Vodacom Group Limited · JSE:VOD
Vodacom — FY2022 Earnings Presentation
39 slides from Vodacom's earnings presentation, May 2022
Slide 1: Vodacom Group Annual results
Vodacom Group Annual results Year ending 31 March 2022 Vodacom annual results | March 2022 1 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: Vodacom Group | A transformational year
Vodacom Group | A transformational year Purpose-led model Strategy in action Financial outcomes Digital Acquisition of market Free cash 61 million leader in Egypt and society financial services Ethiopia licence award flow +4.6% Financial growth inclusion customers1 South Africa fibre M&A R15.7bn to
Slide 4: Our Purpose | Further together
Our Purpose | 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 • Financial incl
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 strengthened 2 Secure leadership in mobile and fixed • Launch and scale Ethiopia • Lead in mobile data – 4G, 5G. Accelerate smartphone penetration • Complete Egypt transaction • P
Slide 6: Strategy in action | We are accelerating our System of Advantage
Strategy in action | We are accelerating our System of Advantage Strategic objective: Acceleration: Strategic outcomes: Footprint strengthened • Geographic and product diversification Egypt, Ethiopia, SA Fibre M&A Secure leadership • Larger addressable market in fixed and mobile Acquired 110MHz of h
Slide 7: Strategy in action | M&A enhancing our growth and returns profile
Strategy in action | M&A enhancing our growth and returns profile Market leading position across all our markets Acquiring a controlling stake in Vodafone Egypt R102.7bn R39.9bn Market leader, with attractive asset Vodacom Group revenue Vodacom Group portfolio (e.g. towers, spectrum) South Africa an
Slide 8: Highlights | Results reflect growth of new services
Highlights | Results reflect growth of new services 4.5% 3.0% 2.1% R14.6bn 5.8%* 4.6%* 5.4%* Revenue Service revenue Capital expenditure Operating profit R102.7 billion R79.9 billion 14.3% intensity R28.2 billion 130m 61m 3.4% 850cps Customers1 Financial services customers1 HEPS DPS 4.8% growth 5.0%
Slide 9: Geographic lens | Broad-based growth
Geographic lens | Broad-based growth Group service revenue Group operating profit Group customers R billion R billion Millions / growth Normalised Normalised growth %* growth %* 6.4% 27.71 28.21 Group 5.4% 12.3% 3.5 3.1 17.5% 42.4 37.6 37.7 3.8 4.4 11.8% 77.61 79.91 Group 4.6% 129.6 22.1 22.2 5.6% 4
Slide 10: Product lens | We are diversifying into new revenue streams beyond mobile
Product lens | We are diversifying into new revenue streams beyond mobile South Africa International Safaricom Product life cycle New services Financial services Digital services 14.4% 27.6% 42.5% IoT R8.4bn R6.1bn R16.0bn Innovate Fixed Core mobile Integrate into SoA Invest to scale 85.6% 72.4% 57.
Slide 11: Financial services | Continuing to scale our fintech platform
Financial services | Continuing to scale our fintech platform 100% basis (including Safaricom) Proportionate basis (excl. minorities, incl associates)1 Strong 61 million underlying growth $324.6bn R11.2bn / $0.8bn R4.4bn / $0.3bn financial services customers in financial services revenue M-Pesa tran
Slide 12: Financial services | Our business model is high-growth and scalable
Financial services | Our business model is high-growth and scalable Consumer proposition Lifestyle super-app Merchant proposition powered by Trusted platform and brand, Large footprint, low set-up personalised offers, access to costs, personal targeting, affordable financial services low customer ac
Slide 13: Financial services | Good progress the two-sided ecosystem
Financial services | Good progress the two-sided ecosystem Addressable market Merchant services Super-app Financial services + growth drivers opportunities2 Mobile payments Active 30 day active Launched across $4bn FY26 addressable revenue pool merchants app users all markets US$4.4bn of IMT remitta
Slide 14: South Africa highlights | Delivering despite strong comparative period
South Africa highlights | Delivering despite strong comparative period Key indicator FY22 Reported % change Key milestones Service revenue growth Revenue (Rm) 80 828 5.3 underpinned by continued demand for connectivity, incremental wholesale revenue and growth in our Service revenue (Rm) 58 526 3.8
Slide 15: International highlights | Growth underpinned by data and M-Pesa
International highlights | Growth underpinned by data and M-Pesa Reported Normalised* Key indicator FY22 Key milestones % change % change Service revenue (Rm) 22 213 0.3 5.6 Strong data growth • Usage growth 31.4% Data revenue (Rm) 4 588 11.0 16.4 • Smartphone penetration up 1.4pp to 33.7% M-Pesa re
Slide 16: Safaricom highlights | Strong growth supported by M-Pesa and fixed
Safaricom highlights | Strong growth supported by M-Pesa and fixed 1 FY22 FY22 LC % ZAR % Key indicator (KES’bn) (Rm) change change Key milestones M-Pesa contribution increases Service revenue 281 107 37 715 12.3 0.3 • 30% growth to reach 38.3% of service revenue from 33.0% in 8.1 prior year Data re
Slide 17: ESG | Our ESG approach
ESG | Our ESG approach 1 2 Deliver on our three purpose pillars Uphold our Key Digital society Inclusion for all Planet Social contract elements • Connecting people • Access to the benefits of • Reducing our of our ESG and things a digital society for all environmental impact Trust, fairness and fra
Slide 18: Financial review
Financial review Further together 18
Slide 19: Group Income Statement | Strong execution impacted by FX headwinds
Group Income Statement | Strong execution impacted by FX headwinds Reported % Normalised* % R million FY22 FY21 change change Revenue 102 736 98 302 4.5 5.8 Service revenue 79 936 77 574 3.0 4.6 EBITDA 39 888 39 299 1.5 2.1 Depreciation and amortisation (14 657) (15 117) (3.0) Net profit from associ
Slide 20: Service revenue | Consistent performance in South Africa
Service revenue | Consistent performance in South Africa Group South Africa International R million / % R million / % R million / % 7.8% 5.3% 4.8% 13.5% 5.2% 6.7% 7.6% 3.1% 3.2% 4.5% 3.3% 4.9% 4.4% 5.2% 4.5% 3.2% 3.3% 2.2% 3.5% 1.7% 2.1% 0.0% -6.3% -5.9% 19 165 19 750 20 664 20 358 14 070 14 545 14
Slide 21: Group EBITDA | Margin pressure not reflective of underlying trend
Group EBITDA | Margin pressure not reflective of underlying trend Group South Africa International R million / % R million / % R million / % 1.5% 3.3% 2.1%* 3.6%# 40.0% -3.2% 38.8% 38.6% 37.2% -0.6%* 40.1% 39.3% 39 299 39 888 30 745 31 747 8 784 8 504 FY21 FY22 FY21 FY22 FY21 FY22 EBITDA EBITDA marg
Slide 22: EBITDA | Growth profile impacted by one-off events
EBITDA | Growth profile impacted by one-off events Group EBITDA growth International EBITDA growth 1.0pp 4.7pp 1.6pp -0.6% 7.2pp 2.1% 4.7% 11.3% FY22 Lease contract Mobile money FY22 FY22 Lease contract Mobile money FY22 EBITDA growth* separation Tanzania levy adj EBITDA EBITDA growth* separation Ta
Slide 23: Cash flow | Higher cash capex to capture rand strength
Cash flow | Higher cash capex to capture rand strength Group free cash flow R million Accelerated to capture strong rand 1.5% 955 -14 642 -4 172 664 1.6% -7 124 -2 318 2 409 4.6% 39 888 22 693 15 569 15 660 EBITDA Working Capital Lease liability Other Operating Tax paid Net finance Net dividends Fre
Slide 24: HEPS | Underlying growth
HEPS | Underlying growth #Factors impacting reported growth Headline earnings per share (after tax and non-controlling interests) cents 3.4% • Start-up losses in Ethiopia 7.0%# of R380 million (22) (13) 69 • Mobile money levy in Tanzania of R212 million • Lease contract separation had no impact on n
Slide 25: Shareholder returns | Dividend growth
Shareholder returns | Dividend growth Total dividend declared FY22 dividend policy and final dividend calculation R million / % 15 535 90% of pre-Safaricom 15 513 R7 449 million @ 90% R6 704 million 15 183 2H22 headline earnings 7 435 7 552 7 865 Flow through of 1 101 Safaricom cash dividend R2 322
Slide 26: Capital structure | Debt lens ahead of M&A
Capital structure | Debt lens ahead of M&A Maturity profile Debt type Net debt/EBITDA R billion R billion R billion / times 29.3 41.2 39.7 39.1 23.1 0.9 0.9 10.0 10.6 11.2 FY21 FY22 FY21 FY22 Current Non-current Leases Financial Currency mix Debt mix % % Incl leases Excl leases Incl leases Excl leas
Slide 27: Targets | Medium-term targets
Targets | Medium-term targets Targets Considerations Group service revenue growth • The Russia-Ukraine war presents risk, Mid-single digit particularly to cost inflation • Safaricom’s FY23 EBIT guidance of Group EBITDA growth KES87-93bn indicates an investment Mid-to-high-single digit year for Ethio
Slide 28: Outlook | We have a clear ambition to grow new services
Outlook | We have a clear ambition to grow new services FY21 FY22 Medium term (3-5 years) New 25% - 30% services 17% 18% 3yr CAGR: c20% Financial services IoT Digital services Fixed Core 70% - 75% mobile 83% 82% Modest CAGR growth Smartphone penetration 5G leadership New services revenue as % of Gro
Slide 29: 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 Disciplined Accelerate Enhance System of Advantage capital structure & allocation and diversify returns societal value Inclusion for all Leadership in Utilise debt capacity Earnings & FCF - increase female fixed
Slide 30: Appendix
Appendix Further together Vodacom annual results | March 2022 30
Slide 31: 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 17.3% 22.3% 46.5% 9.9% 30.3%* 38.3% 71.9% contribution to of customers contribution to of customers 15.5%* service revenue using M-Pesa service revenue using M-Pesa M-Pesa 2.
Slide 32: Finance charges and debt | Average cost of debt reduced
Finance charges and debt | Average cost of debt reduced Group net finance charges Group net debt % R million FY22 FY21 change R million FY22 FY21 Finance income 554 767 (27.8) Cash balances including overdraft 16 658 15 209 Finance cost (4 229) (4 190) 0.9 Current borrowings (22 061) (9 634) Net fin
Slide 33: Group tax | ETR impacted by Safaricom and change in Kenya tax rate
Group tax | ETR impacted by Safaricom and change in Kenya tax rate Group tax charge and effective tax Reconciliation of SA tax rate to effective tax rate R million / % % FY22 Statutory tax rate 28.0% Net profit from associate and JVs -3.5ppts Irrecoverable foreign +2.0ppts taxes 28.2% 27.8% Tax rate
Slide 34: Tanzania | Mobile money and airtime levies
Tanzania | Mobile money and airtime levies Service Revenue contribution Mobile Money levy background Airtime Levies % Timeline Timeline Early Sept 1st July 2021 20th Oct 10% 1st July 2021 15th July 2021 2021 90% Finance Act Implementation Finance Act Implementation Revised levies Group ex Tanzania T
Slide 35: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom PopulationŦ (million) 60.8 63.3 95.2 33.1 2.2 56.2 GDP per capitaŦ (USD) 105 393η 1 237 542 511 1 316 1 912 GDP growth estimateŦ (%) 1.9 5.2 5.5 5.0 1.7 4.4 Ownership (%) 100 75 51 85 80 34.94¢ 2028/2032/ 2022/2024/ Licence expiry p
Slide 36: Impact of the exchange rate
Impact of the exchange rate Revenue Average YTD exchange rates YoY% growth YoY% growth FY22 FY22 FY21 % changed Reported Normalised* USD/ZAR 14.85 16.36 (9.2) South Africa 5.3 5.3 ZAR/MZN 4.24 4.43 (4.3) International 0.6 6.0 ZAR/TZS 156.04 142.57 9.4 Group 4.5 5.8 EUR/ZAR 17.25 19.04 (9.4) ZAR/KES
Slide 37: 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 during the month. Also included are users on any service during the last three integrat
Slide 38: More information | upcoming dates
More information Visit our website for more information http://www.vodacom.com upcoming dates Vodacom Group AGM 18 July 2022 1Q23 results 21 July 2022 Contact us VodacomIR@vodacom.co.za 1H23 results 14 November 2022 Follow us on social media @Vodacom Facebook.com/vodacom Further together 38
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