Vodacom Interim results for the six months ended 30 September 2017
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be co mmunicated (‘relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Group. Promotional material used in this presentation that is based on pricing or service offering may no longer be applicable. This presentation contains certain non- GAAP financial information which has not been reviewed or reported on by the Group’s auditors. The Group’s management believes these measures provide valuable additional information in understanding the performance of the Group or the Group’s businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Ad ditionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to, the comparable GAAP measures. This presentation also contains forward-looking statements which are subject to risks and uncertainties because they relate to future events. These forward-looking statements include, without limitation, statements in relation to the Group’s projected financial results. Some of the factor s which may cause actual results to differ from these forward-looking statements are discussed on slide 49 of this presentation. Vodafone, the Vodafone logo, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone WebBook, Vodafone Smart tab, Vodafone 858 Smartphone, Vodafone Passport, Vodafone live!, Power to You, Vodacom, Vodacom M-Pesa, Vodacom Millionaires, Vodacom 4 Less and Vodacom Change the World are trademarks of Vodafone Group Plc (or have applications pending). Other product and company names mentioned herein may be trademarks of their respective owners. Interim results | 30 September 2017 2
Operating review
Group salient features +11.8% 25.8% +7.0% +4.6% EBIT margin Net profit Customers Revenue R42.0 billion R10.8 billion 71.1 million R6.7 billion +15.1% 390 cents R5.4bn +1.1% Capital Data customers Interim dividend HEPS expenditure per share 34.7 million 12.8% of revenue 445 cents per share Interim results | 30 September 2017 4
South Africa | Strong customer net adds underpins growth +7.7% Key indicators 1H18 % change Revenue (Rm) 33 881 7.7 Revenue growth Service revenue (Rm) 26 670 4.7 +4.7% EBITDA (Rm) 13 370 2.7 Service revenue growth EBIT (Rm) 9 882 (2.2) Customers (‘000) +2.9 million 40 000 12.1 Data customers (‘000) 19 905 9.6 Customer net adds Active smart devices (‘000) 17 297 14.8 Interim results | 30 September 2017 5
International | Improving trends + 5.5% * Key indicators 1H18 % change Normalised Revenue (Rm) 8 574 (5.2) 5.0 Service revenue growth Service revenue (Rm) 8 308 (4.8) 5.5 +1.4 million EBITDA (Rm) 2 405 2.3 3.1 Customer net adds EBIT (Rm) 988 18.6 2.2 + 27.2% * Customers (‘000) 31 092 11.4 Data customers (‘000) 14 755 23.3 M-Pesa revenue growth M- Pesa customers (‘000) 13 986 27.9 Interim results | 30 September 2017 6
Safaricom | Continued strong performance, double digit growth +12.0% Key indicators 1H18 % change Revenue (KES’bn) 114 12.1 Service revenue growth Service revenue (KES’bn) 110 12.0 +1.4 million EBITDA ( KES’bn ) 54 6.8 Customer net adds EBIT (KES’bn) 38 8.9 +16.2% Customers (‘000) 29 490 10.8 Data customers (‘000) 16 946 13.5 M-Pesa revenue growth M- Pesa customers (‘000) 19 307 9.5 Interim results | 30 September 2017 7
Safaricom | Co-operation priorities Enterprise Big data M-Pesa Keny a Penetration: Customer take-up Tanzania Moz Lesotho DRC Market maturity: Functionality and products • • Vodafone big data incubator 27.4% of Service revenue • 32 countries • 1.1 billion bundles sold • USD6 billion transacted monthly • IoT leader • 719 million ‘Just 4 You’ bundles • Broad base of financial services • VGE hub to leverage Interim results | 30 September 2017 8
Growth drivers
South Africa data | Device, pricing and network supporting demand Data revenue Data progression as a % of service revenue Million +15.0% +12.1% -4.8% +9.6% +14.8% +62.8% 6.0 3.7 45.6 38.8 41.5 42.6 35.7 40.0 18.2 19.9 15.1 17.3 1H17 1H18 Customers Data customers Active smart devices 4G customers 1H17 1H18 Voice Data Promotions Data bundles sold Million • Average usage per smart device +55.5% +19.5% to 776MB • Data traffic up +51.2% 59.4% 52.7% 51.4% • 11.8m customers are purchasing bundles 223 272 347 1H17 2H17 1H18 Bundles sold % of data customers purchasing bundles Interim results | 30 September 2017 10
International | Data progressing Data customers Data contribution Thousand/% +23.3% Expanding data coverage 13.6% Number of sites 47.5% 42.9% of International service revenue 463 11 965 14 755 348 1H17 1H18 Data customers Contribution to total customers Smartphone penetration % 4 691 5 013 1H16 1H17 • R1.5bn capital investment 43.5% 43.7% 3G 4G 27.6% • Data traffic up +73.1% 20.5% • 47.5% of customers are using data Tanzania DRC Moz Lesotho Interim results | 30 September 2017 11
International | M-Pesa flying International M-Pesa customers 1 Thousand +26.4% 13.6% Africa’s biggest payment platform of International service revenue R24 billion transacted monthly in • International 8 508 10 755 1H17 1H18 1. 30 day customers • R82 billion transacted monthly in Safaricom Safaricom M-Pesa customers 1 Thousand • Merchant payments expanding +9.5% 27.4% of Safaricom service revenue 17 626 19 307 1H17 1H18 1. 30 day customers Interim results | 30 September 2017 12
Enterprise | Growing service revenue contribution SA Enterprise service of which SA fixed-line and BMS revenue SA Enterprise revenue revenue contribution R million R million +10.0% +11.7% R6.8bn 25.3% of service revenue 6 141 6 758 871 973 1H17 1H18 1H17 1H18 VBA service revenue impacted by currency devaluation R million Malaysi sia UK Tunisi France sia Algeria eria Libya Egypt +0.9%* Singapore Maurita tania ia Mali Nig iger er Senegal al • Enterprise churn 5.8% Sudan Chad Burki kina Djibouti Guinea Gu Faso so Benin S. Ghana Nigeria eria Cote Ethio iopia ia Leone Gh D’Ivoire CAR Liberi eria Togo Kenya ya Ga Gabon Rwan anda da Congo o (DRC) Burundi di Tanzania Seychell elles es • Government contract Malawi Angol ola Zambia migration progressing Zimbabwe 684 576 Namibia ia Botsw swana Mauriti tius MPLS Network Swaziland Lesot otho 1H17 1H18 South th Afri rica Reachable through VSAT & Partners Interim results | 30 September 2017 13
New services | IoT scaling up to drive vertical integration Afrigis XLink Mezzanine Geo-location services Pay-point services Platform solutions NB IoT R399m IoT revenue 3.3m IoT connections 1 st commercial transaction up +22.4% up +24.6% 1 100 base stations Metro areas Interim results | 30 September 2017 14
New services | Capturing new revenue shares Fintech Advances Payment services Insurance R1.4bn purchases R342m airtime sales 1.0 million policies through airtime advance through Vodacom up +47% Express Recharge Improved margins up +53% Fibre Over 39 000 homes and businesses passed Wholesale partnership agreements additional access to over 175 000 end points Interim results | 30 September 2017 15
Strategy | Towards Vision 2020 – Digital first Our Purpose To connect everybody to live a better today and build a better tomorrow Our Strategies Vision 2020 Digital Our Brand and Best Customer Best Segmented Organisation Reputation Experience Technology Propositions and Culture Responding to customer’s Seamless Leading technology Innovation Agility Brand with a purpose Needs Frictionless Intelligent systems New skills Industry leader Wants Personalised Transform society Behaviours Digital Interim results | 30 September 2017 16
Segmentation | Based on customer needs The new Emerging market Youth High value The old • Free health info • • Loyalty programmes Over 2 million subscribers • Free online learning • Music talent show • 24/7 premium customer care agents One size fits all • Facebook Flex • Exclusive access to events • Data sharing sims • Free access to job sites • Exclusive rewards • Free funeral cover • Free access to selected job sites • Targeted digital content Interim results | 30 September 2017 17
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