Group +1.7% Co/leader data volumes in 18/21 markets +53% €8.1bn Enterprise Europe: +0.7% Co/best data outperformance Sustained commercial network 15/21 markets revenue +3.3% performance €4.0bn Record broadband Largest EU NGN AMAP: +3.9% Transformation net adds footprint India slowdown +417k 90m homes passed 1 All growth rates shown in this document are organic unless otherwise stated with Vodafone Netherlands excluded from organic growth from Q3 16/17 4 1. Including VodafoneZiggo
Commercial momentum Customer experience Growing customer base Consumer NPS 1 (points) Customer net adds (000s) 2 Gap to next best competitor Mobile contract India Gap to third Fixed broadband 1,425 14 1,415 14 12 1,290 10 1,135 1,048 2 1 0 414 416 417 348 327 (3) Q3 14/15 Q3 15/16 Q2 16/17 Q3 16/17 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 • YoY improvement in NPS points in 17/21 markets • Mobile impacted by India • Record fixed net adds, led by Europe NGN +430k • Gap to competitors improving 1. Gap to next best based on 21 markets, gap to 3rd based on 20 markets and represents the simple average of the difference in Consumer NPS between Vodafone and the 3rd ranking competitor. In markets where 5 Vodafone is the 3rd ranking competitor the negative difference between Vodafone and the 2nd ranking competitor is used. 2. Mobile contract additions in Q3 16/17 excludes a 125,000 impact in the UK following a one-off customer base adjustment, reported +923,000. All net adds excludes Vodafone Netherlands in Q3 16/17
All growth engines contributing Q3 16/17 service revenue growth contribution (pp) 0.7 Data 1.2 (excl. roaming) 1.7 0.9 (0.8) 1.0 0.0 (excl. roaming) (0.1) European consumer AMAP consumer Enterprise Consumer fixed line Carrier, wholesale Q3 16/17 mobile mobile and other¹ • Delivering growth from branded retail customers, despite regulatory pressures • Lower revenue reflects strategic choices - wholesale and low margin carrier 6 1. Other includes mobile and fixed wholesale, common functions and eliminations
Growth engines: data take-up Mobile data traffic rising due to 4G Stabilising European ARPU Consumer contract (local currency) Volume (PB) Growth (%) UK Germany Spain Italy (consumer prepaid) 800 80 28.5 28.3 28.1 28.1 27.6 70 24.5 24.8 700 24.2 24.4 68 23.9 65 60 53 61 20.0 20.1 59 19.8 19.6 19.0 600 50 699 670 40 569 500 11.9 11.8 11.2 11.2 10.8 501 30 458 400 20 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 • Data growth slowing due to India; Europe /other AMAP • Continued benefit from more-for-more actions still strong • Continued opportunity: 4G penetration only 60% in • 4G base 65m 1 , +32m YoY Europe 3 • Europe average data usage +51% to 1.5GB 2 1. Excludes Vodafone Netherlands in Q3 16/17 7 2. Monthly smartphone usage 3. Based on 41m European 4G customers as a share of active data users
Growth engines: enterprise Diversified revenue streams Growth in fixed driving outperformance Service revenue splits Enterprise service revenue growth (%) Group Mobile Fixed Multi-National Corporate AMAP Fixed 2.5 3.3 3.3 Public Sector 5.4 National 4.7 4.6 Corporate 2.8 SME 2.5 Europe Mobile 1.7 SOHO Region Product Customer Q1 16/17¹ Q2 16/17 Q3 16/17 • 28% of Group service revenue • Outperformance due to fixed (IP-VPN +13%) and AMAP • NPS leader in 15/20 markets • Mobile: ARPU decline easing, customers growing • Leading network: IP-VPN to 73 countries, 49m IoT • Growth drivers: IoT +19%, Cloud & hosting +9%, VGE +2% connections 8 1. Q1 16/17 service revenue growth restated to take into account the reallocation in Germany of certain customers from Enterprise SOHO to consumer
Growth engines: fixed momentum Record net adds Largest NGN footprint in Europe Group fixed broadband net adds (000s) 1 European NGN homes reached (m) 2 % Penetration 3 Total NGN Total On Net 12% 457 416 414 417 415 9% 381 90 374 354 348 327 69 24% 19% 38 28 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 Q3 15/16 Q3 16/17 • Fixed broadband base now 14.3m , of which 7.4m NGN • 58% NGN coverage in Europe (incl. VodafoneZiggo) 2 , matching incumbents • 9.7m TV customers (+104k) • 3.5m converged customers (+189k) 1. Excludes Vodafone Netherlands in Q3 16/17 9 2. Includes VodafoneZiggo, 7.1m households passed and 3.1m broadband customers as of Q2 16/17 3. Number of customers divided by homes passed
VodafoneZiggo: JV creates a fully-converged operator Operational A strong integrated player Total communications revenue market share (%) 1 Board and management in place Other Tele2 8 Commercial 4 T-Mobile VodafoneZiggo 37 8 Co-branded convergence proposition in Spring Q2 UPDATE Customer targeting initiatives executed NUMBERS Financial KPN 43 Net €0.6bn closing payment received €3.5bn NPV synergy target reconfirmed 3 • Nationwide cable and 4G coverage • €4bn revenue, 10m fixed RGUs and 5m mobile 2 1. Source: Vodafone estimates as at September 2016 2. See 31 December 2016 press release at www.vodafone.com for more details 10 3. Lower cost and capex synergy run rate offset by higher profits post sale of Vodafone Thuis
Operational review Nick Read Group Chief Financial Officer
Continued growth in Europe, slowdown in India Q3 16/17 organic service revenue (%) Q3 15/16 Q4 15/16 2 Q1 16/17 Q2 16/17 Q3 16/17 Europe (0.6) 0.5 0.3 1.0 0.7 (0.3) 19.6 AMAP 6.5 8.1 7.7 7.1 3.9 7.4 Group 1.4 2.5 2.2 2.4 1.7 1.8 15.0 Group 1.3 2.1 1.7 2.0 2.2 (Ex. India) 8.3 4.1 4.0 2.8 3.0 2.2 1.8 1.7 1.2 0.0 (1.9) (2.0) (3.2) (6.4) Egypt Turkey Ghana Spain¹ Vodacom Italy Romania Portugal Germany Group Greece New India Ireland UK NL ex. Zealand Thuis 1. Excluding impact of handset financing 12 2. Figures in italics for Q4 15/16 represent underlying growth excluding leap year benefits and accounting changes
Germany: steady underlying growth Customer experience KPIs Financial results Consumer NPS (points) Customer net adds (000s) Service revenue growth (%) Gap to next best Mobile contract Reported 3.2 Gap to third Fixed Growth ex MTR impact 2.2 17 1.7 1.7 14 196 3.1 8 134 1.8 1.6 1.6 110 105 108 1 92 (0.3) 61 49 (0.4) (1) 20 8 (4) Q3 15/16 Q2 16/17 Q3 16/17 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 • Growth slowed due to MTR cuts 1 and • High network quality ranking : P3 • Continued focus on direct channels ‘connect’ close #2, Chip test joint first MVNOs • Solid in fixed: DSL net adds +33k • 400Mbps NGN passing >6m homes (LY +9k); cable +77k • Mobile 0.0%, Fixed +4.8% 2 1. The German regulator reduced mobile termination rates in early December by 34% 13 2. Fixed service revenue growth was +3.1% (Q2 +4.4%) excluding one-off from reclassification of CPE revenue from non-service revenue to service revenue
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