Vodacom Group Limited · JSE:VOD
Vodacom — H1 2022 Earnings Presentation
39 slides from Vodacom's earnings presentation, Sep 30, 2021
Slide 1: Vodacom Group Interim results
Vodacom Group Interim results For the six months ended 30 September 2021 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 | Further together
Our Purpose | Further together Purpose We connect for a better future Digital society Inclusion for all Planet • Affordable internet for all • Diversity (incl women) • Energy mix, water, waste • Digital solutions that transform lives • Education ecosystem (incl youth) • Biodiversity • Financial incl
Slide 4: Highlights | Results reflect growth of new services
Highlights | Results reflect growth of new services 4.2% 1.0% 3.3% R6.9bn 7.9%* 5.4%* 5.7%* Revenue Service revenue Capex intensity EBITDA R49.9 billion R38.9 billion 13.9% R20.1 billion -5.1% 129.9m 57.3m 420cps 3.0%# Customers1 Financial services customers1 HEPS DPS 8.6% growth 4.4% growth 505cps
Slide 5: Our Strategy | Leading African TechCo with clear System of Advantage
Our Strategy | Leading African TechCo with clear System of Advantage Footprint finalised Secure leadership in Mobile and Fixed Diversify and differentiate with our digital ecosystem Scale Financial Digital Partner World class loyalty Personalisation and Digital of choice for and customer through CVM
Slide 6: Strategy in action | Accelerating our System of Advantage
Strategy in action | Accelerating our System of Advantage Acceleration: >500m Strategic Strategic objective: outcomes: Population supporting scalable partnerships Market leader in Egypt, Secure leadership in Ethiopia licence • Accelerating our fixed and mobile System of South Africa fibre scale 51%
Slide 7: M&A in context | Accelerating our System of Advantage
M&A in context | Accelerating our System of Advantage Vodafone Egypt South Africa fibre Market leader, with Super-app opportunity Market leading Enhance our home & attractive asset portfolio to unlock financial and open-access FTTx business connectivity (eg towers, spectrum) digital services assets
Slide 8: Geographic lens | Broad-based growth
Geographic lens | Broad-based growth Group service revenue Group operating profit Group customers R billion Normalised R billion Normalised Millions / growth growth %* growth %* 14.51 10.0% 14.11 5.7% 19.2 18.4 16.9% 2.5 1.7 14.3% 41.9 1.7 2.1 27.2% 38.51 38.91 5.4% 11.4 10.7 9.0% 129.9 1.4% 45.4 42
Slide 9: Product lens | Diversifying into new revenue streams beyond mobile
Product lens | We are diversifying into new revenue streams beyond mobile South Africa International Safaricom Product life cycle New services Financial services Digital services 13.9% 27.9% 41.8% Innovate IoT R4.0bn R3.0bn R7.7bn Fixed Integrate into SoA Core mobile Invest to scale 86.1% 72.1% 58.2
Slide 10: Financial services | Continuing to scale our fintech platform
Financial services | Continuing to scale our fintech platform 100% basis (including Safaricom) Proportionate basis (excl. minorities, incl associates)1 57 million Strong growth $26.8bn R5.4bn / $380 million R2.4bn / $170 million financial services customers in financial services revenue M-Pesa month
Slide 11: Financial services | Bringing consumers and merchants together
Financial services | Bringing consumers and merchants together Consumer proposition Lifestyle super-app Merchant proposition powered by Trusted platform & brand, Large footprint, low set up costs, personalised offers, access to personal targeting, affordable financial services low customer acquisiti
Slide 12: Financial services | High-growth & scalable model with attractive returns
Financial services | High-growth & scalable model with attractive returns Expanding our product set to capture growth opportunities + Scalable platform + Multiple revenue drivers = Attractive margins & returns Payments & Lending Savings & Insurance Super` App Fee per transaction e-Commerce investmen
Slide 13: South Africa highlights | Delivering despite strong comparative period
South Africa highlights | Delivering despite strong comparative period Key indicator 1H22 Reported % Key milestones change Revenue (Rm) Service revenue growth 39 272 7.0 underpinned by IoT, fixed revenue and financial services Service revenue (Rm) 28 615 3.6 Key growth drivers Vodacom Business servi
Slide 14: International highlights | Profitability recovers strongly
International highlights | Profitability recovers strongly 1H22 Reported Normalised* Key milestones Key indicator % change % change Strong data growth Service revenue (Rm) 10 713 -6.1 9.0 • Data customers up 4.5% to 21.4 million Data revenue (Rm) 2 158 1.3 16.6 • Smartphone users up 8.6% to 11.6 mil
Slide 15: Safaricom highlights | Strong growth supported by M-Pesa and fixed
Safaricom highlights | Strong growth supported by M-Pesa and fixed 1H22 1H22 LC % ZAR % Key milestones Key indicator1 (KES’bn) (Rm) change change Service revenue 138.4 18 351 16.9 -4.5 M-Pesa contribution increases 1H22: 37.8% vs 1H21: 30.3% Data revenue 23.6 3 129 6.3 14.4 Strong FTTx growth M-Pesa
Slide 16: ESG | Aligned with our purpose
ESG | Aligned with our purpose Purpose (G) To connect for a better future Digital society (S) Inclusion for all (S) Planet (E) Environment Governance Social Reducing the amount Purpose driven outcomes We provide mobile health solutions, support vaccination of GHG emissions Doing what’s right program
Slide 17: Financial review
Financial review Further together Vodacom Interim Results September 2021
Slide 18: Group Income Statement | Strong execution impacted by FX headwinds
Group Income Statement | Strong execution impacted by FX headwinds Reported Normalised* R million 1H22 1H21 % change % change Revenue 49 856 47 844 4.2 7.9 Service revenue 38 915 38 515 1.0 5.4 EBITDA 20 076 19 433 3.3 5.7 Depreciation and amortisation (7 657) (7 565) 1.2 Net profit from associate a
Slide 19: Service revenue | Commercial execution diluted by government interventions
Service revenue | Commercial execution diluted by government interventions Group South Africa International R million / % R million / % R million / % 7.8% 7.8% 8.5% 4.2% 5.4% 13.5% 5.2% 3.1% 8.5% 3.2% 4.3% 4.9% 5.3% -0.3% 3.9% 5.4% 5.2% 2.2% 2.1% -1.4% -3.8% -5.9% 0.0% -6.3% 19 627 19 432 19 165 19
Slide 20: Group EBITDA | Strong International recovery with SA impacted by base effect
Group EBITDA | Strong International recovery with SA impacted by base effect Group South Africa International R million / % R million / % R million / % 3.3% 5.7%* 3.7% 3.1% 15.8%* 40.6% 40.3% 39.3% 41.7% 40.4% 35.9% 19 433 20 076 15 294 15 860 4 218 4 350 1H21 1H22 1H21 1H22 1H21 1H22 EBITDA EBITDA
Slide 21: South Africa EBITDA | Growth profile impacted by phasing of costs
South Africa EBITDA | Growth profile impacted by phasing of costs in prior year EBITDA growth EBITDA margin 1H22 1H21 vs1H22 0.2% Adj EBITDA margins flat yoy 0.2% 1.3% 0.3% 2.5% 1.0% 3.7% 7.0% 41.7% 40.2% 40.1% 40.1% 40.4% # 1H22 Loyalty # Opex FX benefit 1H22 1H21 Loyalty Opex 1H21 1H22 Opex 1H22 E
Slide 22: Cash flow | Higher cash capex to capture rand strength
Cash flow | Higher cash capex to capture rand strength Group free cash flow R million 3.3% Seasonal outflow -4,697 Accelerated to capture strong rand Safaricom dividend contribution lower yoy due to FX -6,920 -2,328 327 -5.7% -15.6% -3,389 -1,035 2 422 20 076 6 458 4 456 EBITDA Working Capital 1 Lea
Slide 23: HEPS | Underlying growth despite FX headwinds
HEPS | Underlying growth despite FX headwinds Once-offs after tax and non- Headline earnings per share controlling interests cents • Prior year deferred tax due to rate -5.1% change in Kenya of R705 million 3.0%# • Prior year loyalty programme (41) 14 provision in the current year of R102 million •
Slide 24: Shareholder returns | Dividend growth despite fx headwinds
Shareholder returns | Dividend growth despite fx headwinds Total dividend declared FY21 dividend policy and interim dividend calculation R million / % 90% of pre-Safaricom 1H22 R7 232 million @ 90% R6 509 million 15 513 15 183 headline earnings 7 435 7 552 Flow through of 1 101 R2 322 million @ 50%
Slide 25: Capital structure | Debt lens ahead of M&A
Capital structure | Debt lens ahead of M&A Maturity profile Debt type Net debt/EBITDA R billion R billion R billion / times 40.8 37.4 39.9 36.1 9.9 11.2 10.8 12.5 0.9 0.9 1H21 1H22 1H21 1H22 Current Non-current Leases Financial Currency mix Debt mix % % Incl leases Excl leases Incl leases Excl lease
Slide 26: Capital structure | Accelerating our System of Advantage
Capital structure | Accelerating our System of Advantage Accelerate Utilising Simplify Enhance System of Advantage debt capacity dividend policy shareholder value M&A – VE debt impact Capacity to Disciplined and strong Vodafone Egypt around R23 billion accelerate growth M&A track record M&A – Fibre
Slide 27: Targets | Medium-term targets
Targets | Medium-term targets Targets Impact of M&A Group service • Vodafone Egypt and CIVH fibre asset revenue growth acquisitions expected to enhance our System Mid-single digit of Advantage, diversify and accelerate our growth profile: Group operating • Vodafone Egypt to contribute around profit
Slide 28: New services contribution | Gaining momentum, pivoting to TechCo
New services contribution | Gaining momentum, pivoting to TechCo 1H21 1H22 FY24 FY26 Medium-term target: 25% - 30% > 30% New services 17% 18% 3yrs CAGR: = / >20% 5yrs CAGR: = / >20% Financial services Financial services Digital services Digital services IoT IoT Fixed Fixed 70% - 75% < 70% Core mobil
Slide 29: Priorities
Priorities Spectrum & Ethiopia data growth Launch Platform M&A acceleration Integration Financial Optimised, Services growth future-ready TechCo Further together Vodacom Interim Results September 2021 29
Slide 30: Appendix
/APDeNElix
Slide 31: M-Pesa | P2P intervention supporting financial inclusion and platform growth
M-Pesa | P2P intervention supporting financial inclusion and platform growth International 22.4% 47.4% M-Pesa revenue 68.4% Safaricom R million 22.4% 44.1% 19.4% 37.8% 68.4% 45.8%* contribution to of customers contribution to of customers service revenue using M-Pesa service revenue using M-Pesa 8.7
Slide 32: 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 R million 1H22 1H21 change 1H22 1H21 Finance income 314 443 -29.1 Cash balances including overdraft 9 621 13 983 Finance cost (2 006) (2 161) -7.2 Current borrowings (10 166) (9 783) Net fina
Slide 33: Group tax | ETR impacted by Safaricom and change in Kenya tax rate
Group tax | ETR impacted by Safaricom and change in Kenya tax rate Group tax charge and effective tax Reconciliation of SA tax rate to effective tax rate R million / % % 1H22 Statutory tax rate 28.0% Net profit from associate and JVs -3.7ppts 8.7% Irrecoverable foreign taxes 1.3ppts 28.5% Tax rate d
Slide 34: Tanzania | Mobile money and airtime levies
Tanzania | Mobile money and airtime levies Service Revenue contribution Mobile Money levy background Airtime Levies % Timeline Timeline Early Sept 1st July 2021 20th Oct 10% 1st July 2021 15th July 2021 2021 90% Finance Act Implementation Finance Act Implementation Revised levies Group ex Tanzania T
Slide 35: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom PopulationŦ (million) 60.0 61.5 92.4 32.2 2.2 55 GDP per capitaŦ (USD) 105 393η 1 237 542 511 1 316 1 912 GDP growth estimateŦ 2019 (%) 5.2 4.3 3.8 2.8 1.9 4.4 Ownership (%) 100 61.61 51 85 80 34.94¢ 2039/2032/ 2022/2024/ Licence ex
Slide 36: Impact of the exchange rate
Impact of the exchange rate Revenue Average YTD exchange rates Revenue YoY% growth YoY% growth 1H22 1H22 1H21 % changed Reported Normalised* USD/ZAR 14.38 17.43 -17.5 South Africa 7.0 7.0 ZAR/MZN 4.31 4.01 7.5 International -5.9 9.4 ZAR/TZS 161.35 133.19 21.1 Group 4.2 7.9 EUR/ZAR 17.13 19.77 -13.4
Slide 37: Definitions
Definitions Customers Data customers M-Pesa Customers ARPU Data customers are based on the number of Customers are based on the total unique users generating billable data traffic number of mobile customers using during the month. Also included are users on any service during the last three integrat
Slide 38: 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 anticipated competitive activity; higher than expected costs or capital statement expenditures; slower than expected cu
Slide 39: More information
More information Visit our website for more information http://www.vodacom.com 2022 upcoming dates 3Q22 results 01 February 2022 FY22 results 16 May 2022 Contact us VodacomIR@vodacom.co.za 1Q23 results 21 July 2022 Follow us on social media 1H23 results 14 November 2022 @Vodacom Facebook.com/vodacom