Vodacom Group Limited · JSE:VOD
Vodacom — Vodacom Group Ltd Ord — Q4 2022 Earnings Presentation
32 slides from Vodacom's earnings presentation, May 16, 2022
Slide 1: Annual results
Annual results For the year ended 31 March 2023 Further together
Slide 2: Our Purpose | Further together
Our Purpose | Further together Purpose We connect for a better future Digital society Inclusion of all Planet • Access for all • Managing carbon emissions • Digitising critical sectors • Propositions for equality • Reducing waste, circular economy • Digitising government • Workplace equality • Using
Slide 3: 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 Footprint Secure leadership 1 2 strengthened in mobile and fixed Diversify and differentiate with our digital ecosystem Scale financial Digital partner of Personalisation World class loyalty
Slide 4: Strategy in action | We are accelerating our system of advantage
Strategy in action | We are accelerating our system of advantage The six capitals Inputs Strategic ambitions Strategic outcomes: Medium-term targets Social and relationship Our Social contract Africa’s leading upgraded 186 million customers communications company 2H EBITDA growth R16.5bn in capital
Slide 5: Strategy in action | Vodafone Egypt investor day, a best-in-class asset
Strategy in action | Vodafone Egypt investor day, a best-in-class asset Leadership position across key KPIs Staying #1 Telecom Largest spectrum Brand #1 operator portfolio & number of Sites #1 +13 points gap on non-user Technology Consumer Business Financial People 82.5MHz & 10.8k sites consideratio
Slide 6: Strategy in action | Safaricom investor day, showcasing key growth vectors
Strategy in action | Safaricom investor day, showcasing key growth vectors Ethiopia M-Pesa Kenya Enterprise Kenya Electronic payments Strong position in the market Demographic opportunity 14% contribution to Safaricom 119m ARPU growth and expansion to new service revenue 1 population, 63m customer d
Slide 7: Strategy in action | Partnering to power our growth
Strategy in action | Partnering to power our growth FY23 achievements Looking ahead #1 Efficiency through infrastructure sharing in Network NPS all our markets #1 TowerCo CIVH & Rural BTS via Non-terrestrial in Gartner IT4C (SA & EG) established in SA International FibreCo ring-fenced SPV networks S
Slide 8: Strategy in action | Scaling our dual-sided financial services ecosystem
Strategy in action | Scaling our dual-sided financial services ecosystem Consumer proposition Lifestyle super-app Merchant proposition Trusted platform powered by Large footprint, and brand, low set-up personalised offers, access to costs, personal targeting, affordable financial services low custom
Slide 9: Financial services | Scaling our dual-sided financial services ecosystem
Financial services | Scaling our dual-sided financial services ecosystem Merchant services Super-app Financial services + growth drivers Active merchants 30 day M-Pesa app users Launched across all markets MPA roadmap 803k >4m In Tanzania, 30% mini-app acceleration, up with of M-Pesa customers use a
Slide 10: Results highlights | Reflects growth of new services and Vodafone Egypt
Results highlights | Reflects growth of new services and Vodafone Egypt Revenue Service revenue EBITDA Capital expenditure R119.2 billion R93.7 billion R45.1 billion R16.5 billion Reported 16.0% 17.2% 13.2% 12.6% Growth Ex Vodafone Egypt^ 8.0% 7.2% 6.0% 4.3% Normalised* 4.9% 3.5% 3.6% 186m 71m 948cp
Slide 11: Geographic lens | Growth profile enhanced by Vodafone Egypt
Geographic lens | Growth profile enhanced by Vodafone Egypt Group service revenue Group operating profit Group customers R billion R billion Millions / growth Growth Growth 8.1% 29.31 3.6% / -0.9%* 28.21 10.0% / 5.2%* 2.8 -9.8% 37.7 41.5 3.1 45.9 4.5 4.3% 4.4 93.71 17.2% / 3.5%* 1.7 79.91 20.4% 50.2
Slide 12: Product lens | We are diversifying into new revenue streams beyond mobile
Product lens | We are diversifying into new revenue streams beyond mobile South Africa Egypt International Safaricom (from 8 Dec 2022) New services 15.3% R9.2bn 14.2% R1.1bn 28.7% R7.9bn 44.5% R18.4bn Financial services Digital services IoT Fixed Core 84.7% 85.8% 71.3% 55.5% mobile R50.8bn R6.9bn R1
Slide 13: Financial services | Africa's leading fintech platform
Financial services | Africa’s leading fintech platform 100% basis (including Safaricom) Contribution to International M-Pesa growth Strong 71 million $364.8 billion underlying growth Financial M-Pesa in financial services customers transaction value services revenue R6.5 billion +31.1% SA Egypt M-Pe
Slide 14: South Africa highlights | Clear EBITDA improvement in second half
South Africa highlights | Clear EBITDA improvement in second half Key indicator FY23 Reported % change Key milestones Resilient service revenue Revenue (Rm) 84 715 4.8 • Mobile contract revenue 2.8% • Mobile prepaid revenue 3.1% Service revenue (Rm) 60 038 2.6 • Financial services revenue 10.8% • 4Q
Slide 15: Vodafone Egypt highlights | Double-digit growth, strong data uptake
Vodafone Egypt highlights | Double-digit growth, strong data uptake FY23 FY23 Pro-forma Key indicator Consolidated (Rm) Pro-forma (EGPm)^ % change^ Key milestones from 8th Dec 2022 Full year Full year (c 4 months) Service revenue 7 976 39 073 21.7 Data growth supported by pricing environment VF cash
Slide 16: International highlights | Growth underpinned by data and M-Pesa
International highlights | Growth underpinned by data and M-Pesa Reported Normalised* Key indicator FY23 % change % change Key milestones Service revenue (Rm) 26 395 18.8 5.3 Strong data growth • Usage growth 33.1% Data revenue (Rm) 6 109 33.2 18.2 • Smartphone growth 16.3% M-Pesa revenue (Rm) 6 504
Slide 17: Safaricom highlights | Strong growth supported by M-Pesa and fixed
Safaricom highlights | Strong growth supported by M-Pesa and fixed FY23 KES % FY23 R% Key milestones Key indicator1 (KES’bn) change (R’bn) change Service revenue 295 692 5.2 41 482 10.0 M-Pesa • Contribution increased to 39.6% of service revenue from 38.3% in PY Data revenue 53 952 11.4 7 577 17.1 •
Slide 18: Financial Review
Financial Review Further together
Slide 19: Group income statement | EBITDA growth offset by Ethiopia & finance costs
Group income statement | EBITDA growth offset by Ethiopia & finance costs Reported Ex Vodafone Egypt^ Normalised* R million FY23 FY22 % change % change % change Revenue 119 170 102 736 16.0 8.0 4.9 Service revenue 93 650 79 936 17.2 7.2 3.5 EBITDA 45 144 39 888 13.2 6.0 3.6 Depreciation and amortisa
Slide 20: Service revenue | Growth supported by Vodafone Egypt & FX
Service revenue | Growth supported by Vodafone Egypt & FX Group South Africa International R million / % R million / % R million / % Vodafone Egypt contribution: 3Q: R1 821 million 4Q: R6 155 million 37.2% 21.6% 18.0% 10.4% 25.2% 16.1% 3.0% 9.2% 1.3% 8.7% 5.2% 3.0% 3.1% 4.5% 5.4% 3.5% 2.4% 2.6% 4.9%
Slide 21: South Africa | Impact of loadshedding
South Africa | Impact of loadshedding Average network (R1) availability 98% 98% 96% 94% Variable Impact 45% 605 loadshed hours Data • Acceleration of data traffic growth from 30% in FY1Q to 45% in FY4Q demand • Incrementally challenging to meet demand as loadshedding stages increase 39% • R300 milli
Slide 22: Group EBITDA | Significant improvement in second half growth
Group EBITDA | Significant improvement in second half growth Group EBITDA 1H22 vs 1H23 Group EBITDA: 2H22 vs 2H23 R billion 24.9 0.5 -0.9 0.3 -0.2 0.6 1.5 1.4 20.2 2.9 20.1 -0.1 -0.6 19.8 Lease SA network, Service Vodafone VC service Net cost Load Net cost 1H22 contract back-to-office, revenue FX im
Slide 23: 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 13.2% R million R million FY22 17 734 EBITDA 5 256 (16 818) R419m gain yoy D&A Vodacom (2 161) (1 316) (531) 3.6% 466m (1 150) 3 923 gain yoy D&A Vodafone Egypt (1 150) R796m (4 712) 468 R2 161
Slide 24: HEPS | Underlying performance improved
HEPS | Underlying performance improved Factors impacting growth (after tax and non- Headline earnings per share controlling interests) cents • Higher start-up losses in 1 013 Ethiopia of R714 million • Higher finance costs of 40 R757 million • FX gain of R340 million • Deferred tax asset 948 recogni
Slide 25: Cash flow | Strong growth, impacted by timing of Safaricom dividend
Cash flow | Strong growth, impacted by timing of Safaricom dividend Group free cash flow R million 13.2% 868 Impacted by timing of Safaricom's interim dividend - For the FY22 interim received in April 2022, R1.2bn - For the FY23 interim received in March 2023, R1.0bn (16 490) (4 952) 10.7% 3 821 (54
Slide 26: Shareholder returns | One of the JSE's highest payout ratios
Shareholder returns | One of the JSE’s highest payout ratios Total dividend declared New simplified policy implemented R million 90% pay-out + Safaricom pass-through >75% pay-out Old policy Since FY13, we have maintained dividend policy of paying at 15 146 15 605 least 90% of headline earnings, excl
Slide 27: Net debt | Strong free cash supports FY leverage
Net debt | Strong free cash supports FY leverage Group net debt FY24 outlook R billion 3.4 • Spectrum payments: 3.2 0.9 10.4 7.4 -16.5 - VSA R2.2 billion 2.4 -2.0 6.4 - TZ R0.6 billion -15.7 14.2 48.3 44.6 34.2 35.1 • South Africa fibre M&A in MAZIV: - Modest additional FY21 FCF Cash Other FY22 FCF
Slide 28: Capital structure | Debt lens post Vodafone Egypt transaction
Capital structure | Debt lens post Vodafone Egypt transaction Maturity profile Debt type Net debt/EBITDA R billion R billion R billion / times 70.5 70.5 1.1 52.4 52.4 60.9 56.1 0.9 29.3 39.7 23.1 12.7 14.4 9.6 FY22 FY23 FY22 FY23 Non-current Current Financial Leases Currency mix Debt mix % % Incl le
Slide 29: Targets | Medium-term targets upgraded
Targets | Medium-term targets upgraded Targets Considerations Group service revenue growth The macro-outlook remains uncertain, with the base case evolving to lower growth for longer from mid-single digit to mid-to-high-single digit Our strategy is resilient, but we have also sharpened focus Group E
Slide 30: Targets | Capital allocation priorities
Targets | Capital allocation priorities Big data-led smart capex planning Investment into organic growth Commercial Supported by stable capital intensity with an optimisation ambition of flat to improving ROCE Dividend pay-out of at least 75% of dividends Network Network One of the highest payout’s
Slide 31: Outlook | We have a clear ambition to grow new services
Outlook | We have a clear ambition to grow new services FY22 FY23 Medium term (3-5 years) New 17.9% 19.3% 25% - 30% services Of which: - Financial services 10.5% CAGR: c20% for new services: - Digital services 2.0% - Financial services mid teens - IoT 1.6% - Fixed 5.2% contribution to SR Modest CAGR
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 Upgraded targets Inclusion for all Complete M&A Accelerate Medium-term increase female MAZIV (South Afri
Vodacom Group Ltd Ord — Q4 2022 Earnings Presentation on 6ix