Vodafone Fixed/Convergence Open Office 19-20 September 2017 - PowerPoint PPT Presentation

Vodafone Fixed/Convergence Open Office 19-20 September 2017

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Fixed/Convergence: A significant growth opportunity Nick Read Group Chief Financial Officer

Key takeaways We have created Europe's largest NGN footprint , thanks to our 1 flexible infrastructure strategy The shift to NGN is a significant window of opportunity for Vodafone 2 to achieve substantial and profitable market share gains Significant fixed-line scale and advanced TV/content capabilities allow 3 us to unlock convergence benefits Fibre builds will bring incremental growth and attractive returns , 4 given our disciplined investment criteria 4

The shift to NGN creates a window of opportunity for substantial market share gains… European fixed broadband customers (in Vodafone footprint) 1 (m) 140 120 100 80 Legacy copper 60 40 NGN 20 0 2015 2016 2017e 2018e 2019e 2020e 2021e (% of BB base on NGN) 42% 51% 59% 66% 76% 81% 71% 5 Source: Analysys Mason

Vodafone has created a significant NGN footprint European homes marketable (Q1 17/18) Owned European NGN network vs. peers 1 (m) (m) 51 Not covered 163 Total incl ’ ADSL and NGN 136 38 36 NGN wholesale 98 31 Strategic wholesale partnerships 2 41 24 Owned NGN network 18 36 17 % of homes 22 25 60 83 100 Liberty DT Vodafone Orange BT TEF TI Leading NGN marketable footprint in EU, #3 on-net 6 1. Vodafone estimates as at Q1 17/18 2. Includes Telefonica (selected areas in Spain), Open Fiber (Italy) and SIRO (Ireland)

We are Europe’s fastest growing broadband provider European broadband net adds (FY 16/17) 1 NGN on-net and off-net penetration (FY 16/17) (m) (%) On-net Off-net Vodafone 1.3 44% ORA 0.8 27% 27% 0.7 LBTY 22% 19% 0.2 BT 12% 8% DT 5% 0.2 4% 2.5% 1% 1% 0% 0% TEF Europe NL DE ES PT IT UK 0.1 1. Note: JV with Ziggo is included in Vodafone and Liberty Global, based on company reports 7

And have reached significant scale Revenue market share (Q1 17/18) 1 Total broadband customer base in Europe (Q1 17/18) 1 (m) (%) Mobile Fixed 39% 37% 18.6 18.1 33% 17.5 32% 16.8 30% 22% 21% 9.3 8.1 8% 7% 7.3 4% DT Orange LBTY Vodafone BT TEF TI DE UK IT PT NL 1. Vodafone includes VodafoneZiggo. 8 Source: Vodafone estimates and company reports

Fixed scale unlocks convergence opportunities Non-converged to converged (FY 16/17) Churn improvement (Q1 17/18) (m) (%) Consumer customers’ convergence pyramid 1 Vodafone Spain, consumer contract customer churn Households / SIMs ~40% of 4 8 fully converged on Vodafone fixed households have fixed and Upgrade mobile, and Vodafone Household / SIMs 22% ~ 17% of 2 3 not in integrated bundles mobile SIMs Cross-sell 9 53 Single product Fixed-only Mobile-only Vodafone customers households SIMs 9% 7% Acquire Non-Vodafone 104 Mass customers within Households Market footprint Mobile only 3P 4P (incl. TV) Broadband Mobile SIMs households 9 1. Mobile active consumer SIMs; excludes Eastern Europe; SIMs per household calculation based on regional averages

Supported by our leading TV platforms and expertise TV markets TV customers (m) VodafoneZiggo • Competitive premium content Analogue portfolio Digital • Distributor/partnership model preferred to exclusive ownership 4.0 4.0 • TV drives ARPU growth (~20-50%) 1 4.7 4.5 4.8 4.9 Giga TV 4.9 5.0 5.1 5.2 5.0 4.9 4.7 4.6 Live TV Connected screens Q4 15/16 Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Content in the Cloud On Demand 10 1. When customers move from 2P to 3P (incl. TV)

Markets are moving to convergence at different speeds Fixed-mobile convergence as % of total fixed broadband households (%) Market Market Vodafone consumer (Q1 17/18) 2 FY 11/12 1 FY 16/17 1 88% 84 24% 48 21% 22 21 74% 27% 8% 12 9 8 7 5 4 3 2 ES PT NL DE UK IT 1. Analysys Mason – Multi-Play in Europe 11 2. Number of consumer broadband (RGUs) linked to a converged customer account relative to total consumer broadband customers

We have good momentum Europe consumer converged customers(Q1 17/18) Europe converged consumer net adds (LTM) 1 (000s) (m) Fully converged customers and penetration of consumer broadband base Europe 4.4 Total Europe Spain Italy Spain 689 2.3 220 165 VodafoneZiggo² 0.6 Italy 0.5 Germany UK Germany 0.5 195 93 UK 0.1 Other Europe 0.4 • ~60% of European broadband net adds are converged • On average 2 SIMs per customer over the last 12 months • Significant penetration potential 1. Last 12 months (Q2 16/17 to Q1 17/18). Excludes VodafoneZiggo 12 2. VodafoneZiggo stated as at Q4 16/17

Vodafone Germany: Gigabit Investment Plan Approx €2bn investment in fibre over the next 4 years… … to drive attractive incremental growth and returns Giga-Business Under-served market: • <2% 1 of homes have access to Gigabit speeds • Targeting 100,000 companies in around 2,000 business parks in co-operation with • 25% 2 of broadband connections are <50Mbps strategic partners • Fibre demand in enterprise bids doubled YoY • €1.4bn - €1.6bn investment Giga-Municipality Opportunity to gain share: • Enterprise fixed revenue market share <15% • Partnering with local municipalities to reach around 1m rural homes • Accretive to service revenue growth by 1-2pp • Attractive incremental EBITDA margins • €0.2bn -0.4bn investment Giga-Cable Value accretive investment: • Accelerating the upgrade of our cable • IRR >20% for Giga-business and Giga- infrastructure to deliver 1 Gbps across our municipality 12.6m marketable homes • Payback of <4 years per business park and <6 years per municipality • € 0.2bn investment A success-based investment model, with limited execution risk and fast speed to market 13 1. Source: OECD 2016 2. Vodafone projections based on BMWI Breitbrandatlas

Summary Fixed as a % of European service revenue 1 1. We have created Europe's largest NGN footprint , thanks FY 16/17 to our flexible infrastructure strategy 28% 2. The shift to NGN is a significant window of opportunity for Vodafone to achieve substantial and profitable market share gains 3. Significant fixed-line scale and TV/content capabilities allow us to unlock convergence benefits 4. Fibre builds will bring incremental growth and attractive FY 11/12 returns , given our disciplined investment criteria: - IRR materially above WACC 12% - Typical payback period 4-7 years - Predictable regulatory framework 14 1. Excludes Vodafone Netherlands in all periods

Vodafone Fixed/Convergence Open Office Vodafone Italy

Market overview Service revenue (FY 16/17) Mobile revenue share (FY16/17) Fixed revenue share (FY 16/17) (€ bn) (%) (%) Others Others Vodafone Others Vodafone Fastweb 7 6 3 8 Fastweb 6 18 WindTre Vodafone 12 32 32 WindTre 19 7 WindTre FY 16/17 51 66 33 TIM TIM TIM Mobile customers Fixed broadband customers TV subscribers (m) (m) (000s) Q1 17/18 Q1 17/18 Q1 17/18 590 30.0 30.3 7.4 22.8 2.4 2.4 2.3 10 Vodafone TIM 1 WindTre Vodafone TIM WindTre Fastweb Vodafone TV TIMvision 16 1. Including M2M