Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — Merger or Acquisition (May 2018)
23 slides from Vodafone Group Public's merger presentation, May 9, 2018
Slide 1: Acquisition of Liberty Global's operations in Germany, Czech Republic, Hungary and Romania
Acquisition of Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania 9 May 2018
Slide 2: Disclaimer
Disclaimer This document does not constitute, or form part, of any offer or invitation to sell, allot or issue or any solicitation of any offer to purchase or subscribe for any securities, nor shall it (or any part of it) form the basis of, or be relied on in connection with, or act as any inducemen
Slide 3: Transaction summary
Transaction summary Vodafone becomes the leading next generation Vodafone to acquire network owner in Europe, accelerating our Liberty Global’s operations in convergence strategy Germany, the Czech Republic, Hungary and Creating a converged national challenger to Romania for €18.4 billion the domina
Slide 4: Transaction with a strong strategic and financial rationale
Transaction with a strong strategic and financial rationale Accelerates Vodafone’s • Vodafone becomes the leading next generation infrastructure owner in Europe 1 converged communications • Accelerates Vodafone’s position as Europe’s leading fixed-line challenger strategy • Bringing together leading
Slide 5: Unitymedia – A highly complementary, attractive asset
Unitymedia – A highly complementary, attractive asset Highly attractive standalone business with upside potential1 Complementary to Vodafone’s existing footprint 2nd largest 13.0m homes passed Kiel cable operator in Hamburg Germany In-fills & Schwerin 11.0m homes currently marketable upgrades Bremen
Slide 6: Unitymedia – Significant standalone growth potential
Unitymedia – Significant standalone growth potential Opportunity to increase BB penetration in UM’s footprint TV ARPUs are low CY17 cable broadband penetration in own footprint (%)1 CY17 TV blended ARPU (€/month) Incumbent Residential <1% c.30% c.2% c.70% c.2% cable ARPU 55 58 52 27 23 17 FTTH cover
Slide 7: Unitymedia – Consistent mid-single digit growth
Unitymedia – Consistent mid-single digit growth Strong revenue… …and EBITDA growth YoY revenue growth (%) YoY segment EBITDA growth (%)1 CY17 2 year CAGR: 4.7% CY17 2 year CAGR: 5.1% 2 8.2% 7.2% 2 6.3% 6.3% 6.4% 6.3% 5.8% 5.9% 6.0% 5.8% 2 2,3 5.6% 4.8% 4.7% 2,3 2 4.6% 4.2% 4.1% Q2'16 Q3'16 Q4'16 Q1'
Slide 8: Creating the leading fully converged national challenger
Creating the leading fully converged national challenger DE – NGN marketable homes (m) DE – Fixed broadband customers (m)1 DE – TV customers (m)1,5 CY17 CY17 CY17 30.3 17.7 Gigabit 13.2 investment plan2 24.7 1.0 14.0 10.0 11.3 11.0 6.3 3.5 o/w 3.5m cable customers 4.3 12.7 6.5 7.7 3.1 2.1 2.4 2.9 0.
Slide 9: Enabling the Gigabit Society in Germany
Enabling the Gigabit Society in Germany Gigabit infrastructure leader Gigabit investment plan PF Vodafone marketable homes post transaction as of December 2017 (m) Giga-Business 40.0 Total homes • Targeting 100,000 companies in around 2,000 business 39.0 ADSL wholesale parks in co-operation with str
Slide 10: Vodafone & Unitymedia – Significant cross-selling opportunities
Vodafone & Unitymedia – Significant cross-selling opportunities Under Vodafone’s ownership, KDG has grown faster Converged customers have lower churn and higher Net ARPAs Broadband net adds excluding active ULL migrations (000s) Q3 FY18 customer churn Q3 FY18 Net ARPA uplift reduction (%) Significan
Slide 11: Transforming our CEE assets into fixed/converged challengers
Transforming our CEE assets into fixed/converged challengers CY17 in-country NGN coverage versus incumbent (m) CY17 (m, unless stated) Czech Republic Hungary Romania Liberty (cable) Incumbent (VDSL >30 Mbps) NGN homes passed 1.5 1.8 3.1 Incumbent (FTTH/B / Other) % of HHs 33% 43% 41% Customers 0.6 0
Slide 12: Unlocking substantial cost and capex synergies
Unlocking substantial cost and capex synergies Area Description Year 5 (€m) • Merge national and regional backbones • Consolidate and simplify IT & billing platforms c.115 Network & IT • Reduction in leased line and mobile backhauling costs • Closure of central offices ULL • Save ULL and bitstream f
Slide 13: Greater synergy potential than successful KDG integration
Greater synergy potential than successful KDG integration Synergy estimates compared to successful KDG integration Successful synergy realisation offsetting mobile ARPU pressure Cost and capex synergy estimates in Germany (€m)1 Vodafone Germany OpFCF (€bn)2 KDG Unitymedia Strong underlying performan
Slide 14: Increasing proportion of growing and resilient converged revenue
Increasing proportion of growing and resilient converged revenue Europe service revenue mix Europe NGN homes coverage mix1 EBITDA mix2 Strategic Europe fixed Europe mobile On-net Wholesale Europe AMAP partnership Wholesale ADSL 25% 23% 31% 65% 47% 71% 60% 85% 100% 6% 75% 77% 6% 69% 47% 35% 34% 29% 1
Slide 15: Maintaining a solid investment grade credit rating, within 2.5-3.0x leverage range
Maintaining a solid investment grade credit rating, within a 2.5-3.0x leverage range c.€3bn of mandatory convertible bonds (0.2x) 3.0x c.2.8x 1.0x 2.1x 0.1x FY18E net leverage Settlements & handset Deal leverage Mandatory convertible PF reported net leverage² Hybrid equity credit PF net leverage fin
Slide 16: Significantly value accretive transaction
Significantly value accretive transaction Attractive return • Transaction value of €18.4 billion, implying 12.5x FY2019E OpFCF1,2 post year 5 synergies on capital • The returns from the transaction are expected to exceed the estimated cost of capital for the acquired operations within 5 years3 • Acc
Slide 17: Summary
Summary • Vodafone becomes the leading next generation infrastructure owner in Europe, accelerating our convergence strategy • Bringing together leading mobile and fixed-line/TV talent to strengthen our position • Creates a fully converged national challenger in Germany • Transforms Vodafone’s fixed
Slide 18: Appendix
Appendix
Slide 19: Key financials of acquired assets
Key financials of acquired assets1 Unitymedia Liberty Czech Republic Liberty Hungary Liberty Romania €m CY16 CY17 CY16 CY17 CY16 CY17 CY16 CY17 Revenue 2,295 2,394 146 162 211 233 131 137 growth (%) 4.3% 10.9% 10.5% 5.0% EBITDA2 1,343 1,419 78 87 86 94 35 39 margin (%) 58.5% 59.3% 53.4% 53.7% 40.8%
Slide 20: Financial overview
Financial overview FY2019E (€m) Multiple (x) Transaction enterprise value 18,400 NPV of net operating losses (183) Adjusted enterprise value 18,217 Liberty DE, CZ, HU & RO OCF (US GAAP)1 1,820 Duct leases (73) TSA charges (opex) (57) Share based compensation (11) EBITDA (IFRS), pre synergies 1,678 1
Slide 21: Transaction sources & uses overview
Transaction sources & uses overview Sources (€ billion) Uses (€ billion) Acquired debt rolled over 4.5 Cash consideration 10.8 Mandatory convertible 3.0 Net debt, derivatives and accrued interest acquired1 7.2 New debt (including hybrid) & existing liquidity 10.9 Vendor financing & leases 0.4 Total
Slide 22: Vodafone pro forma NGN footprint by country
Vodafone pro forma NGN footprint by country1 Households coverage (m) 68% 52% 70% 96% 54% 93% 39% 3.3 11.0 9.9 27.9 9.7 6.4 12.7 1.9 10.3 0.2 2.5 7.1 6.4 3.3 Germany Italy Spain UK Portugal VodafoneZiggo NLJV CEE³ Owned Open Fiber² Acquired assets Wholesale 110m Households passed with NGN (incl. whol
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