Slide 1: Interim Results for the six months ended 30 September 2010
INTERIM RESULTS for the six months ended 30 September 2010 8 November 2010
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. contents Information
Slide 3: Highlights
Highlights g g s Interim results for the six months ended 30 September 2010
Slide 4: Growth across all key measures
Growth across all key measures 4.4%1 41.1% 5.4%2 Group service revenue Group data revenue Group EBITDA R26 094 million R2 865 million R9 789 million 21.8% 38.4% 63.6% Group OpFCF Headline earnings per share Dividends per share R6 560 million 303 cents 180 cents 1. Growth in constant currency 2. Norm
Slide 5: High demand for mobile broadband services
High demand for mobile broadband services SA data bundle users SA mobile connect cards up Thousand 700 1 853 600 46.1% 1 633 500 400 to 916 000 300 1 482 200 220 100 144 151 0 Q4 2010 Q1 2011 Q2 2011 SA data users 70.0 Data bundle users Net additions Thousand/% 60.0 7 913 50.0 7 003 6 685 40.0 30.0
Slide 6: Widening access to mobile internet
Widening access to mobile internet Expanding smartphone portfolio BlackBerry® TorchTM, Samsung Galaxy S and iPhone 4 launched Mobile internet availability expanding 600 000 devices sold to date with Opera Mini Increasing access to smarter phones Vodafone 546 (QWERTY) retail R699 Vodafone 543 (touch
Slide 7: Securing data network leadership in South Africa
Securing data network leadership in South Africa • Expanding 3G coverage SA network traffic Converted to petabytes – 351 3G base stations added – 3G population coverage of 57.0% 54.7 50.3 • Higher network capacity 3.6 44.6 – All 3G sites it 1414.4Mbps 4Mb – 1 800 HSPA+ sites 39.1 2.8 2.3 – RAN swap
Slide 8: Customer growth in South Africa
Customer growth in South Africa SA prepaid customers SA contract customers Thousand Thousand/% 1 000 20 4 799 4 672 900 4 497 4 349 18 800 16 700 15.7 15.4 14 600 14.0 12.5 12 500 400 10 June July August September Q3 2010 Q4 2010 Q1 2011 Q2 2011 2010 2010 2010 2010 Gross connections Churn Contract c
Slide 9: New value offerings driving higher usage
New value offerings driving higher usage SA prepaid customer ARPU and MOU R/minutes 200 180 90 160 76 74 79 140 120 100 80 60 79 40 55 53 59 20 0 Q3 2010 Q4 2010 Q1 2011 Q2 2011 ARPU MOU SA contract customer ARPU and MOU R/minutes 500 450 400 455 436 350 411 411 300 250 200 220 214 205 207 150 100 5
Slide 10: Growth returns in International operations
Growth returns in International operations • Positive revenue growth International customers Million Ç 15.8% • C t Customer th remains growth i strong t 15.5 13.4 • Demand high for voice services 10.4 • Data g growth boosted by y M-PESA 1.9 • Strong cost focus 1.3 1.4 H1 2009 H1 2010 H1 2011 Custome
Slide 11: Improving performance in Tanzania
Improving performance in Tanzania Tanzania service revenue YoY growth Tanzania MOU/PPM % Minutes/TZS 132 57 13.8 (1.8) 35 (10.8) (19.0) 55 Q3 2010 Q4 2010 Q1 2011 Q2 2011 September 2009 (month) September 2010 (month) MOU Price per minute Tanzania customer growth Tanzania M-PESA Thousand/% 90 TZS 80
Slide 12: Strategy to deliver further growth
Strategy to deliver further growth Grow core mobile businesses Network Value Accessibility Affordability Leadership in broadband Customer obsession Develop converged ICT solutions Service Innovation Availability Applicability Selective expansion in sub-Saharan Africa Efficient and lean operations 11
Slide 13: Financial review
Financial a c a review e e Interim results for the six months ended 30 September 2010
Slide 14: Group income statement
Group income statement R million H1 2011 H1 2010 % change Service revenue 26 094 25 531 2.2 Revenue 29 516 28 675 2.9 EBITDA 9 788 9 519 2.8 Operating profit before impairment losses 7 094 6 896 2.9 Impairment losses (33) (3 189) (99.0) Operating profit after impairment losses 7 061 3 707 90.5 Net f
Slide 15: Solid SA service revenue growth; International trends encouraging
Solid SA service revenue growth; International trends encouraging SA service revenue International service revenue1 R million/% R million/% 13 11 604 11 395 11 1 330 11 191 1 240 1 179 10 969 1 140 4.5 9 (1.0) 9.0 8.6 86 8.2 (10.8) (10.4) 7.6 7 7.1 (16.2) (15.9) 5 4.9 (32.2) 4.4 (37.8) 3 Q3 2010 Q4
Slide 16: Reduction in interconnect revenue largely offset by data
Reduction in interconnect revenue largely offset by data Group service revenue growth by category R million 249 26 094 834 25 531 (890) 149 221 H1 2010 Mobile interconnect Mobile voice Mobile messaging Mobile data Other service H1 2011 service revenue revenue service revenue 15
Slide 17: Impact of mobile termination rates
Impact of mobile termination rates • MTR rates changed from 1 March 2010 SA interconnect – Peak dropped from R1.25 to R0.89 R million H1 2011 H1 2010 % change • MTR impact in first six months Interconnect 3 340 4 075 (18.0) – R800 million in revenue revenue – R260 million illi iin EBITDA % of servic
Slide 18: Group operating costs
Group operating costs Group operating costs1 by segment Group operating costs1 by category R million H1 2011 % change R million H1 2011 % %3 South Africa 16 492 5.4 Direct costs 13 495 0.8 2.8 International2 3 414 (8.2) Staff expenses 2 242 4.6 7.9 Corporate/eliminations (157) (2.6) Marketing and 92
Slide 19: Cost efficiency programme on track
Cost efficiency programme on track Direct costs I Improve contribution t ib ti margin i 1ppt improvement R13.5bn Other operating Cost growth contained below Pressure in SA on R500 million expenses revenue growth transmission in H1 R3.1bn Cost efficiency programme Staff Target stable headcount for 20
Slide 20: Group EBITDA margin stable
Group EBITDA margin stable EBITDA margin % 1.2 (0.3) (0.3) (0 5) (0.5) (0.1) 33.2 33.2 H1 2010 South Africa1 International 2 Translation foreign Trading foreign Other H1 2011 EBITDA margin exchange exchange EBITDA margin 1. Excluding trading foreign exchange 2. Excluding trading foreign exchange and
Slide 21: Group finance charges reduced due to lower average debt
Group finance charges reduced due to lower average debt Group net debt Group net finance charges R million H1 2011 H1 2010 R million H1 2011 % change Cash and cash equivalents 938 729 Net finance costs (364) 52.2 Bank borrowings (2) (9) Gain on remeasurement of 32 113 8 113.8 loans Debt (12 721) (15
Slide 22: Movement in Group net profit
Movement in Group net profit Net profit analysis R million 131 4 302 (260) 725 765 (71) (236) 3 248 H1 2010 Normalised MTR impact Foreign exchange Depreciation, Net finance Taxation H1 2011 adjusted 1 net profit EBITDA excluding impact amortisation and charges and other adjusted 1 net profit MTR imp
Slide 23: Adjusted headline earnings per share increased 11.1%
Adjusted headline earnings per share increased 11.1% H1 2010 headline earnings per share H1 2011 headline earnings per share Cents per share Cents per share Adjusted HEPS 271 Ç 11.1% Adjusted HEPS 301 DRC deferred tax Loan and loan (52) remeasurement 2 remeasurement HEPS 219 Ç 38.4% HEPS 303 Impairm
Slide 24: Group statement of financial position
Group statement of financial position R million H1 2011 FY 2010 Movement Assets Property, plant and equipment 20 233 21 383 (1 150) Intangible assets 6 376 6 673 (297) Other non-current assets 1 160 1 075 85 Current assets 13 330 12 560 770 Total assets 41 099 41 691 (592) Equity and liabilities Tot
Slide 25: Movement in PPE and intangible assets
Movement in PPE and intangible assets Property, plant and equipment Intangible assets R million R million 1 806 (2 140) 234 (533) 6 673 21 383 (131) (685) (136) 138 6 376 20 233 March 2010 Net Depreciation Foreign Other September March 2010 Net Amortisation Foreign Other September net book additions
Slide 26: Capital expenditure
Capital expenditure Group capex Capex intensity R million % Forecast 6 906 6 800 24.5 24.6 6 636 3 930 4 735 3 702 12.4 10.2 10.5 2 976 2 934 10.5 7.0 2 065 7.5 6.4 2009 2010 2011 H1 2010 H2 2010 H1 2011 H1 actual H2 actual H2 forecast Group SA International 25
Slide 27: Group free cash flow increased 65.9%
Group free cash flow increased 65.9% Cash flow generation R million Ç 2.8% 9 788 (449) Ç 6.5% 9 339 (2 779) Ç 21.8% 6 560 (599) (2 154) Ç 65.9% 3 807 H1 2011 Working Cash Net cash additions Operating Net finance Taxation H1 2011 EBITDA capital generated from to PPE and free cash charges free cash an
Slide 28: Improving shareholder returns
Improving shareholder returns • R959 million spent on share repurchase plan Earnings and dividend • 63.6% 63 6% increase in interim dividend R million H1 2011 H1 2010 Adjusted1 headline earnings 4 431 4 039 Adjusted1 HEPS (cents) 301 271 HEPS (cents) 303 219 DPS (cents) 180 110 Payout ratio2 (%) 60
Slide 29: Outlook and guidance
Outlook Ou oo and Outlook a and d guidance gu guidance da ce Interim results presentation Interim results for the six months ended 30 September 2010
Slide 30: Company medium-term targets remain unchanged
Company medium-term targets remain unchanged Market position Maintain or improve market position in all geographies Growth in service revenue despite reduced interconnect revenue Service revenue (low single digit) EBITDA Improve EBITDA margin through operational efficiencies Capex Capital expenditur
Slide 31: Key take-aways
Key take-aways High growth in mobile broadband St Stronger customer t and d usage growth th Recovery in International operations Cost programme on track Improving shareholder returns 30 30
Slide 32: Appendix
Appendix ppe d Interim results for the six months ended 30 September 2010
Slide 33: Exchange rates
Exchange rates Average year to date H1 2011 H1 2010 % change FY 2010 % change USD/ZAR 7.43 8.15 (8.8) 7.83 (5.1) ZAR/MZN 4.74 3.35 41.5 3.68 28.8 ZAR/TZS 197 48 197.48 163 29 163.29 20 9 20.9 171 29 171.29 15 3 15.3 EUR/ZAR 9.53 11.36 (16.1) 11.05 (13.8) Closing rate H1 2011 H1 2010 % change FY 2010
Slide 34: Country data
Country data South T Tanzania i DRC Mozambique M bi L Lesotho th G t Gateway Africa Population (million) 50 45 68 23 2 n/a GDP per capita (USD) 7 180 513 220 388 1 210 n/a GDP growth est. 2010 (%) 2.8 6.4 3.0 8.3 3.5 n/a Estimated mobile penetration (%) 97 37 14 25 46 n/a Number of operators 3 7 4 2
Slide 35: Definitions
Definitions Customers Customers are based on the total number of mobile customers registered on Vodacom’s network, which have not been disconnected, including inactive customers, at the end of the period indicated. ARPU Total T t l ARPU is i calculated l l t db by di dividing idi ththe average month
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 2010 contains 'forward-looking statements' with respect to the Group’s financial condition, results of operations and businesses and certain of the Group Gr
Slide 37: Investor Relations
Investor Relations www.vodacom.com Belinda Williams +27 11 653 5195 Interim results for the six months ended 30 September 2010