Vodacom Group Limited · JSE:VOD
Vodacom — Vodacom Group Ltd Ord — FY2024 Earnings Presentation
41 slides from Vodacom's earnings presentation, May 13, 2024
Slide 1: Vodacom Group Annual results for the year ended 31 March 2024
Vodacom Group Annual results for the year ended 31 March 2024 May 2024 Further together
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: Our purpose | Connecting for a better future
Our purpose | Connecting for a better future Pillars Empowering Protecting the people planet Themes Closing Empowering Supporting Net zero Circularity Biodiversity digital divide customers communities Pursuing ubiquitous Delivering platforms for Enabling education Targeting net zero for our Circular
Slide 4: Strategy | System of Advantage powering our Vision
Strategy | System of Advantage powering our Vision 2017 – 2020 2021 – 2025 2027+ A leading Digital Company A leading African TechCo Customer | Simplicity | Trust • Commitment to Purpose • Align our Purpose with our Social Contract • Amplify our commitment to Purpose & customers • Protecting the Core
Slide 5: Our strategy
Our strategy Where we Where Where came from (Mar 2020) are we now? are we going? (FY27) Market share 2017 – 2020 Market share 2021 – 2025 Market share 2027+ Leadership in all markets Leadership in all markets2 Leadership in all markets2 Customers Customers Customers 115.5 million 203.1 million >230
Slide 6: Healthy markets & leadership | Connecting from Cape to Cairo
Healthy markets & leadership | Connecting from Cape to Cairo #1 Egypt Egypt: near-term growth driver • ROCE accretive, market leader with attractive EBITDA margin Ethiopia • Material fintech opportunity, growing >100% Across our DRC Kenya Tanzania • Asset rich and highly skilled workforce • Managing
Slide 7: Product diversification | Growth levers across a balanced portfolio
Product diversification | Growth levers across a balanced portfolio Service revenue composition % Prepaid voice – managed decline Prepaid data – strong growth • Network leadership • 4G & 5G network expansion • Bundled services & personalised offers 19.6 • Prepaid handset financing & lower cost 29.2
Slide 8: Financial services | Deepening financial inclusion to help economies grow
Financial services | Deepening financial inclusion to help economies grow Powered by our super-apps Drive financial inclusion Deepen financial inclusion Unlocking economic growth Outcomes Consumer + Positively influence Basic services Consumer wealth financial services our operating context and soci
Slide 9: Financial services | Scaling our dual-sided financial services ecosystem
Financial services | Scaling our dual-sided financial services ecosystem Merchant highlights Consumer highlights FY24 growth driver Merchants 30-day M-Pesa app users New services >1.0m 4.9m supporting > 70% of revenue growth up 28% higher ARPU from new services (e.g. M-Pesa merchants, lending, savin
Slide 10: Results snapshot | Strong growth in new services and Vodafone Egypt
Results snapshot | Strong growth in new services and Vodafone Egypt Revenue Service revenue EBITDA Capital expenditure R150.6 billion R120.9 billion R56.1 billion R20.4 billion Reported 26.4% 29.1% 24.3% 13.6% intensity Growth Pro-forma (incl. Egypt)^ 10.1% 9.2% 7.8% 203m 79m 846cps 23.1% Customers1
Slide 11: Group composition | Growth profile enhanced by Vodafone Egypt
Group composition | Growth profile enhanced by Vodafone Egypt Group service revenue Group operating profit Group customer mix R billion R billion % Growth Growth 35.31 20.8% / 5.9%^ 3.9% / 13.4%* 2.7 -4.6% 41.5 43.1 29.31 8.8 47.5%^ 51.7 2.8 120.91 29.1% / 9.2%^ 1.7 31.6%^ 4.5 4.2 -6.8% 93.71 30.2 8
Slide 12: New services | Diversifying beyond mobile
New services | Diversifying beyond mobile South Africa Egypt International Safaricom New 16.6% 15.6% 30.3% 46.5% services R10.2bn R4.7bn R9.5bn R20.0bn • Financial services • IoT • Digital services • Fixed New services revenue as % of Service revenue Core 83.4% 84.4% 69.7% 53.5% mobile R51.4bn R25.5
Slide 13: Financial services | Africa's leading fintech platform
Financial services | Africa’s leading fintech platform 100% basis (including Safaricom) Financial services contribution Financial services Mobile money Financial services customers transaction volume revenue Vodacom R13.0 billion Contribution 79 million 34.3% growth Safaricom R18.0 billion to Group
Slide 14: South Africa highlights | Resilient given challenging macro backdrop
South Africa highlights | Resilient given challenging macro backdrop Key indicator FY24 % change Key Revenue (Rm) 88 304 4.2 milestones Customer service revenue traction Service revenue (Rm) 61 621 2.6 • Mobile contract revenue 3.9% • Mobile prepaid revenue 1.7% Vodacom Business service revenue (Rm)
Slide 15: Egypt highlights | Accelerating growth
Egypt highlights | Accelerating growth FY24 FY24 EGP Key indicator (Rm) (EGPm) % change^ Key Service revenue 30 179 51 432 31.6 milestones New services revenue 4 719 8 065 53.9 (financial & digital services, fixed and IoT) Strong commercial traction • Data usage growth 41.8% Vodafone Cash revenue 1
Slide 16: International highlights | Strong data and M-Pesa growth
International highlights | Strong data and M-Pesa growth Reported Normalised* Key indicator FY24 % change % change Key Service revenue (Rm) 29 858 13.1 5.0 milestones Data revenue (Rm) 7 972 30.5 21.9 Strong data growth M-Pesa revenue (Rm) 7 899 21.4 13.1 • Usage growth 44.0% • Smartphone growth 14.
Slide 17: Safaricom highlights | Kenya result offsets Ethiopia losses
Safaricom highlights | Kenya result offsets Ethiopia losses FY24 KES FY24 Rand Key indicator1 (KESm) % change (Rm) % change Service revenue 335 353 13.4 43 142 3.9 Key milestones Data revenue 63 242 18.0 8 129 8.1 M-Pesa • Contribution increased to 41.7% of M-Pesa revenue 140 007 19.5 18 008 9.5 ser
Slide 18: Financial review
Financial review
Slide 19: Group snapshot | Consistent delivery on cashflow and ROCE
Group snapshot | Consistent delivery on cashflow and ROCE Growth Earnings Balance sheet Returns +26.4% +24.3% Net debt +20.7% Revenue EBITDA 0.9x OpFCF R151bn R56.1bn /EBITDA R30.3bn Target maintained Dividend Service +29.1% EBITDA -0.6ppts up to Liquidity repatriation ROCE revenue R121bn margin 37.
Slide 20: Group income statement | EBITDA growth offset by finance costs
Group income statement | EBITDA growth offset by finance costs FY24 FY23 Reported Pro-forma^ R million % change % change Revenue 150 594 119 170 26.4 10.1 Service revenue 120 897 93 650 29.1 9.2 EBITDA 56 116 45 144 24.3 7.8 Depreciation and amortisation (22 786) (17 968) 26.8 Net profit from associ
Slide 21: Service revenue | Softer quarter in SA offset by Egypt
Service revenue | Softer quarter in SA offset by Egypt Group South Africa R billion / % R billion / % 43.8% 40.8% 29.7% 9.0% 3.9% 4.1% 9.0% 9.0% 8.8% 10.1% 1.9% 0.7% 29.0 30.4 31.1 30.4 15.1 15.6 15.7 15.3 1Q24 2Q24 3Q24 4Q24 1Q24 2Q24 3Q24 4Q24 Service revenue Reported growth Pro-forma^ growth Serv
Slide 22: Group EBITDA | Egypt drives EBITDA in FY24
Group EBITDA | Egypt drives EBITDA in FY24 Growth bridge +24.3% +7.8% (1.6) 4.1 0.9 0.2 7.4 Energy headwind of R0.9 billion y.o.y 45.1 53.5 57.7 56.1 FY23 reported Egypt pro-forma IB FX FY23 pro-forma SA + IB growth Egypt growth FY24 pro-forma FX losses FY24 reported 37.9% 39.1% EBITDA margin 38.3%
Slide 23: Cash flow | FCF conversion improves in the second half
Cash flow | FCF conversion improves, as expected, in the second half Group free cash flow R million Net dividends received from associates and paid to non-controlling shareholders, impacted by: 24.3% 0.2 - Safaricom dividend. In FY23 the phasing of the - Minority dividends leakage. Increased to R1.8
Slide 24: Net profit | Impacted by higher interest costs and FX losses
Net profit | Impacted by higher interest costs and FX losses Net profit FY24 net profit bridge reconciliation, YoY R billion R million Finance charges impacted by: 24.3% FY23 18 111 • Higher interest rates of 2pp vs FY23 • Egypt funding of R1.0bn EBITDA 10 972 • FX remeasurement loss of R0.5bn vs PY
Slide 25: HEPS bridge | Tough macro cycle evident
HEPS bridge | Tough macro cycle evident Factors impacting growth Headline earnings per share (after tax and non-controlling interests) cents Egypt contribution: • Deferred tax asset recognised (15) in prior year for Tanzania (21) - Added 95 cents per share before finance costs and FX losses - Added
Slide 26: Free cash flow & ROCE | Multi-year track record of strong returns
Free cash flow & ROCE | Multi-year track record of strong returns Group FCF: strong 2H, as expected ROCE: improved 1.3pp in FY24 R billion % 9.7 11.2 12.4 13.5 16.5 2.5 2.7 5.3 4.5 2.0 18.4 24.6 22.7 22.0 23.4 21.8 23.1 -0.2 FY19 FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY23 FY24 1H 2H
Slide 27: Shareholder returns | One of the JSE's highest pay-out ratios
Shareholder returns | One of the JSE’s highest pay-out ratios Total dividend declared Dividend aligned to policy R million 13 098 12 259 Policy At least 75% 6 857 5 922 of Group headline earnings 6 241 6 337 Final dividend FY23 FY24 285cps per share Interim dividend Final dividend Total dividend per
Slide 28: Net debt | Net debt stable, leverage down
Net debt | Net debt stable, leverage down Group net debt R billion FY25 Outlook 3.4 10.4 3.4 • South Africa Fibre M&A in Maziv: (18.2) 13.0 Modest additional 4.8 leverage 3.2 (18.5) 13.2 35.2 33.1 37.9 48.3 43.1 46.5 49.9 FY22 FCF Cash SA spectrum Other VFE funding FY23 FCF Cash Spectrum Other FY24
Slide 29: Capital structure | Leverage improves
Capital structure | Leverage improves Maturity profile Debt type Net debt/EBITDA R billion R billion R billion / times 70.5 73.1 70.5 73.1 1.1 52.4 60.9 59.2 56.1 57.4 0.9 9.6 13.9 14.4 15.6 FY23 FY24 FY23 FY24 Non-current Current Financial Leases Currency mix Debt mix % % Incl. leases Excl. leases
Slide 30: Outlook | We have a clear ambition to grow new services
Outlook | We have a clear ambition to grow new services FY23 FY24 Medium-term (3-5 years) 19.3% 20.0% 25% - 30% New services Of which: • Financial services 10.8% CAGR: c20% for new services: • Digital services 2.0% • Financial services mid-teens • IoT 1.4% contribution to SR New services revenue as
Slide 31: Targets | Capital allocation priorities
Targets | Capital allocation priorities Big data-led smart capex planning Investment into organic growth Supported by stable capital intensity with an ambition of flat to improving ROCE Commercial optimisation Dividend pay-out of at least 75% of headline earnings Network Network One of the highest p
Slide 32: Targets | Medium-term targets reiterated
Targets | Medium-term targets reiterated Targets Considerations Group service revenue growth The macro-outlook remains uncertain, Upgraded: High single digit FX volatility and interest rate cycle remain risks Group EBITDA growth Egypt remains a key driver of Group EBITDA in FY25 High single digit Gr
Slide 33: Wrap-up
Wrap-up
Slide 34: Wrap-up | Positioned to accelerate growth
Wrap-up | Positioned to accelerate growth Structurally positioned Execute on our Accelerate Enhance for growth System of Advantage and diversify returns societal value Leadership in fixed and mobile Targets Inclusion for all Market increase female Complete M&A Maziv Accelerate device Medium-term: re
Slide 35: Appendix
O ae Appendix og
Slide 36: Group tax | ETR impacted by withholding tax on dividends and non-deductible interest
Group tax | ETR impacted by withholding tax on dividends and non-deductible interest Group tax charge and effective tax Reconciliation of SA tax rate to effective tax rate R million / % % FY23 Statutory tax rate 27.0% Net profit from associate and JVs -2.1ppt Irrecoverable foreign taxes +2.9ppt 31.5
Slide 37: Impact of exchange rates
Impact of exchange rates YoY% growth Revenue Average YTD exchange rates Reported Normalised* Pro forma^ FY24 FY23 % changed USD/ZAR 18.73 17.00 10.2 South Africa 4.2 4.2 EUR/ZAR 20.31 17.69 14.8 Egypt >100.0 37.2 ZAR/TZS 132.03 137.63 (4.1) International 13.5 5.3 ZAR/MZN 3.41 3.77 (9.5) ZAR/KES 7.78
Slide 38: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Egypt Safaricom Safaricom Kenya Ethiopia PopulationŦ (million) 61.0 69.4 105.6 34.9 2.4 114.5 56.2 129.7 GDP per capitaŦ (USD) 6 180 1 230 657 569 992 2 831 2 003 961 GDP growth estimateŦ (%) 1.5 5.4 5.1 4.3 1.4 3.0 5.5 6.8 Ownership (%) 100
Slide 39: Definitions
Definitions Customers Customers Data customers Data customers M-Pesa customers M-Pesa customers ARPU ARPU Customers are based on the total number of Data customers are based on the number of M-Pesa customers are based on the number Total ARPU is calculated by dividing the sum mobile customers using
Slide 40: Forward-looking statement
Forward-looking These factors include, but are not limited to, the following: changes in economic or political conditions in markets served by operations of the Group; greater than statement anticipated competitive activity; higher than expected costs or capital expenditures; slower than expected cu
Slide 41: More information
More information Visit our website for more information http://www.vodacom.com Upcoming dates FY24 Integrated report 14 June 2024 1Q25 results 24 July 2024 AGM 17 July 2024 1H25 results 11 November 2024 Contact us Follow us on @Vodacom VodacomIR@vodacom.co.za social media Facebook.com/vodacom