Vodacom Group Limited · JSE:VOD
Vodacom — H1 2014 Earnings Presentation
24 slides from Vodacom's earnings presentation, Nov 11, 2013
Slide 1: Vodacom Interim results presentation
11/11/2013 Vodacom Interim results presentation For the six months ended September 2013 Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated (‘relevant persons’). Any person who is not a relevant person
Slide 2: Highlights
11/11/2013 Highlights My5 highlights Group revenue 6.6% R36 688 million Group EBITDA Group data revenue 9.6% 29.0% R13 221 million My 5 R6 082 million Dividend ps HEPS 10.9% 11.3% 439 cents ps 395 cents ps 4 2
Slide 3: Operating Review
11/11/2013 Pressure on SA consumer spending Challenging environment Regulatory changes Inflationary pressure on costs Intensifying competition 5 Operating Review 3
Slide 4: South Africa and International performance
11/11/2013 South Africa: Successful execution of strategy • Improved service revenue trends to flat (2.9% excl MTR) – Revenue up 6.0% boosted by 41.2% increase in equipment sales • 927k increase in prepaid customers • Data revenue growth of 20.6% – Data as percentage of service revenue up to 21.5% (
Slide 5: Strategic review
11/11/2013 Strategic review Snapshot of our strategic objectives Customer Growth Operations People Reputation CUSTOMER GROWTH OPERATIONS PEOPLE REPUTATION • Best network • Grow data • Process • Best talent • Transforming efficiencies society • Best service • Grow • Best practices internationally • C
Slide 6: SA Customer: Best value and best network experience
11/11/2013 SA Customer: Delivering best value to customers Worry free pricing …Worry free pricing through simplified offerings Contract: Migration to integrated plans Prepaid: Simplified and bundled offers (‘000) (R) 1.54 Simplify 1 371 1 194 1 041 0.79 1.39 645 531 747 0.54 Mar-13 Jun-13 Sep-13 Sep
Slide 7: SA Customer: Smarter service; SA Growth: Mobile data
11/11/2013 SA Customer: Evolving to a smarter service Unmatched customer experience Best customer care Best online • #1 NPS, lead extended to 8 points 170% and self service • New format retail stores; improving customer satisfaction and contract connections • > 840k My Vodacom self-help App download
Slide 8: SA new services; International growth contribution
11/11/2013 SA Growth: Expanding new innovative services Handset financing deals Device insurance policies (‘000) (‘000) 52.4% 30.5% 351 469 535 259 338 H1 2013 H2 2013 H1 2014 H1 2013 H1 2014 <6% have insured their smart devices • No of handset deals up 52.4% • 30.5% increase in number of • Supporti
Slide 9: International Growth: Commercial execution and M-Pesa
11/11/2013 International Growth: Successful commercial execution Outgoing traffic Active data customers (million minutes) (‘000) 44.2% 25.6% 19.1% 19.3% 6 417 8 000 9 253 3 700 4 117 6 065 H1 2013 H2 2013 H1 2014 H1 2013 H2 2013 H1 2014 Active data customers Penetration • 44.2% increase in outgoing
Slide 10: Enterprise momentum; Operations efficiency focus
11/11/2013 Enterprise: Gaining momentum as we expand offerings Enterprise contribution Managed services revenue SA M2M connections (Rm) (‘000) R5.0bn 36.3% 24.1% 16.7% of Group service revenue 550 854 1 163 826 1 049 1 302 H1 2012 H1 2013 H1 2014 H1 2012 H1 2013 H1 2014 • 16.7% contribution to Group
Slide 11: People: Talented and diverse team; Mobiles for good
11/11/2013 People: Building a talented and diverse team Bursary and graduate Female leaders in waiting Developing learners programs Developing pipeline Raising the bar New talent • International secondments • Diversifying local skills • Advanced training programs • Driving transformation • Female de
Slide 12: Financial review
11/11/2013 Reputation: Trusted by our stakeholders • Voted #1 in Telecom’s sector and in Cellular Networks • Voted coolest Telecom’s provider in South Africa by Sunday Times youth survey • 1st in 2013 RepTrak Pulse survey with the best reputation amongst SA top 20 listed companies • 1st telecoms com
Slide 13: Group income statement
11/11/2013 Group income statement R million H1 2014 H1 2013 % change % change* Service revenue 30 213 29 632 2.0 3.2 Revenue 36 688 34 426 6.6 7.5 EBITDA 13 221 12 060 9.6 7.3 Depreciation and amortisation (3 301) (3 054) 8.1 Operating profit 9 998 8 970 11.5 Profit on sale of subsidiary - 224 n/a N
Slide 14: Quarterly service revenue growth; cost savings
11/11/2013 Quarterly service revenue growth trends SA revenue growth International service revenue growth 1.4 1.5 2.9 0.1 3.0 22.1 14.8 14.1 19.4 20.0 (0.2) (1.7) (2.0) (4.1) (12.9) (1.7) Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Reported growth Underlying growth Reported growth Underlying growth • Further MTR cut on
Slide 15: Group EBITDA growth; capacity for debt expansion
11/11/2013 Group EBITDA growth of 9.6%; top end of guidance Group EBITDA R million 7.3%* (10) 361 299 (289) 834 (34) 12 060 12 359 13 221 H1 2013 Trading and H1 2013 Trading FX MTR impact South Africa International Corporate H1 2014 EBITDA translation FX EBITDA1 EBITDA EBITDA2 and EBITDA 2 excl MTR
Slide 16: Taxation expense; Headline earnings per share
11/11/2013 Taxation expense in line with prior year Group tax Group tax reconciliation R million 37.8% R million H1 2014 Rate (%) Profit before tax 9 544 30.8% 30.5% Normal tax 2 672 28.0 Non-deductible interest 57 0.6 Withholding tax 70 0.7 Prior year adjustments 169 1.8 2 668 2 722 2 913 Other (55
Slide 17: Statement of financial position; PPE and intangibles
11/11/2013 Group statement of financial position R million H1 2014 FY 2013 Movement Assets Property, plant and equipment 28 830 27 741 1 089 Intangible assets 5 233 5 332 (99) Other non-current assets 1 028 1 361 (333) Current assets 22 716 21 157 1 559 Total assets 57 807 55 591 2 216 Equity and li
Slide 18: Free cash flow; shareholder returns
11/11/2013 Free cash flow Group free cash flow R million 9.6% 232 (2 125) 14.8% (5 020) 2.5% (396) (38) 7.4% (2 696) 13 221 11 328 6 308 3 178 H1 2014 Device Normal working Cash Cash capital Operating Net finance Net dividends Tax paid H1 2014 EBITDA financing capital & other generated from expendit
Slide 19: So what's next?
11/11/2013 Group Service Revenue EBITDA Capital Expenditure medium-term guidance Capital expenditure Low single digit service Mid to high single digit between 11% and 13% revenue growth EBITDA growth of Group revenue 37 So what’s next? 19
Slide 20: Strategic focus areas; The Vodacom of the future
11/11/2013 Strategic focus areas for the remainder of the year Customer Growth Operations People Reputation CUSTOMER GROWTH OPERATIONS PEOPLE REPUTATION • Pricing transformation • Increase smartphones • Cost programmes to • Continued investment • Deliver on targeted deliver flat opex in talent progr
Slide 21: Thank you
11/11/2013 Accelerated capital investment initiatives will be led by mobile Large Towns/ Townships/ Urban Centers/Cities Small Towns Rural areas Differentiated high speed data LTE services Backhaul fibre to support “3G where we have voice” 3G LTE/3G Deeper coverage to support densely populated towns
Slide 22: Appendices: Country data
11/11/2013 Appendices Country data South Africa Tanzania DRC Mozambique Lesotho Population (million) 53 49 69 26 2 GDP per capita* (USD) 6 470 656 305 578 1 070 GDP growth estimate* 2013 (%) 1.9 7.6 7.4 6.5 4.6 Estimated mobile penetration (%) 138 57 32 38 67 Ownership (%) 93.75 65 51 85 80 License
Slide 23: Definitions
11/11/2013 Impact of foreign exchange Revenue Average exchange rates YoY % growth H1 2014 H1 2013 % change H1 2014 Reported Normalised* USD/ZAR 9.74 8.20 18.8 South Africa 6.0 6.0 ZAR/MZN 3.10 3.43 9.6 International 9.2 16.5 ZAR/TZS 167.00 192.90 13.4 Group 6.6 7.5 EUR/ZAR 12.82 10.39 23.4 EBITDA Yo
Slide 24: Forward-looking statements
11/11/2013 Forward-looking statements This presentation which sets out the annual results for Vodacom Group Limited for the year ended 31 March 2013 contains 'forward-looking statements‘, which have not been reviewed or reported on by the Group’s auditors, with respect to the Group’s financial condi