Vodacom Group Limited · JSE:VOD
Vodacom — H1 FY2021 Earnings Presentation
37 slides from Vodacom's earnings presentation, Nov 16, 2020
Slide 1: Vodacom Group Interim results for the six months ended 30 September 2020
Vodacom Group Interim results for the six months ended 30 September 2020 . Ready?
Slide 2: Disclaimer
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 should not act or rely on this presentation or any of its contents. Information in the f
Slide 3: COVID-19 response: 6-point plan
COVID-19 response: 6-point plan 1 2 3 4 5 6 Expand Accelerate Enhance digital Enable digital Support strategies Drive Financial coverage and support to accessibility & adoption for for the “new inclusion network Governments literacy business and normal” through infrastructure (Health, for the most S
Slide 4: Our purpose is aligned with the new normal
Our purpose is aligned with the new normal Purpose We connect for a better future Digital Society Inclusion for All Planet Affordable internet Diversity Energy Mix for all (incl. Women) Water Digital solutions that Education Ecosystem Waste transform lives (incl. Youth) Biodiversity Financial inclus
Slide 5: Highlights | Results reflect the importance of our services
Highlights | Results reflect the importance of our services 7.8% +7.8% 7.0% +7.0% 12.3% R6.6bn R6.6bn 4.7%* (+4.7%)* 5.1%* (+5.1%*) 3.1%* Revenue Revenue Capex Capex EBITDA EBITDA Operating profit R47.8 billion 13.7% intensity 13.7% intensity R19.4 billion R19.4 billion R14.5 billion 119.6m 63.1m 53
Slide 6: Diversified Group | South Africa and FX mix drive growth
Diversified Group | South Africa and FX mix drive growth Group service revenue1 Group EBITDA1 Group customers2 R3.0 billion R1.5 billion 5.1 million 14.4% 14.7% 8.8% 15.7% 15.5% 5.8% 32.3% 5.5% -4.8%* -7.3%* 25.2% 24.9% 5.8% 19.9% 18.3% -1.9% -5.2%* -8.1%* 35.8% -2.3% 31.9% 12.1% 7.1% 9.9% 60.4% 60.
Slide 7: Expanding the ecosystem | Capturing more opportunities
Expanding the ecosystem | Capturing more opportunities Core Accelerators Opportunity Vodacom mobile Unified communications VodaTrade VideoPlay mHealth Africa and wholesale Vodacom fibre Cloud and hosting Airtime advance MyMuze mAgriculture Advance Me Just 4 You SD-WAN Lipa-Kwa M-Pesa PlayInc e-Schoo
Slide 8: Group financial services | Accelerated platform and product growth
Group financial services | Accelerated platform and product growth Platform growth Revenue growth 55 million R9.2 billion financial services customers1 financial services revenue1 Million R billion 12.6% 54.8 1.6 8.9 48.7 1.0 1.2 8.0 9.2 7.9 3.1% 1H20 1H21 1H20 1H21 1 M-Pesa South Africa financial s
Slide 9: ESG | Digital society, inclusion for all, mindful of our planet
ESG | Digital society, inclusion for all, mindful of our planet To improve the next 100 million lives and halve our environmental impact by 2025 Environmental Governance SA emissions per TB of data traffic on our Board structure of 12 network • 5 Independent, non-executive Emissions in mtCO2 27.6 •
Slide 10: Highlights | South Africa – Delivering on reasons to consume
Highlights | South Africa – Delivering on reasons to consume Reported Key indicator 1H21 Key milestones % change Service revenue (Rm) 27 618 7.1 Underlying service revenue growth of 6.5%1 and EBITDA growth of 7.4%2 Customer service revenue (Rm) 22 709 6.3 Work from home solutions Vodacom Business re
Slide 11: South Africa | New services contribution gaining momentum
South Africa | New services contribution gaining momentum Service revenue contribution R billion New services contribution to service revenue 2.3% 7.6% % contribution to YoY Rm service revenue % change 7.1 12.9 IoT revenue 562 2.0 45.7 Fixed revenue1 1 274 4.6 19.3 Digital lifestyle services 854 3.1
Slide 12: South Africa | Leveraging AI into all aspects
South Africa | Leveraging AI into all aspects Customer profitability Churn analytics Interactions Profile Transactions Customer base analytics Identity Service Campaigns EBU single view Location Sentiment Upgrade opportunities Advertising Marketing Loyalty Loyalty base analytics Channel interactions
Slide 13: South Africa | Financial Services | Evolution for a revolution
South Africa | Financial Services | Evolution for a revolution Single platform Trade Save Pay Lend Insure Consumer SME/ Market place Short Term Acquiring Enterprise • Prepaid • Physical POS • Device Handset • Integrated Save SUPER APP Finance POS Entertainment • Airtime Advance • VodaTrade and conte
Slide 14: Highlights | International – Platform growth supported by COVID-19 interventions
Highlights | International – Platform growth supported by COVID-19 interventions Reported Normalised* Key indicator 1H21 Key milestones % change % change Service revenue (Rm) 11 409 5.8 -5.2 M-Pesa traction in Q2 Data revenue1 (Rm) 2 145 19.1 4.8 Value of transactions increased 23% qoq to $4.3 billi
Slide 15: M-Pesa | P2P intervention supporting financial inclusion
M-Pesa | P2P intervention supporting financial inclusion International M-Pesa revenue Safaricom R million 19.4% 40.3% -2.5% -14.5%* 30.3% 70.2% contribution to of customers contribution to of customers service revenue using M-Pesa 14.1% service revenue using M-Pesa -1.4%* M-Pesa customers up M-Pesa
Slide 16: Highlights | Safaricom – Platform growth supports better 2Q21
Highlights | Safaricom – Platform growth supports better 2Q21 1H21 1H21 LC % ZAR % Key Key indicator (KES’bn) (Rm) change change milestones Service revenue 118.4 19 211 -4.8 8.8 2Q21 run-rate Service revenue 2Q21: -1.2% vs Data revenue 22.2 3 606 14.1 30.4 1Q21: -8.4% FTTH M-Pesa revenue 35.8 5 809
Slide 17: Financial Review
Financial Review . Ready?
Slide 18: Group income statement | Strong results
Group income statement | Strong results Reported Normalised* R million 1H21 1H20 % change % change Revenue 47 844 44 389 7.8 4.7 Service revenue 38 515 36 003 7.0 3.4 EBITDA 19 433 18 166 7.0 5.1 Depreciation and amortisation (7 565) (6 967) 8.6 Net profit from associate and joint ventures 2 571 1 6
Slide 19: Service revenue | South Africa outperforms expectations
Service revenue | South Africa outperforms expectations Group South Africa International R million / % 3.4%* R million / % R million / % 7.6% 7.7% 5.8% 6.4% 6.4% 5.7% 4.6% 4.6% 6.4% 6.7% 10.5% 10.7% 9.0% 5.2% 4.1% 4.6% 1.5% 3.8% 3.9% 2.6% 7.1% 3.5% -5.3% -5.2% 18 899 18 452 18 761 19 754 13 567 13 3
Slide 20: Group expenses | Tightly controlled to manage operational leverage
Group expenses | Tightly controlled to manage operational leverage Group expenses South Africa expenses R million R million 1H21 1H20 Reported Normalised* 3.9ppts 6.9% % change % change 3.0% Total expenses1 28 385 26 212 8.3 4.8 21 427 1H21 Adjusted Rain 1H21 expenses roaming costs Expenses Of which
Slide 21: Group EBITDA | South Africa revenue growth drives operational leverage
Group EBITDA | South Africa revenue growth drives operational leverage Group South Africa International R million / % R million / % R million / % 7.0% 5.1%* 9.9% 7.4%# 40.9% 40.6% -1.9% -8.1%* 41.7% 41.0% 38.6% 35.9% 18 166 19 433 13 916 15 294 4 298 4 218 1H20 1H21 1H20 1H21 1H20 1H21 EBITDA EBITDA
Slide 22: Cash flow | Accelerated investment funded by EBITDA growth and Safaricom dividend
Cash flow | Accelerated investment funded by EBITDA growth and Safaricom dividend Group free cash flow R million Seasonal outflow 7.0% 53.6% Capex creditors reflect network prioritisation (4 336) 3.2% Safaricom FY20 dividend received in September (6 551) 49 (2 069) 322 -8.4% 17.9% -44.7% >200.0 92.1
Slide 23: HEPS | Growth underpinned by core, boosted by tax rate adjustment
HEPS | Growth underpinned by core, boosted by tax rate adjustment Headline earnings per share Cents 6.1% One-offs after tax and non-controlling interests: 9.6pp 0.7pp 5.4pp 15.7% 24 44 4 +15.6% − Deferred tax due to rate change in Kenya of R705 million − Loyalty programme provision in the current ye
Slide 24: Shareholder returns | Dividend growth reflects EBITDA growth
Shareholder returns | Dividend growth reflects EBITDA growth Total dividend declared Dividend policy and interim dividend calculation R million / % 14 030 14 595 90% of pre-Safaricom R6 936 million @ 90% R6 243 million headline earnings 7 343 7 435 1 101 Flow through of Safaricom 7 252 6 977 7 631 c
Slide 25: Balance sheet | Comfortable net debt to EBITDA ratio
Balance sheet | Comfortable net debt to EBITDA ratio Net debt/EBITDA R million / times • Conservative balance sheet gearing Net debt headroom • Net debt / EBITDA 1.5 reduced from 1.1x to EBITDA 0.9x headroom 1.1 0.9 38 Sensitivity analysis: 0.9 21 Assuming 1.5x ratio, allows for approximately: 14 •
Slide 26: Gross debt | Balanced debt profile
Gross debt | Balanced debt profile Maturity profile • Short-term debt maturities skewed to ZAR R billion / % denominated Vodafone Term Loans 35.0% 24.0% 20.0% 14.0% • Payment profile spread over 5 years 7.0% 9.9 7.0 17.8 3.7 12.2 <1yr 1-2 yrs 2-3 yrs 3-4 yrs > 4yrs Reported Repayment • Low foreign d
Slide 27: Medium-term targets reinstated
Medium-term targets reinstated Entering the crisis Operating in the new normal Targets postponed Targets reinstated • Economic downturn affecting • Lockdowns easing, shape of consumers and business recovery a risk • Unknown impact on business • Strong interim results • Changing behaviour • Capturing
Slide 28: Medium-term targets and FY21 outlook
Medium-term targets and FY21 outlook Targets FY21 outlook Group service revenue South Africa Preparing for pressure on the consumer wallet in Mid-single digit the second half Group operating profit International Scope for improvement as trading and Mid-single digit economies re-open in the second ha
Slide 29: Priorities
Priorities Spectrum COVID -19 Supporting recovery Platform Digital acceleration Vodacom Financial Data Services growth monetisation Vodacom Group Interim results | 30 September 2020 29
Slide 30: Q&A
Q&A Please type your questions on the webcast portal
Slide 31: Finance charges and debt | Average cost of debt reduced
Finance charges and debt | Average cost of debt reduced Group net finance charges Group net debt R million 1H21 1H20 % R million 1H21 FY20 change Finance income 443 456 -2.9 Cash balances including overdraft 13 983 16 191 Finance cost (2 161) (2 196) -1.6 Current borrowings (9 783) (3 707) Net finan
Slide 32: Group tax | ETR impacted by Safaricom and change in Kenyan tax rate
Group tax | ETR impacted by Safaricom and change in Kenyan tax rate Group tax charge and effective tax Reconciliation of SA tax rate to effective tax rate R million / % % 5.5% 1H21 Statutory tax rate 28.0% Net profit from associate and JVs -5.7ppts Irrecoverable foreign 1.4ppts taxes 27.3% Unrecogni
Slide 33: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom PopulationŦ (million) 59.3 59.7 89.6 31.3 2.1 53.8 GDP per capitaŦ (USD) 6 758 963 408 548 1 342 1 224 GDP growth estimateŦ 2020 (%) -8.3 1.2 -1.3 0.3 -5.0 1.1 Ownership (%) 100 75 51 85 80 34.94¢ 2026/2028/ Licence expiry period 20
Slide 34: Impact of foreign exchange
Impact of foreign exchange Revenue Average YTD exchange rates YoY% growth 1H21 Reported Normalised* 1H21 1H20 % changed USD/ZAR 17.43 14.54 19.9 South Africa 8.2 8.2 ZAR/MZN 4.01 4.29 -6.5 International 5.4 -5.7 ZAR/TZS 133.19 158.29 -15.9 Group 7.8 4.7 EUR/ZAR 19.77 16.24 21.7 ZAR/KES 6.16 7.05 -12
Slide 35: Definitions
Definitions Customers Data customers M-Pesa customers ARPU Customers are based on the total Data customers are based on the number of M-Pesa customers are based on the Total ARPU is calculated by number of mobile customers using any unique users generating billable data traffic number of unique user
Slide 36: Forward-looking statements
Forward-looking statements This presentation which sets out the interim results for Vodacom Group Limited for the six months ended 30 September 2020 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
Slide 37: More information
More information Visit our website for more information http://www.vodacom.com 2021 upcoming dates 3Q21 results 2 February 2021 FY21 results 17 May 2021 1Q22 results 29 July 2021 1H22 results 15 November 2021 Contact us Follow us on social media VodacomIR@vodacom.co.za @Vodacom Facebook.com/vodacom