Vodacom Group Limited · JSE:VOD
Vodacom — Vodacom Group Ltd Ord — Q2 2023 Earnings Presentation
40 slides from Vodacom's earnings presentation, Nov 14, 2022
Slide 1: Vodacom Group Interim results
Vodacom Group Interim results For the six months ended 30 September 2023 November 2023 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 Purpose We connect for a better future Digital society Inclusion of all Planet • Digitising critical sectors • Access for all • Managing carbon emissions • Digitising government • Propositions for equality • Reducing waste, circular economy • Workplace eq
Slide 4: Group snapshot | Connecting from Cape to Cairo
Group snapshot | Connecting from Cape to Cairo Egypt R73 billion 1H revenue #1 Ethiopia Kenya Across our DRC Tanzania South Africa DRC Tanzania Mozambique Lesotho Egypt footprint Mozambique Kenya Ethiopia and 35% Lesotho South stake in Safaricom R22 billion Vodacom-led markets Safaricom-led markets
Slide 5: Our Strategy | Leading African TechCo with clear System of Advantage
Our Strategy | Leading African TechCo with clear System of Advantage Africa’s leading communications company 1 Footprint 2 Secure leadership strengthened in mobile and fixed Diversify and differentiate with our digital ecosystem Scale financial Digital partner of World class loyalty and Personalisat
Slide 6: Footprint | Accelerating growth, managing risks
Footprint | Accelerating growth, managing risks Egypt Ethiopia • ROCE accretive at acquisition • Added IFC to consortium as equity & debt funder • Market leader, attractive EBITDA margin • Localising costs and funding to manage FX pressures • Medium-term targets upgraded • M-Pesa launched ahead of b
Slide 7: Big Data & AI | Monetisation momentum
Big Data & AI | Monetisation momentum Data-driven organisation with 150 data scientists and engineers Data monetisation Credit Scoring Capex Optimisation 1 2 3 CVM enabled Credit scorecards Smart capex >80% of bundles in VSA personalised Safaricom live. VSA, Les, Moz ready R1 billion of efficiency +
Slide 8: Financial services | Scaling our dual-sided financial services ecosystem
Financial services | Scaling our dual-sided financial services ecosystem Merchant highlights Consumer highlights 1H24 growth driver Merchants 30-day M-Pesa app users New services 950k 4.4m supporting up 41% > two thirds of revenue growth M-Pesa higher ARPU from new services One more #1 mobile Scalin
Slide 9: 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 R72.8 billion R59.4 billion R27.3 billion R9.5 billion Reported 35.5% 42.2% 35.1% 13.1% intensity Growth Excluding Egypt 7.9% 7.9% 4.1% 12.7% intensity Pro-forma (incl Egypt)^ 9.0%
Slide 10: Group composition | Growth profile enhanced by Vodafone Egypt
Group composition | Growth profile enhanced by Vodafone Egypt Group service revenue Group service revenue Group operating profit R billion % R billion Growth Growth 19.8 17.01 28.2% / 4.3%^ 5.2% / 9.8%* 1.5 -1.1% 20.0 21.1 13.31 30.5 4.2 1.5 59.41 42.2% / 9.0%^ 26.9 2.1 2.1 0.2% 14.3 41.71 20.2 14.7
Slide 11: New services | Diversifying beyond mobile
New services | Diversifying beyond mobile South Africa Egypt International Safaricom New services 16.6% 15.1% 29.6% 46.6% Financial services R5.1bn R2.2bn R4.6bn R9.8bn Digital services IoT Fixed New services revenue as % of Group service revenue Core 83.4% 84.9% 70.4% 53.4% mobile R25.6bn R12.2bn R
Slide 12: 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 R6.2 billion Contribution 74 million 32.4% growth Safaricom R8.8 billion to Group 10
Slide 13: South Africa highlights | Strong revenue, cost savings to accelerate
South Africa highlights | Strong revenue, cost savings to accelerate Key indicator 1H24 Reported % change Key Revenue (Rm) 43 269 5.1 milestones Service revenue (Rm) 30 669 4.0 Resilient service revenue • Mobile contract revenue 4.1% • Mobile prepaid revenue 3.1% Vodacom Business service revenue (Rm
Slide 14: Vodafone Egypt highlights | Double-digit growth, strong data uptake
Vodafone Egypt highlights | Double-digit growth, strong data uptake 1H24 1H24 EGP Key indicator (Rm) (EGPm) % change^ Key Service revenue 14 312 23 711 28.0 milestones New services revenue 2 162 3 572 52.9 (financial & digital services, fixed and IoT) Strong commercial traction Vodafone Cash revenue
Slide 15: International highlights | Growth underpinned by data and M-Pesa
International highlights | Growth underpinned by data and M-Pesa Reported Normalised* Key indicator 1H24 % change % change Key Service revenue (Rm) 14 732 16.6 4.0 milestones Data revenue (Rm) 3 844 34.9 20.9 Strong data growth M-Pesa revenue (Rm) 3 814 26.8 13.2 • Usage growth 40.4% • Smartphone gr
Slide 16: Safaricom highlights | Strong results support guidance upgrade
Safaricom highlights | Strong results support guidance upgrade 1H24 KES 1H24 Rand Key indicator1 (KES’bn) % change (R’bn) % change Key Service revenue 159 136 9.9 21 079 5.2 milestones Data revenue 29 598 12.6 4 093 7.8 M-Pesa • Contribution increased to 41.6% of service revenue from 39.3% in PY M-P
Slide 17: Financial Review
Financial Review
Slide 18: Group income statement | EBITDA growth offset by Ethiopia & finance costs
Group income statement | EBITDA growth offset by Ethiopia & finance costs 1H24 1H23 Reported Pro-forma^ Normalised* R million % change % change % change Revenue 72 798 53 713 35.5 9.0 4.7 Service revenue 59 350 41 729 42.2 9.0 4.1 EBITDA 27 286 20 200 35.1 5.5 1.8 Depreciation and amortisation (11 1
Slide 19: Service revenue | Resilient performance in South Africa, Egypt accelerates
Service revenue | Resilient performance in South Africa, Egypt accelerates Group South Africa R billion / % R billion / % Vodafone 43.8% 40.8% 37.2% Egypt 16.1% contribution 3.9% 4.1% 3.0% 9.0% 1.3% 7.0% 9.0% 24.0 27.9 29.0 30.4 15.4 15.2 15.1 15.6 3Q23 4Q23 1Q24 2Q24 3Q23 4Q23 1Q24 2Q24 Service rev
Slide 20: Group EBITDA | Expecting stronger growth in the second half
Group EBITDA | Expecting stronger growth in the second half 'Fit4Growth' cost programme Group EBITDA 1H23 vs 1H24 Savings to accelerate in 2H R billion 4.0 -1.5 2.4 3.0 2.0 6.2 1.0 20.2 27.3 0.0 1H23 Egypt EBITDA SA + IB SA + IB 1H24 FY22 FY23 1H24 contribution margin opex growth SA IB 'Fit4Growth'
Slide 21: Net profit | Ethiopia & finance costs weigh on net profit
Net profit | Ethiopia & finance costs weigh on net profit Net profit bridge Net profit reconciliation, YoY R billion R million 1H23 8 071 -9.1 EBITDA 7 086 D&A SA + IB (828) -0.7 -0.4 -2.1 1.9 D&A Egypt (2 085) -3.8 Associates ex Ethiopia 132 1.0 -3.0 Ethiopia losses (250) -1.1 Net finance costs (71
Slide 22: HEPS | Ethiopia losses impact, Egypt accretive
HEPS | Ethiopia losses impact, Egypt accretive Factors impacting growth Headline earnings per share (after tax and non- controlling interests) cents Vodafone Egypt was EPS accretive -11 after issuing 242 million Group shares and raising R11 billion of debt • Deferred tax asset recognised in prior ye
Slide 23: Cash flow | Impacted by timing seasonality and timing factors
Cash flow | Impacted by timing seasonality and timing factors Group free cash flow R billion Seasonal working capital outflow, expected to unwind into second half -7.7 Net dividends received from associates and paid to non-controlling shareholders, impacted by: - Safaricom dividend timing. In 1H23 w
Slide 24: Free cash flow | FCF generation skewed to second half
Free cash flow | FCF generation skewed to second half Group FCF: 1H23 vs 1H24 Group FCF: material seasonal variance R billion Timing factors -1.3 -0.7 2.2 -0.7 9.7 11.2 12.4 13.5 12.2 16.5 -1.3 2.0 -0.4 2.0 2.5 2.7 5.3 4.5 2.0 1H23 VFE FCF* VFE VFE tax OpFCF SF dividend Finance -0.2 1H24 -0.2 minori
Slide 25: 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 90% pay-out + Safaricom pass-through >75% pay-out Policy At least 75% of 15 605 Group headline earnings 13 098 7 894 6 857 7 711 6 241 6 337 FY22 FY23 FY24 Interim dividend Fina
Slide 26: Net debt | Seasonally higher net debt
Net debt | Seasonally higher net debt Group net debt 2H24 R billion outlook 1.1 0.6 0.2 6.4 • Final payment for South 0.8 4.0 Africa spectrum of R2.2 3.2 10.4 billion -2.0 7.4 -16.5 5.8 • Seasonally strong cash inflow in 2H 35.2 43.8 44.6 33.9 44.3 48.3 48.3 48.5 54.8 55.9 56.6 FY22 FCF Cash SA Othe
Slide 27: Capital structure | Comfortable leverage position
Capital structure | Comfortable leverage position Maturity profile Debt type Net debt/EBITDA R billion R billion R billion / times 58.7 57.9 1.1 43.4 1.0 35.6 22.2 14.3 14.4 15.1 1H23 1H24 1H23 1H24 Current Non-current Leases Financial Currency mix Debt mix %% % % Incl leases Excl leases Incl leases
Slide 28: Targets | Medium-term targets reiterated
Targets | Medium-term targets reiterated Targets Considerations Group service revenue growth The macro-outlook remains uncertain, mid-to-high single digit FX volatility remains a risk Group EBITDA growth Safaricom Plc raised Kenya and Group guidance, high single digit confirmed peak EBITDA losses fo
Slide 29: 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 30: Outlook | We have a clear ambition to grow new services
Outlook | We have a clear ambition to grow new services FY23 1H24 Medium term (3-5 years) 19.3% 19.8% 25% - 30% New services Of which: • Financial services 10.4% CAGR: c20% for new services: • Digital services 2.0% • Financial services mid-teens • IoT 1.5% contribution to SR New services revenue as
Slide 31: Wrap-up
Wrap-up Further together
Slide 32: Priorities | Enhancing shareholder value as we shift from telco to techco
Priorities | Enhancing shareholder value as we shift from telco to techco Execute on our Accelerate Enhance system of advantage and diversify returns societal value Leadership in fixed and mobile Targets Inclusion for all Complete M&A MAZIV Accelerate device Medium-term: increase female representati
Slide 33: Appendix
O Appendix
Slide 34: South Africa | Impact of loadshedding
South Africa | Impact of loadshedding Average network (R1) availability Variable Impact 98% 95% 97% Data • Acceleration of data traffic growth from 30% in 1H23 to 42% in 1H24 demand 42% 45% • R300 million additional operating costs in FY23, largely related to diesel Operating • Some incremental netw
Slide 35: Group tax | ETR impacted by withholding tax on dividends
Group tax | ETR impacted by withholding tax on dividends Group tax charge and effective tax Reconciliation of SA tax rate to effective tax rate R million / % % 1H24 Statutory tax rate 27.0% Net profit from associate and JVs -2.4ppt Irrecoverable foreign taxes +3.7ppt 29.6% 27.0% Non-deductible finan
Slide 36: Impact of exchange rates
Impact of exchange rates YoY% growth Revenue Average YTD exchange rates Reported Normalised* Pro forma^ 1H24 1H23 % changed USD/ZAR 18.65 16.31 14.3 South Africa 5.1 5.1 ZAR/MZN 3.43 3.93 (12.5) ZAR/TZS 129.93 143.12 (9.2) International 16.4 3.6 EUR/ZAR 20.29 16.88 20.2 ZAR/KES 7.55 7.24 4.3 Group 3
Slide 37: Country data
Country data Safaricom Safaricom South Africa Tanzania DRC Mozambique Lesotho Egypt Kenya Ethiopia PopulationŦ (million) 61.3 67.4 102.3 33.9 2.3 112.7 55.1 126.5 GDP per capitaŦ (USD) 6 180 1 230 657 569 992 2 831 2 003 961 GDP growth estimateŦ (%) 0.6 5.5 6.5 6.5 0.7 3.7 5.2 6.0 Ownership (%) 100
Slide 38: 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 any during the month. Also included are users on Total ARPU is calculated by dividing s
Slide 39: 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 40: More information
More information Visit our website for more information Upcoming dates http://www.vodacom.com 3Q24 results 2 February 2024 FY24 results 13 May 2024 AGM TBC 1Q25 results 24 July 2024 Contact us Follow us on social media VodacomIR@vodacom.co.za @Vodacom Facebook.com/vodacom
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