Slide 1: Vodacom Group Proprietary Limited
Vodacom Group Proprietary Limited For the year ended March 31, 2004 June 7, 2004
Slide 2: Content
Content Alan Knott-Craig Group Chief Executive Officer Operational highlights Leon Crouse Group Finance Director Financial review 2
Slide 3: Operational highlights
Operational highlights Alan Knott-Craig Group Chief Executive Officer
Slide 4: Group highlights
Group highlights Total customers Revenue EBITDA 11.2 million R23.5 billion R7.8 billion 29.7% 18.7% 15.9% Net profit Customers per Capex as a % employee of revenue R3.0 billion 2,433 12.3% 36.9% 23.9% 4.9%pts Launch of Vodacom Mozambique Operational structure streamlined 4
Slide 5: Consistent delivery on strategy
Consistent delivery on strategy Revenue growth Margin management • Market penetration • Leveraging our economies of • Vodafone alliance scale • The continuous introduction • Control of customers of new high-utility services • Optimising efficiencies – Look4me, Call Sponsor • Synergy between operatio
Slide 6: New products and services
New products and services • Top Up contract/prepaid hybrid • Office Anywhere • Look4me • Look4it • Yebo5 prepaid voucher • Call Sponsor • Corporate GPRS APN access 6
Slide 7: BEE – an economic imperative in South Africa
BEE – an economic imperative in South Africa • Equity - HCI transaction – Purchased for R91 million, sold for R1.5 billion • Employment equity – 79% of workforce in SA from designated groups • Procurement – 60% of total commercial spend with BEE companies • Enterprise development – Community service
Slide 8: South Africa – impressive market growth
South Africa – impressive market growth 20 18.2 18 16 13.9 14 Customers (millions) 10.8 12 9.7 10 8.5 8.3 7.9 8 6.6 6.0 5.1 5.1 6 3.2 4 2 0 2001 2002 2003 2004 Other operators Vodacom Total 8
Slide 9: South Africa – market share 54%
South Africa – market share 54% Population 42.7 million, penetration 41.2% % 2003 2004 change • Total customers 7.9 million 9.7 million 23.5% • Revenue R18,544 million R21,981 million 18.5% • EBITDA R6,423 million R7,536 million 17.3% • ARPU R183 R177 3.3% • Customers per employee 2,017 2,527 25.3%
Slide 10: Strong SA operational indicators
Strong SA operational indicators • Gross connections up Vodacom SA customers 43.0% to a new high 12,000 9,725 of 5.0 million 10,000 7,874 Thousands 8,000 6,557 • Customers up 23.5% 6,000 5,108 to 9.7 million 4,000 2,000 • Total traffic increased 0 by 17.3% to 12.3 billion 2001 2002 2003 2004 minutes
Slide 11: Higher SA ARPUs, stable contract churn
Higher SA ARPUs, stable contract churn • Contract churn at all-time SA churn history low of 10.1% 45 40 40.5 34.0 41.3 35 • Prepaid churn increased 30.1 36.6 30 31.8 24.8 25 30.4 to 41.3% % 23.3 27.2 20 15 17.4 18.7 10 • Prepaid ARPU stable 14.5 11.9 10.1 5 0 • Increased contract ARPU 2000 2001 2002
Slide 12: Potential for further growth in South Africa
Potential for further growth in South Africa • Potential for further growth South African market share – Data focus – SA market estimated at 25 to 30 million 100 90 • Vodacom is strategically 80 placed for continued 70 59 61 61 dominance 60 57 54 – Lowest-cost operator 50 % – Extensive distribution
Slide 13: Tanzania – market share 57%
Tanzania – market share 57% Population 35.9 million, penetration 3.3% % 2003 2004 change • Total customers 447,000 684,000 53.0% • Revenue R880 million R867 million 1.5% • EBITDA R334 million R278 million 16.8% • ARPU R216 R128 40.7% • Customers per employee 1,997 2,165 8.4% • Capital expenditure R3
Slide 14: DRC – market share 47%
DRC – market share 47% Population 56.6 million, penetration 2.3% % (100% of Vodacom Congo) 2003 2004 change • Total customers 248,000 670,000 170.2% • Revenue R508 million R933 million 83.7% • EBITDA (R96 million) R190 million • ARPU R200 R150 25.0% • Customers per employee 1,215 2,006 65.1% • Capit
Slide 15: Lesotho – market share 80%
Lesotho – market share 80% Population 1.8 million, penetration 5.1% % 2003 2004 change • Total customers 78,000 80,000 2.6% • Revenue R96 million R119 million 24.0% • EBITDA R26 million R27 million 3.8% • ARPU R104 R125 20.2% • Customers per employee 1,047 1,176 12.3% • Capital expenditure R72 milli
Slide 16: Mozambique – market share 11%
Mozambique – market share 11% Population 17.5 million, penetration 2.6% 2004 • Total customers 58,000 • Revenue R13 million • EBITDA (R71 million) • ARPU R110 • Customers per employee 1,349 • Capital expenditure R478 million Faster roll-out 16
Slide 17: Slowing SA capex, increasing other African operations capex
Slowing SA capex, increasing other African operations capex Capex composition – 2003 Capex composition – 2004 Capex R3,399 million Capex R2,891 million 2.3% 15.2% 16.5% 0.4% 9.5% 13.7% 12.1% 57.2% 73.0% South Africa South Africa Tanzania Tanzania Congo (51%) Congo (51%) Lesotho and holding companies
Slide 18: Financial review
Financial review Leon Crouse Group Finance Director
Slide 19: Group results
Group results % change R million 2002 2003 2004 04/03 Revenue 16,151 19,779 23,478 18.7 Operating expenses excluding depreciation and amortization (10,460) (13,075) (15,711) 20.2 EBITDA 5,691 6,704 7,767 15.9 Depreciation and amortization (2,070) (2,374) (2,533) 6.7 Profit from operations 3,621 4,33
Slide 20: Group revenue analysis by country
Group revenue analysis By country % change R million 2002 2003 2004 04/03 South Africa 15,410 18,544 21,981 18.5 Tanzania 657 880 867 (1.5) DRC (51%) 14 259 476 83.8 Mozambique – – 13 – Lesotho 70 96 119 24.0 Holding companies – – 22 – Vodacom Group 16,151 19,779 23,478 18.7 Other African operation’
Slide 21: Group revenue analysis by revenue type
Group revenue analysis By revenue type Revenue analysis – 2003 Revenue analysis – 2004 R19,779 million R23,478 million 2.7% 1.9% 2.8% 1.5% 11.4% 12.3% 26.8% 24.6% 53.8% 54.3% 3.3% 4.4% Airtime Data revenue Airtime Data revenue Interconnection Equipment sales Interconnection Equipment sales Internati
Slide 22: Data revenue growth
Data revenue growth By country 62.3% 943 1,000 900 800 700 581 600 (Rm) 436 500 400 300 200 28.2% 91 71 100 150.0% 21 5 2 0 2002 2003 2004 Lesotho Tanzania South Africa 22
Slide 23: Group EBITDA analysis
Group EBITDA analysis By country % change R million 2002 2003 2004 04/03 South Africa 5,567 6,423 7,536 17.3 Tanzania 231 334 278 (16.8) DRC (51%) (12) (49) 97 – Mozambique – – (71) – Lesotho 31 26 27 3.8 Holding companies (126) (30) (100) (233.3) Vodacom Group 5,691 6,704 7,767 15.9 EBITDA margin (
Slide 24: EBITDA growth and margin pressure
EBITDA growth and margin pressure 11,000 40.0 36.2% 35.2% 10,000 33.9% 33.1% 35.0 31.6% 9,000 8,000 7,767 30.0 7,000 6,704 25.0 6,000 5,691 20.0 % 5,000 (Rm) 4,189 4,000 15.0 3,462 3,000 10.0 2,000 5.0 1,000 0 0.0 2000 2001 2002 2003 2004 EBITDA EBITDA margin 24
Slide 25: Group operating expenses
Group operating expenses By expense type Operating expense analysis 2003 Operating expense analysis 2004 R15,449 million R18,244 million 7.7% 7.3% 6.6% 7.3% 15.4% 13.9% 55.9% 55.2% 14.4% 16.4% Other direct network operating costs Other direct network operating costs Payments to other operators Payme
Slide 26: Group profit from operations analysis
Group profit from operations analysis % change R million 2002 2003 2004 04/03 South Africa 3,627 4,476 5,466 22.1 Tanzania 134 187 141 (24.6) DRC (51%) (20) (117) 9 – Mozambique – – (88) – Lesotho 12 4 1 (75.0) Holding companies (132) (220) (295) (34.1) Vodacom Group 3,621 4,330 5,234 20.9 Profit fr
Slide 27: Factors affecting the trends
Factors affecting the trends • Currency influence Adjusted and statutory profit after tax – Current capex cheaper in Rand 13.4% 13.0% 13.5% 13.9% 4,000 14.0 – Depreciation of US$ historical 3,500 11.8% 12.0 capex lower 3,000 10.0 – Translated US$ revenue lower 2,500 8.0 (Rm) (%) 2,000 – Rand-based a
Slide 28: Factors affecting the trends
Factors affecting the trends • Change in traffic mix in SA Equipment sales negatively affected operating 4,000 profit 60.2% 20.3% 39.2% 28.0% 3,500 2,898 3,000 • Fluctuating, low margin 2,500 2,264 2,042 (Rm) 2,000 1,627 equipment sales affect 1,500 1,275 1,000 revenue and margins 500 0 • More compe
Slide 29: Improved efficiencies
Improved efficiencies Customers per employee per country 3,000 2,527 2,500 2,165 2,017 2,006 2,000 1,997 1,349 1,215 1,500 1,176 1,047 1,000 500 0 South Africa Tanzania DRC Lesotho Mozambique 2003 2004 29
Slide 30: Improved efficiencies
Improved efficiencies Capex as % of revenue 30.0 25.3 24.0 25.0 21.1 20.0 17.2 15.0 % 12.3 10.0 5.0 0.0 2000 2001 2002 2003 2004 30
Slide 31: Strong cash generation
Strong cash generation Operating cash flow 10,000 13.0% 8.6% 7,597 32.7% 8,000 6,721 6,188 46.6% 6,000 4,664 (Rm) 3,182 4,000 2,000 0 2000 2001 2002 2003 2004 31
Slide 32: Strong cash generation
Strong cash generation Free cash flow 4,000 62.7% 3,037 3,500 3,000 2,500 1,867 2,000 (Rm) 1,500 915 1,000 -104 -794 500 0 -500 -1,000 2000 2001 2002 2003 2004 32
Slide 33: Net debt maturity profile
Net debt maturity profile Total Rand million 2005 2006 2007 2008 2009 >2010 2004 2003 SA finance leases 29 51 79 114 192 421 886 885 Vodacom Tanzania 66 85 110 87 78 – 426 592 Vodacom Congo (51%) 745 – – – – – 745 692 Vodacom Lesotho 4 – – – – – 4 4 SA shareholder loans – – – – – – – 920 Debt exclud
Slide 34: Debt composition
Debt composition Gross debt composition Gross debt composition including including bank overdrafts bank overdrafts and off-balance sheet commitments R2,833 million R3,752 million 15% 11% 27% 25% 27% 40% 24% 31% Foreign denominated, ring-fenced Foreign denominated, ring-fenced Foreign denominated, no
Slide 35: Shareholder distributions
Shareholder distributions • Repaid R920 million in Dividends and interest on shareholder loans shareholder loans • Paid interim dividend of 2,500 R600 million 179.6% • Declared final dividend of 2,000 2,100 R1.5 billion • Dividend expected to be 1,500 increased because of not (Rm) entering Nigeria 1
Slide 36: Questions?
a LWT vodacom Questions?
Slide 37: Disclaimer
Disclaimer • This presentation has been prepared and published by Vodacom Group (Proprietary) Limited. • Vodacom Group (Proprietary) Limited is a private company and as such is not required by the Companies Act of 61 of 1973, as amended, to publish its results. • Vodacom Group (Proprietary) Limited
Slide 38: Group income statements
Group income statements extracts for the years ended March 31 % change R million 2002 2003 2004 04/03 Revenue 16,151 19,779 23,478 18.7 Operating expenses excluding depreciation and amortization (10,460) (13,075) (15,711) 20.2 EBITDA 5,691 6,704 7,767 15.9 Depreciation and amortization (2,070) (2,37
Slide 39: Group balance sheets
Group balance sheets extracts as at March 31 % change R million 2002 2003 2004 04/03 ASSETS Non-current assets 11,429 12,276 13,194 7.5 Current assets 4,145 4,690 6,904 47.2 Total assets 15,574 16,966 20,098 18.5 EQUITY AND LIABILITIES Capital and reserves 5,464 6,837 7,603 11.2 Minority interest 11
Slide 40: Group cash flow statements
Group cash flow statements extracts for the years ended March 31 % change R million 2002 2003 2004 04/03 Cash receipts from customers 15,583 19,349 22,798 17.8 Cash generated from operations 6,188 6,721 7,597 13.0 Net cash flows from operating activities 3,815 4,342 4,790 10.3 Net cash flows utilize