Slide 1: Vodacom Group Annual Financial Results
VODACOM GROUP (PROPRIETARY) LIMITED ANNUAL FINANCIAL RESULTS for the year ended March 31
Slide 2: Operational highlights
Operational highlights Alan Knott-Craig Chief Executive Officer
Slide 3: Group highlights
Group highlights For the year ended March 31, 2007 vs. prior year Total customers (SIM cards) 30.2 million 28.2% High gross connections: increase of 31.5% year on year to 15.6 million Revenue R41.1 billion 20.9% Profit from operations R10.9 billion 22.5% EBITDA R14.2 billion 20.5% Net profit after t
Slide 4: South Africa
20.1% 18.8% 13 pts 19.7% 16.1 pts South Africa 10.9 million Gross connections 33.8% Churn % 84% Estimated mobile penetration % R10.3 billion Profit from operations 23.0 million Total customers 2007
Slide 5: Tanzania
55.3% 54.6% 7 pts 31.6% 7.1 pts Tanzania 2.1 million Gross connections 35.6% Churn % 16% Estimated mobile penetration % R346 million Profit from operations 3.2 million Total customers 2007
Slide 6: Democratic Republic of Congo (DRC)
67.5% 89.2% 3 pts 136.8% 2.3 pts Democratic Republic of Congo (DRC) 1.7 million Gross connections 30.4% Churn % 9% Estimated mobile penetration % R277 million Profit from operations 2.6 million Total customers 2007
Slide 7: Lesotho
35.4% 21.4% 4 pts 47.1% Lesotho 119 thousand Gross connections 19.0% Churn % 17% Estimated mobile penetration % R75 million Profit from operations 279 thousand Total customers 2007
Slide 8: Mozambique
101.6% 133.0% 6 pts 9.5 pts 22.9% Mozambique R177 million Loss from operations 797 thousand Gross connections 41.7% Churn % 14% Estimated mobile penetration % R154 million Loss from operations (excluding impairment) 988 thousand Total customers 2007
Slide 9: Pillars for continued growth
Pillars for continued growth
Slide 10: Loyalty programmes
Loyalty programmes Prepaid: Yebo Millionaires Vodacom Talking Points Contract: Onyx/Platinum Credit card South Africa VodaMail: Free e-mail service to contract customers Bazza uau!: prepaid tariff rewarding customers for receiving calls Bazza bonus: rewarding previous day’s spend with free airtime 6
Slide 11: Innovative non-voice products and tariffs
Innovative non-voice products and tariffs Access content through commercial arrangement 22 TV channels Enter broadcasting / multimedia market Over 33 thousand Mobile TV users Mobile TV / DVB-H Digital Satellite Pay TV Personal services and telemetry Business customer needs: offering full service to
Slide 12: Expansion of distribution and support channels
Expansion of distribution and support channels Community service containers Strong relationships with the distribution channels Informal channels Dual service providers Branded franchised store points Vodaworld cellular mall – biggest contract connection centre Distribution channels Vodacare stores
Slide 13: Brand leadership
Brand leadership Voted most popular telecommunications brand and second most recognised brand after Coca-Cola (Markinor / Sunday Times Top Brands)
Slide 14: Black Economic Empowerment (BEE)
Black Economic Empowerment (BEE) Vodacom is developing a BEE transaction which will be completed towards the end of the year, enabling employees and BEE partners to share in the success of the business May well be one of the largest BEE equity transactions in South Africa (capped at R7.5 billion) Be
Slide 15: Regulation
Regulation Reduction in mobile termination rates Pro-actively engaged with regulator Customer registration legislation and MNP Affects informal distribution channel Remains threat to industry Government re-evaluating introduction Vodacom pro-active in commencing registration process MNP had no major
Slide 16: Acquisitions
Acquisitions Acquired a 10% stake in iBurst through the WBS acquisition, with a further option to acquire 15.5% In order to ensure growth within our area of focus, Vodacom made investments in companies such as: G-Mobile Holdings Ltd (Wi-Fi business) Gogga Tracking Solutions (Pty) Ltd (Wi-Fi business
Slide 17: Managed services and internet products
Managed Ven Internet products Services Managed voice aggregation solutions Managed Services Bactkecey eS iene Wireless access capacity products and services Diesel Corporate Access Service EIRENE? Provider Provider 7. Infrastructure ’ Provider Hosting and z data centre s Repackaging fixed connectivi
Slide 18: Way forward (continued)
Way forward (continued) Continue to seek financially viable opportunities in Africa Seek out new associated business opportunities in South Africa Gear up to provide total converged solutions to Corporates Grow and consolidate current business Focus on improving customer service and loyalty Focus on
Slide 19: Financial review
Financial review Leon Crouse Chief Financial Officer
Slide 20: Group income statement
Group income statement Extracts for the year ended March 31, (147.9%) (295) (119) (106) Net finance (costs) / income >200% - - Profit on sale of investments (143.4%) (23) (268) Impairment 27.6% 6,560 5,143 3,888 Net profit (24.4%) (3,836) (3,084) (2,614) Taxation (21.1%) (26,919) (22,234) (17,725) O
Slide 21: Group operational indicators
Group operational indicators Gross connections up 31.5% year on year to a record high of 15.6 million Customers up 28.2% year on year to 30.2 million Total traffic in South Africa increased by 19.4% year on year to 20.4 billion minutes Gross connections Closing customers
Slide 22: ARPU by country
ARPU by country Declining ARPUs SA decreased 10.1% to R125 DRC decreased 10.5% to R77 Lesotho decreased 3.8% to R75 Tanzania decreased 22.4% to R52 Mozambique decreased 22.2% to R28 Vodacom Group consolidated ARPU decreased 12.6% year on year from R127 to R111 ARPU per month
Slide 23: South Africa ARPU
South Africa ARPU Contract ARPU decreased 9.6% year on year to R517 Prepaid ARPU decreased 8.7% year on year to R63 Total ARPU decreased 10.1% year on year to R125 Lower incoming revenue per customer Lower average usage Customer mix South Africa ARPU per month
Slide 24: Group revenue by country
Group revenue By country 43.5% 1,914 1,334 1,075 DRC 19.1% 37,007 31,069 25,041 South Africa, including holding companies 20.9% 41,146 34,043 27,315 70.3% Mozambique 33.5% Lesotho 31.8% 1,729 1,312 Tanzania 2006 % change 2007 2005 R million Revenue driven by strong customer growth Non-South African
Slide 25: Group revenue composition
Group revenue Revenue composition 34.5% 1,306 International airtime 17.9% 4,699 3,986 2,687 Equipment sales 17.0% 7,835 6,697 5,924 Interconnection 18.0% 23,708 20,085 16,191 Airtime, connection & access 20.9% 41,146 34,043 27,315 (3.8%) Other sales and services 64.0% 3,342 2,038 1,340 Data 2006 % c
Slide 26: Group revenue (excluding equipment sales)
Group revenue (excluding equipment sales) By revenue type Revenue analysis – 2007 R36,447 million (excluding equipment sales) Revenue analysis – 2006 R30,057 million (excluding equipment sales) Airtime contribution down 1.8% points to 65.0% Interconnect contribution down 0.8% points to 21.5% Data co
Slide 27: EBITDA and margin analysis
EBITDA and margin analysis EBITDA margin by country EBITDA performance Increased 20.5% year on year to R14.2 billion EBITDA margin decreased 0.1% points year on year to 34.6% EBITDA margin 39.9%, when excluding cellular phone and equipment sales South Africa EBITDA Increased 17.3% year on year to R1
Slide 28: Group profit from operations
Group profit from operations By country 136.8% DRC >200% (23) Holding companies 31.6% Tanzania 0.4% pts 26.4% 26.0% 23.7% Profit from operations margin (%) 22.5% 10,860 8,866 6,478 (22.9%) (177) (144) (454) Mozambique 47.1% Lesotho 19.7% 10,293 8,602 6,618 South Africa 2006 % change 2007 2005 R mill
Slide 29: Factors affecting trends and margins
Factors affecting trends and margins South Africa traffic mix Outgoing traffic increased 20.1% year on year to 13.6 billion minutes: Outgoing fixed increased by 2.6% to 1.2 billion Outgoing mobile increased by 22.2% 12.4 billion Incoming traffic increased 18.1% year on year to 6.7 billion minutes: I
Slide 30: Productivity measures
Productivity measures Consolidated customers per employee Increased 18.2% year on year to 5,093 based on 5,920 employees Consolidated gross capex additions as a % of revenue increased to 16.4% from 15.1% for the same period in the previous financial year Investment in new technologies Increased capa
Slide 31: Capex additions and composition
Capex additions and composition Including software Capex gross additions – 2007 R6,748 million Capex gross additions – 2006 R5,138 million South Africa capex gross additions increased by 13.9% to R5.0 billion Non-South African capex additions increased by 113.1% to R1.6 billion
Slide 32: Cash generation
Cash generation EBITDA increased by R2.4 billion Cash generated from operations increased 25.0% to R13.9 billion Free cash flow increased 13.8% to R3.7 billion Cash generated from operations Free cash flow
Slide 33: Debt composition
Debt composition Gross debt composition including bank overdrafts– 2007 R3,435 million Gross debt composition including bank overdrafts – 2006 R3,855 million Net debt: R2,664 million (2006: R709 million) Net debt to equity ratio 27.6% (2006: 8.2%) Adjusting for dividends and STC on dividends payable
Slide 34: Group shareholder distributions
Group shareholder distributions 20.0% year on year The level of future dividend payments is dependent on the extent of investment activities 32.4% year on year 61.9% year on year
Slide 35: Questions?
Questions?
Slide 36: Group balance sheet
Group balance sheet Extracts at March 31, 8.3% 15,011 13,860 11,474 Current liabilities 14.9% 28,470 24,768 22,595 Total equity and liabilities 70.5% 3,812 2,236 3,233 Non-current liabilities 11.2% 9,647 8,672 7,888 EQUITY AND LIABILITIES Capital and reserves 14.9% 28,470 24,768 22,595 Total assets
Slide 37: Group cash flow statement
Group cash flow statement Extracts for the year ended March 31, (106.1%) (108) 1,760 2,173 Cash and cash equivalents at the end of the year >200% (16) (6) Effect of foreign exchange rate changes (19.0%) 1,760 2,173 1,598 Cash and cash equivalents at the beginning of the year (>200%) (1,926) (397) Ne
Slide 38: 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 61 of 1973, as amended, to publish its results. Vodacom Group (Proprietary) Limited makes no
Slide 39: Thank you
Thank you