Slide 1: FY21 interim results
families communities hospitals businesses re: MUrSeS everyone schools governm«
Slide 2: Agenda & contents
Agenda & contents H1 Nick Read p3 highlights Chief Executive Financial Margherita Della Valle p6 performance Chief Financial Officer We connect for a better future Strategy Nick Read p18 The leading connectivity provider in Europe update Chief Executive & Africa enabling an inclusive & sustainable d
Slide 3: H1 highlights: Resilient performance & reiterating FY21 guidance
H1 highlights ⫶ Resilient performance & reiterating FY21 guidance Service revenue growth Adjusted EBITDA Free cash flow Ex-roaming & visitor revenue FCF Pre-spectrum & restructuring 7.5 1.5% Guidance pre-spectrum & restructuring 1.6% 1.5% 6 7 €5.3bn €7.1bn 1.0% €7.0bn >€4.5bn €6.9bn 5 0.8% 0.7% 0.5%
Slide 4: H1 highlights: Delivering our strategic priorities
H1 highlights ⫶ Delivering our strategic priorities Deepening Accelerating Improving Optimising customer digital asset the engagement transformation utilisation portfolio • 8th consecutive qtr of • Accelerated cost • Mobile network • Combination of customer loyalty savings in H1 with sharing agreeme
Slide 5: Two years into our long-term transformation
Two years into our long-term transformation A We are delivering our strategic priorities at pace to reshape Vodafone… …but we have more to do to drive shareholder returns B Focused on growth with unique capabilities to create sustainable value H1 FY21 Interim Results 5
Slide 6: Financial performance
Financial performance Margherita Della Valle Chief Financial Officer H1 FY21 Interim Results 6
Slide 7: Financial summary: Resilient performance in line with expectations
Financial summary ⫶ Resilient performance in line with expectations H1 FY20 H1 FY21 Organic €m €m change Group service revenue 18,544 18,418 (0.8%) • COVID-19 impacting service revenue and Adjusted EBITDA 7,105 7,023 (1.9%) EBITDA EBITDA margin 32.4% 32.8% • European net opex savings supporting Cape
Slide 8: Trading performance: Good underlying momentum
Trading performance ⫶ Good underlying momentum YoY quarterly service revenue growth 1.6% 1.1% Europe Group 1.6% • Group underlying growth back to Q4 FY20 0.6% 0.1% 0.7% 0.8% exit rate -0 .4% (0.4)% (0.4)% (1.4)% (1.4)% (1.3)%1 • Europe ex. roaming & visitor broadly flat -0 .9% -1 .4% (1.8)% -1 .9% (
Slide 9: COVID-19 update: Impact and evolution
COVID-19 update ⫶ Impact and evolution 1.0 Q1 to Q2 service revenue growth movement Low travel volumes impacting roaming revenue 0.5 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 0.0 0% 0.2% (0.4%) -0.5 (1.3%) -20% -1.0 0.7% -40% -1.5 -60% Q1 FY21 Roaming Business Prepaid Q2 FY21 SR growth /visitors /Ot
Slide 10: Germany: Driving cable network penetration and ARPU accretion
Germany ⫶ Driving cable network penetration and ARPU accretion Service revenue growth 41% of Group EBITDA1 2.0% 2.0% Q2 H1 21 H1 21 growth €m growth 1.5% 1.8% 1.8% 1.5% Service revenue (0.1%) 5,723 (0.1%) Retail 1.3% 1.0% 1.2% 1.0% Adjusted EBITDA 2,844 1.3% Retail ex. roaming 0.9% & visitor 0.5% 0.
Slide 11: Germany: Liberty integration supporting EBITDA growth
Germany ⫶ Liberty integration supporting EBITDA growth H1 EBITDA bridge (€m) Retail transformation +1.3% 3,000 YoY % broadband sales on Gigabit 2,900 44 83 45% 2,844 2,800 2,807 (54) Unitymedia Vodafone (36) 2,700 footprint footprint c.20pp 2,600 35% 2,500 VOD Ex. Unitymedia 2,400 footprint footprin
Slide 12: UK: Commercial momentum; Italy: Pricing pressure
Italy ⫶ Pricing pressure UK ⫶ Commercial momentum 11% of Group EBITDA 9% of Group EBITDA Q2 H1 21 H1 21 Q2 H1 21 H1 21 growth €m growth growth €m growth Service revenue (8.0%) 2,249 (7.2%) Service revenue (0.5%) 2,401 (1.2%) Adjusted EBITDA 800 (11.1%) Adjusted EBITDA 636 (2.3%) Vodafone MNP (‘000)
Slide 13: Spain: Competing effectively; Other Europe: Prepaid improvement
Spain ⫶ Competing effectively Other Europe ⫶ Prepaid improvement 7% of Group EBITDA 12% of Group EBITDA Q2 H1 21 H1 21 Q2 H1 21 H1 21 growth €m growth growth €m growth Service revenue (1.8%) 1,880 (4.4%) Service revenue (1.8%) 2,411 (2.4%) Adjusted EBITDA 488 6.0% Adjusted EBITDA 870 (2.2%) Net cust
Slide 14: Vodacom: Strong data growth; VodafoneZiggo: Performing well
Vodacom ⫶ Strong data growth VodafoneZiggo ⫶ Performing well 13% of Group EBITDA 50% joint-venture Q2 H1 21 H1 21 growth €m growth 4.0% Total revenue growth* Service revenue 3.2% 1,949 2.3% 3.5% Adjusted EBITDA 891 3.6% 3.0% 2.5% 12 0% 16.0 2.0% 101% 87% 3.3% 2.9% 14.0 1.5% 10 0% 4G device 81% 12.0
Slide 15: Adjusted EBITDA: Accelerated cost performance
Adjusted EBITDA ⫶ Accelerated cost performance Europe €0.3bn €1.2bn 7.4 Rest of world below inflation €1.1bn €0.8bn 7.2 €0.4bn €7.2bn (0.3) (0.1) FY 19 FY 20 H1 21 3yr 7.0 0.2 target €7.0bn • €1.1bn of original ≥€1.2bn net European1 6.8 opex target achieved 6.6 • >10% YoY reduction in customer care
Slide 16: Free cash flow: H1 cash generation consistent with annual phasing
Free cash flow ⫶ H1 cash generation consistent with annual phasing -2 .0 -1 .0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Adjusted EBITDA €7.0bn EBITDA Interest €1.0bn & tax Working capital & other €2.3bn • Working capital outflow – in line with prior years Dividends €0.2bn - timing of capex spend, regulat
Slide 17: Guidance: Reconfirming full year outlook with increased confidence
Guidance ⫶ Reconfirming full year outlook with increased confidence 15 .5 FY21 Adjusted EBITDA guidance FY21 FCF (pre-spectrum) guidance 6.0 15 .0 5.8 €14.5bn €14.4-14.6bn 5.6 €5.2bn >€5bn 5.4 14 .5 5.2 5.0 14 .0 4.8 4.6 13 .5 4.4 4.2 13 .0 4.0 Re-based Roaming/visitor Other COVID Underlying FY21 Gu
Slide 18: Strategy update
Strategy update Nick Read Chief Executive
Slide 19: Delivering our strategic priorities at pace to reshape Vodafone
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone My first presentation as CEO in Nov’18 But we still have more to do to drive shareholder returns H1 FY21 Interim Results 19
Slide 20: Customer engagement: Delivering more consistent commercial performance
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone Customer engagement ⫶ Delivering more consistent commercial performance Launched converged customer offer in all European markets Launched ‘value’ brands in key markets European NGN broadband customers (#m) Active ‘value’ brand cust
Slide 21: Digital transformation: Best-in-class operational efficiency
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone Digital transformation ⫶ Best-in-class operational efficiency through standardisation Invested in class-leading digital distribution Launched AI customer care, reducing contact centre volume 25 % Proportion of EU4 gross adds via dig
Slide 22: Asset utilisation: Efficient use of capital through network sharing
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone Asset utilisation ⫶ Facilitating efficient use of capital through network sharing Created Vantage Towers with 3 priorities Agreed network sharing across Europe Latest Country Partner Sharing status update Passive sharing with DT & T
Slide 23: Vantage Towers: Leading European tower infrastructure operator
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone Vantage Towers ⫶ Created a leading European tower infrastructure operator Ensuring operational independence & flexibility • Clear, detailed & arm’s length MSAs in place • Management incentivised to commercialise third- party tenancy
Slide 24: Portfolio optimisation: Significant & rapid execution
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone Portfolio optimisation⫶ Significant & rapid execution to enable strategic priorities Objective 1 ⫶ Focus on Europe & Africa Country Actions taken Objective Consolidated our holdings in Safaricom and M-Pesa to be • Strategic focus no
Slide 25: Liberty acquisition: Transformation into Europe's leading connectivity provider
A ⫶ Delivering our strategic priorities at pace to reshape Vodafone Liberty acquisition ⫶ Transformation into Europe’s leading connectivity provider Created Germany’s leading converged challenger Enabling the Gigabit society in Germany Q1 FY20 9.4m 3.4m 18.3m 9.2m 55 million SIM connections Q2 FY21
Slide 26: Focused on growth with unique capabilities to create sustainable value
B ⫶ Focused on growth with unique capabilities to create sustainable value Digital Inclusion Planet Our purpose Society for All 1 2 3 4 5 Best Co-best Gigabit Social Contract Our growth levers Simplified & connectivity Leading digital connectivity scaled Group shaping industry products & architectur
Slide 27: Best connectivity products & platforms: European Consumer
B ⫶ Focused on growth with unique capabilities to create value Consistent Ongoing 1 ⫶ Best connectivity products & platforms ⫶ European Consumer revenue growth margin expansion Great core connectivity products building a converged base + Unique connectivity platforms & “best on” Vodafone Consumer Io
Slide 28: Best connectivity products & platforms: African Consumer
B ⫶ Focused on growth with unique capabilities to create value Consistent Ongoing 1 ⫶ Best connectivity products & platforms ⫶ African Consumer revenue growth margin expansion Africa ⫶ leading data & payments provider New Vodacom ‘super-app’ >170m customers • Technology partnership with Alipay No. 1
Slide 29: Best connectivity products & platforms: Vodafone Business
B ⫶ Focused on growth with unique capabilities to create value Consistent Ongoing 1 ⫶ Best connectivity products & platforms ⫶ Vodafone Business revenue growth margin expansion High growth challenger opportunity Strategic partners enabling growth B2B revenue mix by product type Digital & Managed Ser
Slide 30: Co-best Gigabit connectivity infrastructure
B ⫶ Focused on growth with unique capabilities to create value Consistent Disciplined 2 ⫶ Co-best Gigabit connectivity infrastructure revenue growth capital allocation ‘5G built right’ to support decade of data Strong spectrum holdings* 140m marketable NGN homes in Europe demand 16 0 • 3-6 Mbps 136m
Slide 31: Leading digital architecture: Telco as a Service model
B ⫶ Focused on growth with unique capabilities to create value Ongoing Disciplined 3 ⫶ Leading digital architecture – Telco as a Service model margin expansion capital allocation • Open digital architecture TaaS Platform Omnichannel OnePlatform driving simplification • Common software with TOBi open
Slide 32: Simplified & scaled Group operating model
B ⫶ Focused on growth with unique capabilities to create value Ongoing Strong 4 ⫶ Simplified & scaled Group operating model margin expansion cashflow conversion Repeatable processes enable significant productivity gains Network Network Sales & Customer Billing & Procurement ‘Last mile’ management op
Slide 33: Social Contract shaping industry structure to improve returns
B ⫶ Focused on growth with unique capabilities to create value Disciplined 5 ⫶ Social Contract shaping industry structure to improve returns capital allocation Our policy Vodafone’s Leading the discussion objectives societal recovery actions with tangible results Healthy, sustainable market structur
Slide 34: Our value model: Capital allocation framework
B ⫶ Focused on growth with unique capabilities to create value Disciplined Our value model ⫶ Our capital allocation framework to drive shareholder returns capital allocation Long-term portfolio management principles Capital allocation priorities 8 Transformation, 1 €1.2bn 1 €1.2bn 7 €1.4bn Focus Inv
Slide 35: Our growth levers: A stronger Vodafone
B ⫶ Focused on growth with unique capabilities to create value Our growth levers ⫶ A stronger Vodafone delivering the best products & platforms Phase 1 ⫶ FY19-FY21 Phase 2 ⫶ FY22 & beyond Nov’ Reshaping Vodafone as a stronger telco Group Driving shareholder returns through efficiency & growth Deepen
Slide 36: Join us in 2021 for a closer look at key growth levers
B ⫶ Focused on growth with unique capabilities to create value Join us in 2021 for a closer look at key growth levers Nov’ Vodafone Business virtual investor briefing 18 Vinod Kumar (CEO Vodafone Business) + team Digital first – no travel required March present deep-dive into Business operations & s
Slide 37: Conclusions: Executing at pace, focused on growth
Conclusions ⫶ Executing at pace, focused on growth to create value Resilient financial performance + reaffirmed FY21 guidance Deepening Accelerating customer digital engagement transformation Improving Optimising We are delivering our strategic priorities at pace to reshape Vodafone asset the utilis
Slide 38: Appendices
I Our regional footprint p39 II Definitions p40 III Supporting information p41 IV Statutory results summary p42 Appendices V Financial leverage p43 VI Capital expenditure p44 VII Importance notice p45 H1 FY21 Interim Results 38
Slide 39: Appendix I: Our regional footprint
2 ⫶ We are the Appendix I ⫶ Our leading regional connectivity footprintprovider in Europe & Africa. Europe ⫶ converged connectivity leader Africa ⫶ leading data & payments provider 40m 5m 4m 17m 2m 31m <1m <1m 11m 4m <1m 38m 8m 3m 9m 14m <1m <1m 19m 15m 3m 2m <1m 13m 5m 3m 8m <1m 24m 4m 1m 1m 46m #m
Slide 40: Appendix II: Definitions
Appendix II ⫶ Definitions Term Definition Term Definition Adds Customer additions within a defined period MTM Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price AI Artificial intelligence / machine learning of the ass
Slide 41: Appendix III: Supporting information
Appendix III ⫶ Supporting information 1. Quarterly revenue The information opposite is available in spreadsheet format 2. Adjusted income statement via investors.vodafone.com 3. Segmental information 4. Income statement information 5. Cash flow 6. Mobile customers 7. Fixed-line broadband customers 8
Slide 42: Appendix IV: Statutory results summary
Appendix IV ⫶ Statutory results summary Income statement (€m) H1 FY21 H1 FY20 Change (%) Cash Flow H1 FY21 H1 FY20 Change (%) Revenue 21,427 21,939 (2.3) Adjusted EBITDA 7,023 7,105 (1.2) - Service revenue 18,418 18,544 (0.7) Capital additions (3,363) (3,000) - Other revenue 3,009 3,395 (11.4) Adjus
Slide 43: Appendix V: Financial leverage
Appendix V ⫶ Financial leverage Net debt progression (€ billion) Bond maturity profile (€ billion) 45 .0 3.0x 20 .0 Net cash position 44 .0 18 .0 Vantage Senior 2.8x 1.1 IPO 16 .0 Hybrid 43 .0 1.2 42 .0 0.5 14 .0 4.3 (>4.5) 41 .0 12 .0 42.2 40 .0 1.2 10 .0 44.0 8.0 39 .0 13.6 2.0 11.2 6.0 38 .0 9.4
Slide 44: Appendix VI: Capital expenditure
Appendix VI ⫶ Capital expenditure H1 20 H1 21 YoY €m €m ∆ Network & IT maintenance CPE 781 887 14% • Capex execution not impacted by COVID-19 (12%) Network capacity & coverage 894 1,110 24% Maintenance • Additional investment in capacity to support Transformation Transformation 386 (26%) 370 (4%) ne
Slide 45: Appendix VII: Important notice
Appendix VII ⫶ Important notice By accessing these slides, you agree to be bound by the following conditions. You may not Forward-looking statements are sometimes, but not always, identified by their use of a date in disseminate these slides or any related recording, in whole or in part, without the
Slide 46: Investor Relations contacts and upcoming events
Group Investor investors.vodafone.com Upcoming events Relations ir@vodafone.co.uk 1 Kingdom Street, London, W2 6BY 17 Vantage Towers Nov virtual CMD Matthew Johnson Director matthew.johnson@vodafone.com Group IR Daniel Morris Deputy Director Group IR daniel.morris@vodafone.com 3 Q3 Trading Update Fe