Vodacom Group Limited · JSE:VOD
Vodacom — H1 2020 Earnings Presentation
40 slides from Vodacom's earnings presentation, November 2019
Slide 1: Vodacom interim results
Vodacom interim results For the six months ended 30 September 2019
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: Purpose-led Vodacom | Connecting for a better future
Purpose-led Vodacom | Connecting for a better future Digital society Inclusion for all Planet Education Connect South Africans for a better future by democratising access to key information & resources: Health & Wellness INCLUSION FOR ALL Create a free-to-use platform where customers can Safety & Se
Slide 4: Highlights
Highlights +3.9% R6.3bn +9.9% (0.7%*) +16.0% (1.2%*) Revenue Capex EBITDA Operating profit R44.4 billion +14.3% intensity R18.2 billion R12.9 billion 115.0m 61.3m 460cps 440cps Customers1 Data customers1 HEPS Total DPS +5.8% +9.3% +18.9% +11.4% 1. Including Safaricom * Normalised growth presents per
Slide 5: South Africa | Growth returns
South Africa | Growth returns Key indicators 1H20 Reported % change Normalised* % change +4.2% Q2 underlying service revenue growth Service revenue (Rm) 25 797 0.3 EBITDA (Rm) 13 916 0.8 (3.9) Data customers (‘000) 21 420 4.3 +28.8% 4G customers (‘000) 11 012 28.8 Increase in 4G customers Active sma
Slide 6: International | Sustained strong growth
International | Sustained strong growth Key indicators 1H20 Reported % change Normalised* % change +15.5% Service revenue growth Service revenue (Rm) 10 780 15.5 8.7 Data revenue1 (Rm) 1 802 27.2 20.2 M-Pesa revenue (Rm) 1 937 37.4 28.9 18.0% EBITDA (Rm) 4 298 47.7 15.4 M-Pesa revenue to Service rev
Slide 7: Safaricom | Strength underpinned
Safaricom | Strength underpinned Key indicators 1H20 KES’bn 1H20 R’m % change* +18.2% M-Pesa revenue growth Service revenue 124 17 650 5.3 M-Pesa revenue 42 5 957 18.2 Net profit 35 5 064 14.4 +2.7 million customer net adds Customers (‘000) 34 570 15.5 Data customers (‘000) 20 194 14.8 M-Pesa custom
Slide 8: Strategy | Towards Vision 2020 – Digital first
Strategy | Towards Vision 2020 – Digital first Best customer experience Our brand and reputation Seamless, frictionless, personalised Connecting for a better future by digital experience to our customers enabling a digital society, inclusive for all with the least environmental impact Segmented prop
Slide 9: Digital services | Unlocking OTT for everyone
Digital services | Unlocking OTT for everyone 1 million 1.9 million 343 000 Video Play customers App downloads subscribers 14.8 million 5.6 million Over 2 000 Video on demand purchases subscribers Games available Interim results | 30 September 2019 9
Slide 10: Commercial progress: Transforming data to be more affordable and accessible
Commercial progress: Transforming data to be more affordable and accessible More data Data plus on postpaid 2017 complete consumer c40% more data Added 1.5 million data Added data to customers to 21.4 million 4/5 bundle sales Affordability for prepaid 2018 Power Hour < 30 days New shorter validity b
Slide 11: Commercial progress: International data | potential realising
Commercial progress: International data | potential realising Data1 contribution Data users Million +5.4% +27.2% R1.8bn +9.5% +6.9% 16.7% of International 34.7 36.6 18.0 19.7 11.1 11.8 service revenue Customers Data customers Active smartphone users 1H19 1H20 Expanding data coverage Number of sites
Slide 12: Commercial progress: Financial services | expanding new services
Commercial progress: Financial services | expanding new services Financial services in South Africa Financial services revenue (R million) 73.% +37.1% 54.9% +73.0% VodaPay launched in June 23.8% +54.9% R4.9 billion airtime advanced with +23.8% 9.9 million customers engaged Insurance revenue up +21.8
Slide 13: Commercial progress: M-Pesa | continued momentum
Commercial progress: M-Pesa | continued momentum M-Pesa in International M-Pesa in Safaricom M-Pesa revenue (R million) M-Pesa revenue (KES’m) US$13.9 billion +28.9% processed monthly +18.2% +20.1% +31.5% +18.2% +27.3% +12.5% +31.1% 37.9 million total M-Pesa customers 1 202 1 410 1 667 1 937 R7.9 bi
Slide 14: Enterprise | Fixed growing strongly, mobile impacted by EUSSC
Enterprise | Fixed growing strongly, mobile impacted by EUSSC SA Enterprise service revenue SA Enterprise mobile revenue SA fixed revenue per category contribution R million R million +11.1% +2.8% +3.4% +0.2% -10.7% 24 >200% -4.8% 137 +21.0% R6.8bn 26.5% 367 +15.3% of South Africa service revenue 1
Slide 15: New business update | IoT
New business update | IoT Internet in the car Vodacom takes the wheel of Competition Commission approved Africa’s first connected Implementing solutions for Vodacom base stations to drive cost savings – vehicle in partnership with to be scaled into other markets Toyota and Netstar Collaborating with
Slide 16: New Business update | AWS
New Business update | AWS Vodacom AWS Business Group, Africa’s only AWS Business Group launched Vodacom has established its AWS Cloud Centre of Excellence Vodacom is driving its open cloud ecosystem approach and has invited consulting partners to collaborate Targeting premier partner status by 2020
Slide 17: Technology | Readying the network
Technology | Readying the network SA network coverage 5G 4G 4G population coverage (%) Vodacom has demonstrated 4G Sites deployed across Africa’s first live, 5G data session on Vodacom International a commercially ready 5G mobile markets > 2170 Sites 98.0 80.0 99.0 82.9 phone and network FY19 1H20 U
Slide 18: Regulatory
Regulatory South Africa Spectrum Competition Commission data market review ICASA – Inquiry into mobile broadband services International Tanzania biometric customer registration Interim results | 30 September 2019 18
Slide 19: Financial review
Financial review
Slide 20: IFRS 16 | Impacts
IFRS 16 | Impacts R million 1H20 1H19 R million 1H20 1H19 Income statement Balance sheet Operating lease expenses Right of use assets Group - 1 274 Group 10 982 - South Africa - 671 South Africa 5 498 - International - 603 International 5 731 - Depreciation right of use assets Lease liabilities Grou
Slide 21: Group income statement
Group income statement Reported Normalised* R million 1H20 (IFRS 16) 1H19 (IAS 17) % change % change Revenue 44 389 42 707 3.9 2.5 Service revenue 36 003 34 552 4.2 2.5 EBITDA 18 166 16 534 9.9 0.7 EBITDA-aL 16 203 n/a n/a Depreciation and amortisation (6 967) (5 316) 31.1 Net profit from associate
Slide 22: Service revenue | SA growth recovery; International extended strong performance
Service revenue | SA growth recovery; International extended strong performance South Africa International R million / % R million / % 3.5% 4.2% 24.2% 21.2% 19.6% 1.3% 5.0% -1.2% -1.2% 13.2% 12.1% 1.8% 8.5% 14.4% -1.2% 9.4% 9.2% 8.2% 9.2% 4.1% 12 736 12 985 12 975 12 845 12 577 13 220 4 275 5 057 5
Slide 23: Group expenses | Well contained
Group expenses | Well contained Group expenses1 Group total expenses reconciliation R million 1H20 1H19 Reported Normalised* R million % change % change (IFRS 16) (IAS 17) +3.5%* (1.4ppts) Direct expenses 16 161 15 331 5.4 (0.5ppts) +1.6% Operating 26 187 24 845 10 051 10 895 (7.7) expenses 1H20 Tot
Slide 24: Costs | TOBi savings
Costs | TOBi savings Call centre volumes 25% total call volume reduction million 1.6 Almost 800 000 TOBi chats per month 1.4 1.2 TOBi containment almost 70% and improving 1.0 every month 0.8 0.6 TOBi engagement is a fraction of the cost 0.4 of a traditional call 0.2 0.0 Targeting savings from call v
Slide 25: Big data | Journey of getting smarter
Big data | Journey of getting smarter Faster delivery 500 000 000 000 43.9m interactions Shorter development time customers Rapid iteration and experimentation +650m Financial services 27 billion transactions minutes Build once use many AI & Platform enriched customer profile Customer AI Decision En
Slide 26: Group EBITDA | International performance improving
Group EBITDA | International performance improving Group South Africa International R million/% R million/% R million/% +15.4%* +0.7%* -3.9%* 41.7% 43.0% 40.9% 41.0% 36.4% 38.6% 38.7% 41.0% 30.2% 16 534 18 166 13 810 13 916 2 910 4 298 1H19 1H20 1H19 1H20 1H19 1H20 EBITDA EBITDA EBITDA EBITDA margin
Slide 27: Finance charges and debt | Gearing impacted by IFRS 16
Finance charges and debt | Gearing impacted by IFRS 16 Group net finance charges Group net debt 1H20 1H19 1H20 FY19 R million % change R million (IFRS 16) (IAS 17) (IFRS 16) (IAS 17) Finance income 456 325 40.3 Cash balances including overdraft 6 075 11 066 Finance cost (1 546) (1 440) 7.4 Current b
Slide 28: Group tax | ETR normalising
Group tax | ETR normalising Group effective tax Reconciliation to effective tax rate R million/% % 1H20 Statutory tax rate 28.0% Net profit from associate (4.2ppts) Irrecoverable WHT +2.0ppts 33.1% Non-deductible opex +0.5ppts Non-deductible finance +0.4ppts costs 28.8% Unrecognised tax asset +0.3pp
Slide 29: Cash flow | Free cash flow +10.6%
Cash flow | Free cash flow +10.6% Group free cash flow R million +9.9% -33.6% (2 821) +19.0% (6 349) 100 (1 894) 274 +5.7% -4.7% (3 192) 14.9% (1 368) (167) +10.6% 18 166 7 476 2 749 EBITDA Working Capital Disposal of Lease liability Other Operating Tax paid Net finance Dividends paid Free cash capi
Slide 30: HEPS | Affected by BEE; boosted by Safaricom
HEPS | Affected by BEE; boosted by Safaricom Headline earnings per share Cents +18.9% 17 (20) 19 (17) 74 • One-offs impacted Core growth by 20cps • One-offs include: - Prior year deferral release R292 million - BEE staff expense R113 million - IFRS 15 adjustment R177 million 387 384 386 386 460 1H19
Slide 31: Shareholder returns | Dividend boost to shareholders
Shareholder returns | Dividend boost to shareholders Total dividend declared Dividend policy and final dividend calculation R million 14 030 14 595 90% of pre-Safaricom +16.5% R6 483 million @ 90% R5 836 million headline earnings 7 316 7 343 1 101 Flow through of Safaricom cash R2 267 million @ 50%
Slide 32: Targets | Confirmed
Targets | Confirmed Group service revenue Mid-single digit Group operating profit Mid-to-high single digit Group capital intensity 13.0% to 14.5% of Group revenue These targets are on average, over the next three years and are on a reported basis in constant currency, excluding spectrum purchases, e
Slide 33: Priorities
Priorities Spectrum Customer engagement New platforms Digital Vodacom Financial services growth Partnerships Interim results | 30 September 2019 33
Slide 34: Q&A
Q&A
Slide 35: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom PopulationŦ (million) 58 61 87 31 2 52 GDP per capitaŦ (USD) 91 471 1 028 586 464 1 133 1 836 GDP growth estimateŦ 2019 (%) 1.3 6.5 4.5 3.7 1.0 5.2 Ownership (%) 100 75§ 51 85 80 34.94¢ 2028/2032/2026/ Licence expiry period 2029 203
Slide 36: Impact of foreign exchange
Impact of foreign exchange Revenue Average YTD exchange rates YoY % growth 1H20 Reported Normalised* 1H20 1H19 % change South Africa 0.8 0.8 USD/ZAR 14.54 13.37 8.8 ZAR/MZN 4.29 4.48 (4.2) International 15.6 8.7 ZAR/TZS 158.29 170.80 (7.3) Group 3.9 2.5 EUR/ZAR 16.24 15.73 3.2 ZAR/KES 7.05 7.57 (6.9
Slide 37: EBITDA-aL reconcilliation
EBITDA-aL reconcilliation EBITDA-aL R’m 1H20 Group South Africa International EBITDA 18 166 13 916 4 298 Depreciation – right of use assets (1 313) (775) (552) Finance costs – lease liabilities (650) (269) (395) EBITDA-aL 16 203 12 872 3 351 EBITDA-aL Earnings before interest, taxation, depreciation
Slide 38: Definitions
Definitions Customers Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly fee that entitles them to use the service even if they do not actually use the service and those customers who are active whilst
Slide 39: Forward-looking statements
Forward-looking statements This presentation which sets out the interim results for Vodacom Group Limited for the year ended 30 September 2019 contains 'forward-looking statements‘, which have not been reviewed or reported on by the Group’s auditors, with respect to the Group’s financial condition,
Slide 40: More information
More information Visit our website for more information http://www.vodacom.com FY20 upcoming dates Q3 results 4 February 2020 FY20 results 11 May 2020 Contact us VodacomIR@vodacom.co.za Follow us on social media @Vodacom Facebook.com/vodacom Interim results | 30 September 2019 40