Slide 1: Interim results for the six months ended 30 September 2018
Interim results for the six months ended 30 September 2018 The future is exciting. Ready?
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: Highlights
Highlights +10.6% +5.6% 25.2% R1.4bn Customers Revenue EBIT margin Net profit from associate 78.8 million R42.7 billion R11.2 billion +11.1% R5.3bn 385 cps 395 cps Data customers Capital expenditure HEPS Interim dividend 38.5 million 12.0% of revenue +6.0% (excl BEE charges +1.3% and Safaricom acqui
Slide 4: Key transformational milestones
Key transformational milestones BEE deal Safaricom R16.4 billion deal R1.4 billion share of profit Committed to transformation R2.0 billion dividend receivable R3.3 billion returned to investors Closer co-operation to leverage innovation special dividend and learnings Diversified portfolio as part o
Slide 5: Diversified Group | Double digit growth in two key segments
Diversified Group | Double digit growth in two key segments Group service revenue Group EBITDA Group customers +R6.1 billion +R2.9 billion +10.2% +11.1% 4.5% 4.9% 12.8% +7.7%* 14.7% +14.5%* 14.5% 22.7% 38.9% 21.9% 14.9% +18.7%* +11.4%* 49.4% 11.7% +4.6% +2.8% +1.5% 72.9% 65.3% 80.6% 70.4% 1H18 1H19
Slide 6: Operating review
Operating review
Slide 7: South Africa | Strong customer net adds
South Africa | Strong customer net adds Key indicators 1H19 % change Revenue (Rm) 35 324 4.3 +4.6% Service revenue growth Service revenue (Rm) 27 898 4.6 Data revenue (Rm) 12 207 7.5 +2.4 million Customer net adds EBITDA (Rm) 13 750 2.8 EBIT (Rm) 10 009 1.3 Customers (‘000) 44 089 10.2 +10.5% Active
Slide 8: International | Double digit growth
International | Double digit growth +11.4%* Key indicators 1H19 % change Normalised* Revenue (Rm) 9 637 12.4 11.0 Service revenue growth Service revenue (Rm) 9 368 12.8 11.4 Data revenue (Rm) 1 436 26.6 24.1 +2.1 million Customer net adds M-Pesa revenue (Rm) 1 410 25.2 24.2 +24.2%* EBITDA (Rm) 2 904
Slide 9: Safaricom | Continued strong performance; double digit growth
Safaricom | Continued strong performance; dbl digit growth 1H19 1H19 Key indicators Revenue KES’bn 123 Rm 16 324 % change* 7.4 +7.7%* Service revenue growth Service revenue 118 15 697 7.7 Data revenue 20 2 576 10.8 +18.7%* EBIT growth M-Pesa revenue 36 4 716 18.2 EBITDA 62 8 222 14.5 +18.2%* EBIT 45
Slide 10: Strategy | Towards Vision 2020 – Digital first
Strategy | Towards Vision 2020 – Digital first Leading Telco with the best Seamless, personalised, network and best technology One channel Best Best Customer Technology Experience Digital customer experience Deep understanding of our Grow and digitise current insurance customers & their needs offeri
Slide 11: Vision 2020 | Digital Vodacom
Vision 2020 | Digital Vodacom Launched Tobi Continuous improvement 100 chatbot micro journeys Call volumes and 30k chats down 20% Deployed 20 RPA bots 27% increase in online saving 49k man hours sales and upgrades Big data and AI expansion Agile adoption Augmenting fintech 2 tribes (digital channels
Slide 12: Beyond a Telco | Creating new platforms
Beyond a Telco | Creating new platforms Video Play Fintech Payment platform Launched in September 2018 New services added 600 000 customers since launch TVOD/SVOD/Linear M-Pesa Music Merchant payments Interoperability Launching soon Up and coming artist platform My Muze IoT 4 172 000 connections +22
Slide 13: Growth drivers
Watch the latest movies, series and music videos. Growth drivers
Slide 14: South Africa data | Pricing transformation supporting demand
South Africa data | Pricing transformation supporting demand Data progression Million +10.2% +3.2% +10.5% +41.9% 40.0 44.1 19.9 20.5 17.3 19.1 6.0 8.6 Customers Data customers Active smart devices 4G customers 1H18 1H19 Data bundles sold Million +26.0% Price per mb Out of bundle data revenue 16.4% 3
Slide 15: International | Data gaining momentum
International | Data gaining momentum Data contribution Data users Thousand +24.1%* +11.1% R1.4bn +21.7% 15.3% +43.8% of International service revenue 31.2 34.7 14.8 18.0 7.1 8.1 Customers Data customers Active smartphone users 1H18 1H19 Expanding data coverage Number of sites 906 463 • R1.3bn capit
Slide 16: Fintech | Expanding into new business, increased sophistication
Fintech | Expanding into new business, increased sophistication Insure Pay Financial Fintech revenue Services R709 million +55% Lend Insurance Express recharge Airtime advance R330 million airtime sold 1 million insurance policies 2% of prepaid airtime 8.4 million customers Only mobile operator with
Slide 17: M-Pesa | Adoption improving
M-Pesa | Adoption improving M-Pesa customers M-Pesa revenue +24.2%* Tanzania Mozambique R1.4bn +10.2% +36.3% 54.7% 15.1% 60.8% of International service revenue 6 189 6 818 2 625 3 579 1H18 1H19 1H18 1H19 M-Pesa customers M-Pesa customers % of customers using M-Pesa % of customers using M-Pesa DRC Le
Slide 18: Enterprise | Improving service revenue contribution
Enterprise | Improving service revenue contribution SA Enterprise service SA Enterprise mobile revenue SA fixed-line revenue per category revenue contribution R million R million +7.7% R7.4bn 190 +10.0% 150 +14.2% 26.6% of service revenue 3 894 4 195 392 >200% 1H18 1H19 of which SA fixed-line and BM
Slide 19: Best Technology | Network leadership
Best Technology | Network leadership SA network performance International 4G population coverage (%) 5G first in Lesotho 4G launched in the DRC 94 59 96 70 4G launched in Mozambique 1H18 1H19 Urban coverage Rural coverage Benchmark data performance on 4G (Mbps) FTTx IT Performance Ookla Speed Score
Slide 20: Brand with a purpose | Recognition of a top company
Brand with a purpose | Recognition of a top company 2018 Sunday Times Border roll out Brand Award Deploy network sites in Top telecommunications provider deep rural areas South African Customer 200 000 Satisfaction Index teachers trained through Empowering a ‘Best network 3 years in a row’ 92 teache
Slide 21: Regulatory context
Regulatory context South Africa Spectrum allocation confirmed by March 2019 New draft ECA paving way for the Hybrid model Consultation processes to address key challenges International First to launch 5G in Lesotho Secured spectrum in Tanzania for 4G Launched 4G in the DRC following the granting of
Slide 22: Financial review
Financial review
Slide 23: Key transformational milestone | BEE
Key transformational milestone | BEE Consolidate YeboYethu Additional costs • YeboYethu separate legal entity Non-recurring costs • No direct ownership by Vodacom Group Non-deductible, non-recurring IFRS 2 charge R1 404 million • New deal created to manage Vodacom Group’s BEE ownership credentials T
Slide 24: IFRS 15 | Implementation timelines and transition
IFRS 15 | Implementation timelines and transition Consolidated income statement For the year ended 31 March FY 2019 FY 2020 2019 2018 2020 2019 IFRS 15 IFRS 15 IFRS 15 IAS 18 Interim results | 30 September 2018 24
Slide 25: Bridge | IAS 18 – IFRS 15
Bridge | IAS 18 – IFRS 15 Service revenue R2.2bn Revenue R1.7bn R million R million (416) (1 756) 10 (1 756) 89 (41) 36 765 34 552 44 364 42 707 Service revenue Move from service Netting of Leases Service revenue Revenue Move from service Netting of Leases Revenue IAS 18 revenue to commissions IFRS
Slide 26: Group income statement
Group income statement 1H19 1H19 1H18 % change R million % Normalised* IFRS 15 IAS 18 IAS 18 IAS 18 Revenue 42 707 44 364 41 995 5.6 5.4 Service revenue 34 552 36 765 34 654 6.1 5.8 EBITDA 16 534 16 468 15 731 4.7 4.1 Depreciation and amortisation (5 316) (5 316) (4 981) 6.7 EBIT 11 263 11 197 10 83
Slide 27: Group service revenue | Driven by data, fixed-line and M-Pesa
Group service revenue | Driven by data, fixed-line and M-Pesa Group service revenue by category R million +6.1% +19.0%* 103 [+5.8%*] 82 +24.2%* +9.0%* 319 275 +1.1%* 110 (73) 1 127 168 34 654 36 765 1H18 Mobile voice* Mobile interconnect* Mobile messaging* Mobile data* M-Pesa* Fixed-line Other* Tran
Slide 28: Service revenue | SA steady and International double digit
Service revenue | SA steady and International double digit South Africa service revenue International service revenue R million/% R million/% 12.8% 9.2% 5.5% 11.4% 4.7% 5.1% 4.6% 5.5% 5.8% 2.1% (4.8%) (15.1%) 26 608 26 670 27 952 27 898 8 050 8 308 8 520 9 368 2H17 1H18 2H18 1H19 2H17 1H18 2H18 1H19
Slide 29: Group expenses | Impacted by roaming charges
Group expenses | Impacted by roaming charges Group expenses Group direct expenses reconciliation R million 1H19 1H18 % R million IAS 18 IAS 18 change Direct expenses 17 081 16 465 3.7 +6.2% (2.1ppts) Operating expenses 10 868 9 855 10.3 Staff expenses 3 056 2 839 7.6 (0.4ppts) Publicity expenses 925
Slide 30: Digital | Future savings opportunities
Digital | Future savings opportunities Optimising the value chain The digital opportunity Operate Market R21bn Commissions Deploy Sell R7bn Service c.30% Distribution Opex Digital marketing Digital services • Machine learning Smart operations • Artificial intelligence Baseline Addressable • Process
Slide 31: Group EBIT | Improved International performance
Group EBIT | Improved International performance Group EBIT Group EBIT margin R million % +4.4% excluding BEE +18.7%* +6.7%* 458 (331) +3.4% +2.4%* 52 [+2.8%*] (141) 29.2% 28.3% 329 25.8% 25.2% 14.3% 11.5% 10 830 11 197 1H18 South Africa International Depreciation Other* ∆ Forex 1H19 1H18 1H19 IAS 18
Slide 32: Net finance charges | Currency benefits
Net finance charges | Currency benefits Group net finance charges Group net debt % R million 1H19 1H18 R million 1H19 FY18 change Finance income 325 317 2.5 Bank and cash balances 8 135 12 538 Finance cost (1 440) (1 405) (2.5) Bank overdrafts (300) - Net finance costs (1 115) (1 088) (2.5) Current
Slide 33: Group tax | ETR impacted by non-deductible BEE expenses
Group tax | ETR impacted by non-deductible BEE expenses Group effective tax Reconciliation to effective rate R million/% % 1H19 Statutory tax rate 28.0% Net profit from associate (3.8ppts) Irrecoverable foreign taxes 2.2ppts Net unrecognised tax asset 1.1ppts 33.1% 30.5% Other 1.3ppts 1H19 ETR (excl
Slide 34: Balance sheet | Boosted by BEE deal
Balance sheet | Boosted by BEE deal R million 1H19 1H19 FY18 Movement IFRS 15 IAS 18 Assets Property, plant and equipment 42 577 42 577 40 529 2 048 Intangible assets 10 123 10 123 9 073 1 050 Other non-current assets 56 579 55 216 46 941 8 275 Current assets 40 921 37 385 34 822 2 563 Total assets
Slide 35: Cash flow | Strong OFCF generation
Cash flow | Strong OFCF generation Group free cash flow R million +4.7% +2.4% (4 185) +0.8% (5 334) 13 112 +12.1% (7.8%) (3 350) +5.6% (1 191) (47) +22.6% 16 468 7 074 2 486 EBITDA Working capital Capital Disposal of property, Other Operating Tax paid Net finance Dividends paid Free cash flow 2 expe
Slide 36: Headline earnings and HEPS | Affected by BEE
Headline earnings and HEPS | Affected by BEE Headline earnings Headline earnings per share R million cents Reported HEPS 385 BEE 801 (4.6%) 32 BEE transaction 89 (1 509) 393 HEPS excl. BEE 474 +6.5% YoY Net contribution from Safaricom1 (63) 6 856 6 541 6 573 1H18 Share of BEE expenses Core business
Slide 37: Shareholder returns | Dividend growth despite share dilution
Shareholder returns | Dividend growth despite share dilution Total dividend declared Dividend policy R million 90% of pre-Safaricom headline earnings + Flow through of Safaricom cash dividend (net of withholding tax) = Total Vodacom dividend 7 216 +6.4% Interim dividend calculation R6.9 billion @ 90
Slide 38: Targets
Targets Group service revenue Group EBIT Group capital intensity Safaricom Mid-single digit Mid-to-high single digit 12% to 14% Group revenue EBIT between KES85 - KES89 billion Capex between KES35 - KES38 billion These targets are on average over the next three years and are on a normalised basis in
Slide 39: Key priorities
Key priorities Spectrum / Electronic Digital Vodacom Data growth Communications Act Fintech / M-Pesa growth New platforms Safaricom Interim results | 30 September 2018 39
Slide 40: Q&A
Q&A The future is exciting. Ready?
Slide 41: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom PopulationŦ (million) 57.4 59.1 84.0 30.5 2.3 51.0 GDP per capitaŦ (USD) 85 753η 976 533 542 1 125 1 720 GDP growth estimateŦ 2018 (%) 0.6 6.7 3.0 3.5 1.3 5.5 Ownership (%) 100# 61.6125§ 51 85 80 34.94¢ 2028/2032/2026/ License expir
Slide 42: Impact of foreign exchange
Impact of foreign exchange Revenue Average YTD exchange rates YoY % growth 1H19 Reported Normalised* 1H19 1H18 % change South Africa 4.3 4.3 USD/ZAR 13.37 13.20 1.3 ZAR/MZN 4.48 4.68 (4.7) International 12.4 11.0 ZAR/TZS 170.80 169.54 0.7 Group 5.6 5.4 EUR/ZAR 15.73 14.78 4.8 ZAR/KES 7.57 7.84 (3.4)
Slide 43: Definitions
Definitions Customers Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly fee that entitles them to use the service even if they do not actually use the service and those customers who are active whilst
Slide 44: Forward-looking statements
Forward-looking statements This presentation which sets out the annual results for Vodacom Group Limited for the six months ended 30 September 2018 contains 'forward-looking statements‘, which have not been reviewed or reported on by the Group’s auditors, with respect to the Group’s financial condit
Slide 45: More information
More information Visit our website for more information http://www.vodacom.com FY19 upcoming dates Q3 results 24 January 2019 Annual results 13 May 2019 AGM 16 July 2019 Contact us VodacomIR@vodacom.co.za Follow us on social media @Vodacom Facebook.com/vodacom Interim results | 30 September 2018 45