Vodacom Group Limited · JSE:VOD
Vodacom — FY2021 Earnings Presentation
42 slides from Vodacom's earnings presentation, 2021
Slide 1: Vodacom Group Annual results for the year ended 31 March 2021
Vodacom Group Annual results for the year ended 31 March 2021 Further together
Slide 2: Disclaimer
This presentation contains certain non-GAAP financial information which has not been reviewed or reported on by the Group’s auditors. The Group’s management believes these measures provide valuable additional information in understanding the performance of the Group or the Group’s businesses because
Slide 3: Purpose-led business model
Purpose-led business model Further together Purpose We connect for a better future Digital society Inclusion for all Planet • Affordable internet for all • Diversity (incl women) • Energy mix, water, waste • Digital solutions that transform lives • Education ecosystem (incl youth) • Biodiversity • F
Slide 4: Highlights: Results reflect growth of new services, investment in growth
Highlights Results reflect growth of new services, investment in growth 8.3% 5.8% 4.5% R13.3bn 7.4%* 4.7%* 3.6%* Revenue Service revenue Capex EBITDA R98.3 billion R77.6 billion 13.5% intensity R39.3 billion 3.7% 825cps 123.7m 57.7m 4.9%# Customers1 Financial services HEPS DPS customers1 7.1% growth
Slide 5: Ecosystem approach: Enablers
Ecosystem approach Capturing more opportunities across our System of Advantage Core Accelerators Opportunity Unified communications VodaTrade VideoPlay mHealth Vodacom mobile Africa & wholesale Cloud, hosting & security Airtime & Voucher Advance MyMuze mAgriculture Vodacom fibre Data as a service SD
Slide 6: Consumer System of Advantage
Consumer System of Advantage Further together Consumer Purpose System of Advantage Further together, growing with our customers Digital society Inclusion for all Planet Lifestyle super-app Future of Home Data Digital Payments Financial Services Everything personalised • Connectivity • Smartphone • V
Slide 7: Vodacom Business System of Advantage
Vodacom Business System of Advantage Trust is everything Purpose Vodacom Business System of Advantage Trust is everything Digital society Inclusion for all Planet Mobile & Fixed SME Platform Gigabit Infrastructure IoT Financial Services Africa & Wholesale Mobile: Simplified offerings, customised SME
Slide 8: Strategic considerations to enhance value creation
Strategic considerations To enhance value creation Infra stats Towers Scalable platforms Create scale in fibre • Reduce costs through sharing • BI driving investment • Retail & wholesale scale • Create TowerCo • ROCE mindset • Build, buy or partner 14 635 SA mobile sites • Enhance last mile opportun
Slide 9: Geographic lens: South Africa leads, International recovers
Geographic lens South Africa leads, International recovers Group service revenue Group operating profit Group customers R billion / growth R billion / growth Millions / growth 27.71 27.71 -0.2% / 2.2%* 12.1% 3.5% -0.3%* 3.6 3.5 -2.1% / 2.5%* 36.3 37.6 39.9 3.8 -16.3% / -5.0%* 4.6 73.41 77.61 1.6% 12
Slide 10: Product lens: Best in connectivity, scaling new services
Product lens Best in connectivity, scaling new services South Africa International Safaricom Product life cycle Beyond mobile 13.7% 26.6% 36.8% Innovate • Financial services R7.7bn R5.9bn R13.8bn • Digital services • IoT • Fixed Integrate into SoA Invest to 86.3% scale 73.4% 63.2% Core mobile R48.7
Slide 11: Africa's largest fintech platform
Fintech Africa’s largest fintech platform 100% basis (incl SF) Proportionate basis (excl minorities, incl associates)1 58 million R19.3bn / $1.3bn $24.5bn R10.0bn / $680 million R4.4bn / $290 million financial services customers financial services revenue M-Pesa monthly transactions financial servic
Slide 12: VodaPay: Lifestyle super-app, a first in Africa
VodaPay Lifestyle super-app, a first in Africa Consumer e-Commerce Merchant We will provide consumers with Insure Lend We will offer merchants leading exceptional experiences, platform capabilities, payment through seamless, engaging services and new ways to personalised journeys access and engage c
Slide 13: M-Pesa Vision 2025
M-Pesa Vision 2025 Accelerating and scaling Africa’s largest fintech platform via M-Pesa Africa Ambition Build the largest fintech The preferred payment platform for Consumers A true business partner to create a seamless end-to-end platform in Africa with services to enable a digital lifestyle exper
Slide 14: South Africa: Strong execution across all segments
Highlights South Africa – Strong execution across all segments Key indicator FY21 Reported % change Key milestones Revenue (Rm) 76 737 10.3 Service revenue growth underpinned by customer service revenue growth of 6.9% Service revenue (Rm) 56 405 7.0 Key growth drivers • Vodacom Business customers up
Slide 15: South Africa: New services contribution continuing to grow
South Africa New services contribution continuing to growing Service revenue contribution by segment R billion / growth New services contribution to service revenue % contribution to service YoY 1.2% 7.9% Rm revenue % change 14.4 26.2 IoT revenue1 1 068 1.9 32.5 Fixed service revenue2 2 712 4.8 17.7
Slide 16: International: M-Pesa and data revenue growth exit FY21 in double digits
Highlights International – M-Pesa and data revenue growth exit FY21 in double digits Reported Normalised* Key indicator FY21 % change % change Key milestones Robust M-Pesa outlook Service revenue (Rm) 22 146 1.6 -1.9 • 4Q normalised M-Pesa revenue growth was 21.0% • M-Pesa transaction value growth D
Slide 17: Safaricom: Platform growth supports FY22 outlook
Highlights Safaricom – Platform growth supports FY22 outlook FY21 FY21 LC % ZAR % Key indicator (KES’bn) (Rm) change change Key milestones M-Pesa lead growth Service revenue 250.4 37 600 -0.3 3.5 recovery • Service revenue 4Q21: 6.4% vs 1Q21: -8.4% Data revenue 44.8 6 717 11.5 14.4 FTTH • Customers
Slide 18: ESG: Aligned with our purpose
ESG Aligned with our purpose Purpose (G) To connect for a better future Digital society (S) Inclusion for all (S) Planet (E) Governance Social Environment Purpose driven outcomes Doing what’s right We provide mobile health solutions, support Reducing the amount of GHG vaccination programmes, improve
Slide 19: Financial Review
Financial Review
Slide 20: Group income statement
Group income statement Strong execution, resilient results Reported Normalised* R million FY21 FY20 % change % change Revenue 98 302 90 746 8.3 7.4 Service revenue 77 574 73 354 5.8 4.7 EBITDA 39 299 37 610 4.5 3.6 Depreciation and amortisation (15 117) (13 955) 8.3 Net profit from associate and joi
Slide 21: Service revenue: South Africa outperforms, International recovers
Service revenue South Africa outperforms, International recovers Group South Africa International R million / % R million / % R million / % 8.5% 7.6% 7.8% 7.7% 6.4% 6.4% 5.4% 3.9% 10.7% 5.3% 4.3% 1.5% -0.3% 4.1% 4.2% 2.6% -1.4% -3.8% -5.3% -5.2% 18 761 19 754 19 627 19 432 13 378 14 240 14 306 14 48
Slide 22: Group EBITDA
Group EBITDA Margin reflects International recovery, South Africa growth reinvested Group South Africa International R million / % R million / % R million / % 4.5% 3.6%* 5.7% 7.2%# 41.4% 1.2% 40.0% -2.2%* 41.8% 40.1% 38.6% 38.6% 37 610 39 299 29 094 30 745 8 679 8 784 FY20 FY21 FY20 FY21 FY20 FY21 E
Slide 23: South Africa EBITDA and operating profit growth bridges
South Africa EBITDA and operating profit growth bridges EBITDA Operating profit Service revenue growth +7.0% 0.9% 1.2% -0.4% 1.3% -0.6% 3.6% -0.6% -0.8% 5.7% 7.2% 4.2% 7.3% FY21 EBITDA FY21 loyalty FY20 IFRS 15 Roaming C-19 bad FY21 Adjusted FY21 Operating FY21 loyalty FY20 Roaming and Higher FY21 A
Slide 24: South Africa: Story of two halves
South Africa Story of two halves 1H21 EBITDA growth 2H21 EBITDA growth -3.3% 0.4% 2.1% 1.3% -1.0% -1.3% 1.5% 3.3% 9.9% 5.8% 7.9% 1.8% 6.8% FY1H21 Opex FY21 loyalty FY20 Roaming C-19 related FY1H21 FY2H21 Opex Roaming C-19 related FY2H21 EBITDA phasing programme IFRS 15 agreements bad debts adj EBITD
Slide 25: Cash flow
Cash flow Growth impacted by prior year special dividend and higher cash tax Group free cash flow R million 4.5% -411 -13 307 715 1.1% -4 266 -7 428 2 258 -8.0% -1 886 39 299 22 030 14 974 EBITDA Working Capital Lease liability Other Operating Tax paid Net finance Net dividends Free cash capital exp
Slide 26: Shareholder returns
Shareholder returns Dividend growth reflects EBITDA growth Total dividend declared Dividend policy and interim dividend calculation R million / % 15 513 90% of pre-Safaricom 15 183 FY2H21 headline R6 848 million @ 90% R6 163 million earnings 7 435 7 552 1 101 Flow through of Safaricom cash dividend
Slide 27: Balance sheet: Comfortable net debt to EBITDA ratio
Balance sheet Comfortable net debt to EBITDA ratio Net debt/EBITDA • Conservative balance sheet R billion / times gearing • Net debt/EBITDA maintained at 0.9x 0.9 0.9 • Our internal leverage threshold of 1.5x net debt/EBITDA provides flexibility 35.2 37.6 34.2 39.3 • Net debt/EBITDA (excl leases) re
Slide 28: Gross debt: Balanced debt profile
Gross debt Balanced debt profile Maturity profile • Short-term debt maturities skewed to ZAR R billion / % denominated Vodafone Term Loans 37.0% 20.0% 19.0% 12.0% 12.0% • Payment profile spread over 5 years 1.1 7.6 18.5 5.8 6.1 <1yr 1-2 yrs 2-3 yrs 3-4 yrs > 4yrs Reported Repayment • Low foreign den
Slide 29: Medium-term targets and FY22 outlook
Medium-term targets and FY22 outlook Targets FY22 Outlook • South Africa: SR growth consistent with Group service revenue growth medium-term Group target Mid-single digit • International: Clear improvement in SR growth rate vs FY21, supported by M-Pesa recovery • South Africa: OP growth impacted by
Slide 30: New services contribution: Gaining momentum, pivoting to TechCo
New services contribution Gaining momentum, pivoting to TechCo FY21 FY24 FY26 Medium-term 3yr CAGR: =/>20% 5yr CAGR: =/>20% target: Investments Mid-single 17% 25% - 30% Financial services Financial services prioritised >30% digit growth Digital services Digital services in FY22 IoT IoT Fixed Fixed G
Slide 31: Priorities
Priorities COVID-19 Platform Spectrum Supporting recovery acceleration Digital Financial Services Data Vodacom growth monetisation Vodacom Group annual results | 31 March 2021 31
Slide 32: Appendix – additional slides
Appendix – additional slides
Slide 33: Telco to TechCo: Growing with our customers
Telco to TechCo Growing with our customers Technology is nothing Business Intelligence without humanity generating a 360° Nano-everything customer view Growing with customers, Segmented propositions adopting a lifestyle approach Machine learning driven Ecosystem approach to e.g. Youth, high value, p
Slide 34: M-Pesa P2P intervention supporting financial inclusion and platform growth
M-Pesa P2P intervention supporting financial inclusion and platform growth International M-Pesa revenue Safaricom R million 1.7% -2.1%* 20.4% 47.4% 33.0% 70.9% 13.0% contribution to of customers 5.8%* contribution to of customers service revenue using M-Pesa service revenue using M-Pesa M-Pesa custo
Slide 35: Vodacom SA's Social Contract
Vodacom SA’s Social Contract Delivering economic value for society, government, business & our customers 1 2 3 4 5 6 Expand & future- Accelerate support Enhance digital Promote Support exit For Africa: Enable proof our network to Governments accessibility & widespread digital strategies through cash
Slide 36: Finance charges and debt
Finance charges and debt Average cost of debt reduced Group net finance charges Group net debt R million FY21 FY20 % change R million FY21 FY20 Finance income 767 884 -13.2 Cash balances including overdraft 15 209 16 191 Finance cost (4 190) (4 702) -10.9 Current borrowings (9 634) (3 707) Net finan
Slide 37: Group tax: ETR impacted by Safaricom and change in Kenyan tax rate
Group tax ETR impacted by Safaricom and change in Kenyan tax rate Group tax charge and effective tax Reconciliation of SA tax rate to effective tax rate R million / % % 4.6% FY21 Statutory tax rate 28.0% Net profit from associate and JVs -4.1ppts Irrecoverable foreign 2.0ppts taxes 27.8% Unrecognise
Slide 38: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Kenya PopulationŦ (million) 59.3 59.7 89.6 31.3 2.1 53.8 GDP per capitaŦ (USD) 83 866 1 159 536 437 1 112 1 848 GDP growth estimateŦ 2020 (%) -7.0 3.0 -1.6 -1.3 -9.1 0.1 Ownership (%) 100 75 51 85 80 34.94¢ 2026/2028/ Licence expiry period 20
Slide 39: Impact of foreign exchange
Impact of foreign exchange Revenue Average YTD exchange rates YoY% growth YoY% growth FY21 Reported Normalised* FY21 FY20 % changed USD/ZAR 16.36 14.79 10.6 South Africa 10.3 10.3 ZAR/MZN 4.43 4.27 3.7 International 1.1 -2.4 ZAR/TZS 142.57 155.93 -8.6 Group 8.3 7.4 EUR/ZAR 19.04 16.42 16.0 ZAR/KES 6
Slide 40: Definitions
Definitions Customers Data customers M-Pesa customers ARPU Customers are based on the total Data customers are based on the number of M-Pesa customers are based on the Total ARPU is calculated by dividing the number of mobile customers using any unique users generating billable data traffic number o
Slide 41: 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; statement greater than anticipated competitive activity; higher than expected costs or capital expenditures; slower than expected cu
Slide 42: More information
More information Visit our website for more information http://www.vodacom.com 2021 upcoming dates Integrated report live 15 June 2021 Annual general meeting 19 July 2021 1Q22 results 29 July 2021 Contact us VodacomIR@vodacom.co.za 1H22 results 15 November 2021 Follow us on social media @Vodacom Fac