Vodacom Group Limited · JSE:VOD
Vodacom — H1 2005 Earnings Presentation
45 slides from Vodacom's earnings presentation, Nov 15, 2004
Slide 1: Vodacom Group (Pty) Limited Interim results
Vodacom Group (Pty) Limited Interim results for the six months ended September 30, 2004 November 15, 2004
Slide 2: Content
Content Alan Knott-Craig Chief Executive Officer Operational highlights. Leon Crouse Chief Financial Officer Financial review
Slide 3: Operational highlights
= vodacom Operational highlights Alan Knott-Craig Chief Executive Officer
Slide 4: Group highlights
Group highlights nas a = Total customers Revenue 13.5 million R13.6 billion R4.2 billion 40.6% 20.3% = 13.4% = =) ¥ r= Operating cash flow Customers per Profit before tax employee R3.8 billion 2,751 R2.6 billion 28.7% - 28.7% - 18.7% -— Interim dividend of R1.6 billion declared -~ Signed Vodafone af
Slide 5: Strategy unchanged
Strategy unchanged Revenue growth Margin management e Contract market leadership e Leveraging our economies of * Better coverage scale * The continuous introduction * Closer to customers of new high-utility services e Optimising efficiencies e High speed mobile data « Synergy between operations e Ne
Slide 6: Strategic issues
Strategic issues e Deregulation and liberalisation — Threat and opportunity * Consolidation of service providers e ICT BEE Charter e 3G and data ~ Vodafone affiliate partner program e African strategy — continue with cautious approach — Nigeria still of interest — Evaluate other opportunities — Moza
Slide 7: South Africa - still more market growth
South Africa - still more market growth Customers (millions) 255 20 + 15 + 10 + Mar-01 Mar-02 Mar-03 Mar-04 Hi 2005 8 Other operators § Vodacom 8 Total
Slide 8: Potential for further growth in South Africa
Potential for further growth in South Africa chia. ~ com * Potential for further growth — Data focus: Vodafone Live! ~SA market estimated at 31 million e Vodacom is strategically placed for continued leadership — Extensive distribution — Strong recognisable brand — Strong, stable management v SA mar
Slide 9: South Africa - market share 56%
South Africa - market share 56% Population 47.4 million, penetration 43.1% vodacom % H1 2003 Hi 2004 change e Total customers 8.5 million 11.3 million 33.1% t _ + EBITDA R3,540 million 3,943 million 11.4% * Customers per employee 2,217 2,845 28.7% t as * Capex as a % of revenue 7.8% 8.9% lips a Mark
Slide 10: SA six-monthly gross connections analysis
SA six-monthly gross analysis connections 3,000 cee 2,681 2,500 2,000 | 8 I Pa & 1,500 + G : 1,273 174.5% © 4,000 | 500 267 110 89 110 87 so fo —o— o> 0 r r H1 2002 H2 2002 H1 2003 H2 2003 H1 2004 H2 2004 H1 2005 =—*= Contract = Prepaid =*SA overall (Incl. community services) 10
Slide 11: Strong SA operational indicators
Strong SA operational indicators a Beira vodacom e Gross contract connections Vodacom SA customers up 174.5% to a new high «Customers up 33.1% year on *79°° 11,346 year to 11.3 million iz 10,000- e Total traffic increased by 20.4% year on year to 8,000 7.0 billion minutes e Overall ARPU declined bec
Slide 12: Very low contract churn
Very low contract churn ® Contract churn at all-time SA churn history low of 8.6% 45 aia . 33 30.4 pee Be 30.4 = 219 e Prepaid churn decreased “20 prs ~ to 21.9% aS m= 11.8 404 —« = 8.6 ~Temporary decrease 0 ' poh, Expected 35% 2002 2003 2004 Hi 2005 ——Total churn —s— Contract —*— Prepaid SA inactiv
Slide 13: Tanzania - market share 58%
Tanzania -— market share 58% Population 36.6 million, penetration 4.0% % H1 2004 Hi2005 _— change _ « Total customers 541,000 952,000 76.0% & * EBITDA R122 million R1i52 million 24.6% t * Customers per employee 2,005 2,785 38.9% * Capex as a % of revenue 33.6% 17.6% 16.0 pts = -~ Market very competi
Slide 14: DRC - market share 48%
DRC — mele siete 48% (400%) H1 2004 H12005 change "Total customers 458,000 903,000 97.2% a * EBITDA R64 million R110 million 71.9% * Customers per employee 1,500 2,119 41.3% t * Capex as a % of revenue 71.1% 31.5% 39.6 pts pal -— Market position entrenched, now a subsidiary
Slide 15: Lesotho - market share 80%
Lesotho - market share 80% 7 > Population 1.9 million, penetration 7.2 % H1 2004 H12005 _— change - e Total customers 71,000 122,000 71.8% @ + EBITDA R12 million R21 million 75.0% * Customers per employee 1,007 1,971 95.7% t * Capex as a % of revenue 7.3% 3.1% 4.2 pts cal -— Significant turnaround d
Slide 16: Mozambique - market share 24%
Mozambique - fie ssee share 24% oo Population 18.8 million, penetration 3.8% vodacom Hi 2005 _ * Total customers 164,000 * EBITDA (R69 million) * Customers per employee 1,934 -— Operation still very young — Entrenched competitor
Slide 17: Financial review
a vodacom Financial review Leon Crouse Chief Financial Officer
Slide 18: Group income statements
Group income statements extracts for the six months ended September 30, vodacom % change Hi 2003 H1 2004; Hi 2005 05/04 Revenue 9,441 11,296 13,594 20.3 fcc ii excluding depreciation (6,414) (7,598) (9,402) 23.7 EBITDA 3,027 3,698 4,192 Depreciation and amortisation (1,189) (1,247) (1,418) Profit fr
Slide 19: Mozambique impairment
Mozambique impairment «IAS 36 — “Impairment of Assets” — Requires impairment testing for cash-generating units ~All African operations were tested — All intangible assets were also tested « Impair to the higher of — Value in use (NPV of expected future pre-tax cash flows) — Fair value less costs to
Slide 20: SA YTD ARPU analysis
SA YTD ARPU analysis 700 623 634 637 a al 600 | 560 493 500 | = E 400 = i 300 @ 208 200 —__™” 183 177 165 ———— ——— —$—— ay 98 93 90 90 73 100 F = ee = <- 2 — e 0 2001 2002 2003 2004 Hi 2005 =*=Contract =—*—=Prepaid =?=SA overall (incl, community services) 20
Slide 21: Group revenue
Group revenue R millions 2002 2003 2004 * 1st six months ® 2nd six months — Revenue seasonal, impacted by DRC consolidation 21
Slide 22: Group revenue analysis
Group revenue analysis By country ‘South Africa Tanzania 408 431 DRC (100%) 186 402 Mozambique - - Lesotho 46 55 Vodacom Group (adjusted) 9,532 11,493 Vodacom Group (statutory) 9,441 11,296 BM other African contribution 8.6% (H1 2004: 7.7%)
Slide 23: Revenue mix
H1 2004 H1 2005 62.9% 57.6% 24.9% 21.6% Airtime and access * Data revenue * Interconnect revenue = Equipment sales « International airtime = Other -" Interconnect contribution down, airtime up
Slide 24: Data revenue
Data revenue By country 500 - 462 400 = = 300 - x 200 27.1% 100 + | By 35 2 8 01 > H1 2004 H1 2005 ® South Africa = Tanzania ® Other African operations 24
Slide 25: Increased earnings
Increased earnings e Strong EBITDA performance —Increasing by 13.4% year on year e Excellent profit before tax 4,200 - performance — Increasing by 18.7% year on year 5,200 | 3,400 + * Impacted by very high contract _ 5 a9 | connections 5 ~ Higher incentive costs ; Saeaaaal t — Mozambique losses © 2.
Slide 26: Group EBITDA analysis
Group EBITDA analysis By country South Africa Tanzania DRC (100%) Mozambique Lesotho Holding companies Vodacom Group (adjusted) Vodacom Group (statutory) Adjusted EBITDA margin (9) Hi 2003 H 2,949 130 122 (109) 64 14 125 (10) (9) 2,974 3,729 3,027 3,698 31.2 32.4 (1.6) pts 26
Slide 27: Adjusted EBITDA and margin analysis
Adjusted EBITDA and margin analysis R million 31.2 2,974 H1 2003 35.1 3,683 —E e H2 2003 we Adjusted EBITDA 32.4 3,729 H1 2004 33.2 30.8 4,131 4,192 H2 2004 H1 2005 —®— Adjusted EBITDA margin 27
Slide 28: Margin analysis
Margin analysis 40% > 35% - 30% 4 25% 4 20% + 15% 5 10% 4 5% 4 0% Six-monthly margins (statutory) 36,5% 35.6% 32,1% 33,8% 32.7% 33,4% 30.8% H1 2002 H2 2002 H1 2003 H2 2003 H1 2004 H2 2004 H1 2005 —®- EBITDA margin —#®- Operating profit margin —?- Net profit margin “ Historically seasonal trend
Slide 29: Equipment sales and net interconnect revenue
e Gross SA contract customer connections of 302,000 * Incentives increased R523 million year on year « Net interconnect revenue continuing to decline - 20.8% decrease year on year e Growing low margin equipment sales « Full consolidation of Vodacom Congo * Competition in all markets Six-monthly equi
Slide 30: Factors affecting the trends
Factors affecting the trends e Change in SA traffic mix continuing « Total outgoing on-net traffic increased from 52.3% to 55.4% of the total e Total mobile-mobile traffic increased by 29.9% e Total mobile-fixed traffic decreased by 0.8% «Incoming voice traffic from Telkom declined by 0.4% year on y
Slide 31: Group operating expenses
Group operating expenses R milion 12,000 10,000 2002 Six-monthly operating expenditure Le 19.8% 16.3% 11,066 iL 2003 2004 2005 ® ist six months ® 2nd six months Mozambique impairment, DRC consolidation, SA contract gross connections, new subsidiaries consolidated 31
Slide 32: Group operating expenses
Group operating expenses H1 2004 H1 2005 15.6% 16,3% 54,9% Depreciation and amortisation " Payments to other network operators * Other direct network operating costs " Staff expenses * Marketing and advertising expenses « General administrative expenses 32
Slide 33: Group operating profit analysis
Group operating profit analysis QR, niry Dy country South Africa Tanzania DRC (100%) Lesotho Holding companies Adjusted operating profit before Mozambique Mozambique Vodacom Group (adjusted) Vodacom Group (statutory) Adjusted operating profit margin (%) % change Hi 2004; H1 2005 0s/04 Hi 2003 1,965
Slide 34: Strong cash generation
Strong cash generation Cash generated from operations 5,000 28.7% 4,606 ] 4,000 + 3,849 3,549 3,172 2,991 3,000 + 2,000 + 1,000 - 0 : - H1 2003 H2 2003 H1 2004 H2 2004 H1 2005 34
Slide 35: Group cash flow statements
Group cash flow statements extracts for the six months ended September 30, Hi Operating profit 1,838 ‘Bad debts, amortisation and disposals 123 Depreciation 1,085 Impairment of Mozambique assets = Working capital changes 126 Cash generated from operations 3,172 Net finance costs (paid) / received (2
Slide 36: Group cash flow statements
Group cash flow statements extracts for the six months ended September 30, Additions to property, plant and equipment (2,081) (1,001) (1,542) Other investing activities (334) (253) (99). Net cash flows from investing activities (2,415) (1,254) (1,641) Shareholder loans repaid = (920) = Net debt incu
Slide 37: Group balance sheets
Group balance sheets extracts as at ASSETS Norn-current assets Current assets Total assets EQUITY AND LIABILITIES Capital and reserves Minority interest Non-current liabilities Current labilities Total equity and liabilities Net debt : equity ratio (before dividends) Net debt ; equity ratio (after d
Slide 38: Net debt maturity profile
Net debt maturity profile SA finance leases 38 64 95 134 168 376 875 Vodacom Tanzania 82 96 120 28 = 82 (ieee) Vodacom Congo (100%) 854 545 - - - ™ 1,399 Vodacom Lesotho 4 - - - - - 8 att Debt excluding bank re a a 978 705 215 162 168 458 2,686 Less; net bank and cash bo bee eee balances 5 (754) Net
Slide 39: Debt composition
Debt composition Gross debt including bank overdrafts R4,499 million 31.7% 39.7% + Foreign denominated, ring-fenced © Foreign denominated, not ring-fenced = ZAR denominated, finance leases * ZAR denominated, other ~ Positive cash balances R2,567 million 39
Slide 40: Shareholder distributions
Shareholder distributions Dividends and interest on shareholders’ loans 2,500 5 2,000 = 1,500 - g E = 4,000 500 4 0+ - ; 2000 2001 2002 2003 2004 H1 2005 ® Interest ® Dividends »~ Strong and steady increase in dividends 40
Slide 41: Improved efficiencies
Improved efficiencies 3,000 + 2,845 South Africa Customers per employee 2,785 Tanzania DRC Lesotho Mozambique = 2003 = 2004 = H1 2005 41
Slide 42: Improved efficiencies
Improved efficiencies 30.0 » 25.0 + 20.0 10.0 - 5.0 Capex as % of revenue (statutory) 10.4 ” 3 oH = N i por N | ~ ha | ni hod 2000 2001 2002 2003 2004 Hi 2005 42
Slide 43: Questions?
= vodacom Questions?
Slide 44: Disclaimer
Disclaimer * This presentation has been prepared and published by Vodacom Group (Pty) Limited. * Vodacom Group (Pty) Limited is a private comeany and as such is not required by the Companies Act 61 of 1973, as amended, to publish its results. * Vodacom Group (Pty) Limited makes no guarantee, assuran
Slide 45: www.vodacom.co.za
www.vodacom.co.za & q@ i oan |