Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — Merrill Lynch TMT Conference 2008
23 slides from Vodafone Group Public's conference presentation, Jun 3, 2008
Slide 1: Merrill Lynch TMT Conference
Merrill Lynch TMT Conference Andy Halford, Chief Financial Officer 3 June 2008
Slide 2: Disclaimer
Disclaimer The following presentations are being made only to, and are only directed at, persons to whom such presentation 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
Slide 3: Contents
Contents 1. Full year highlights 2. Financial review 3. Q & A 3
Slide 4: Group summary
Group summary Continuing operations FY 07/08 Growth Revenue £35.5bn 14.1% Group EBITDA £13.2bn 10.2% Adjusted operating profit1 £10.1bn 5.7% Proportionate customers 260.5m 26.2% Adjusted EPS1 12.50p 11.0% Dividends per share 7.51p 11.1% 1 Excludes non-operating income of associates, impairment losse
Slide 5: Met or exceeded FY 07/08 guidance
Met or exceeded FY 07/08 guidance Guidance FX impact Actual Revenue £34.5bn - £35.1bn £0.7bn £35.5bn Adjusted operating profit1 £9.5bn - £9.9bn £0.1bn £10.1bn Capitalised fixed asset additions £4.7bn - £5.1bn £0.1bn £5.1bn Free cash flow £4.4bn - £4.9bn £0.1bn £5.5bn Note: Includes Vodafone Essar fr
Slide 6: Strong revenue growth driven by EMAPA and data
Strong revenue growth driven by EMAPA and data Total revenue growth1,2 22.1% • Europe - revenue driven by data; particularly in business Pro forma impact 6.6% • EMAPA Organic grow th 2.0% - customer growth drives revenue - growth enhanced by India and Turkey Group Europe EMAPA Group service revenue
Slide 7: Europe: performing well in a challenging environment
Europe: performing well in a challenging environment Service revenue1 EBITDA FY 07/08 margin FY 07/08 Q4 07/08 FY chg • Competition pressures remain, but rate of price erosion is Germany (4.8)% (2.0)% (1.2)pp easing. Margins around 6pp ahead of peers • Service revenue improvement due to lapping of B
Slide 8: EMAPA: India performing well since acquisition
EMAPA: India performing well since acquisition Pro forma FY 07/08 revenue growth1 • Performance remains strong and on 58% 58% track 56% 44% - over 44m customers;17% customer share - EBITDA margins of 33% in FY 07/08 Q1 Q2 Q3 Q4 - over £1bn capex to drive growth - no.2 handset brand in India Net adds
Slide 9: EMAPA: Continued momentum in Verizon Wireless
EMAPA: Continued momentum in Verizon Wireless Total revenue1 Attractive market (US$bn) • 88% market penetration 12 10 Leading position2 8 6 • Largest retail base (65m) 4 • Lowest churn (1.2%) 2 0 • Highest EBITDA margin (44.9%) 04 04 05 05 06 06 07 07 08 08 3/ 3/ 4/ 4/ 5/ 5/ 6/ 6/ 7/ 7/ 20 40 20 40
Slide 10: Our strategy addresses the evolving environment
Our strategy addresses the evolving environment The external environment Our five key strategic objectives • Ongoing regulatory and competitive • Revenue stimulation and cost pressures in Europe 1 reduction in Europe • Growing choice of communication services and providers • Innovate and deliver on
Slide 11: Driving usage and revenue in Europe
1 Driving usage and revenue in Europe Performance1 Drivers 28.1% Voice 16.7% - outgoing usage +20% due to competitive tariffs 8.1% Messaging -1.8% - usage driven by promotions and bundled tariffs Voice Messaging Total revenue Total usage Consumer 4.8% - combination of bundles, promotions and tariffs
Slide 12: Europe: controlling capex and opex to reduce costs
1 Europe: controlling capex and opex to reduce costs Opex1,2 Capex2 £4.8bn 12.3% 9.9% % of revenue £4.6bn Marketing & Sales, Customer care £2.9bn 2.0 2.3 £2.4bn Network, IT & Service Platforms, 2.6 2.5 Other FY05/06 FY07/08 FY05/06 FY07/08 • Met 10% FY 07/08 capital intensity target • Broadly stable
Slide 13: Europe: Continued cost focus over the medium term
1 Europe: Continued cost focus over the medium term • Increasing network sharing from 1/3rd of new sites shared today • All European operating companies on a unified IP backbone by end Networks FY 08/09 • UK leased lines upgrade to Ethernet to enhance capability and improve cost efficiency • Further
Slide 14: Challenging European regulatory environment
1 Challenging European regulatory environment Termination rates Roaming Spectrum • European Commission wants narrowing across • Voice regulation impact markets c.£140m in FY 07/08 • Disciplined, market by market approach to future • Existing decisions likely • Achieved 40% voice price auctions unaff
Slide 15: Delivering our total communications strategy
2 Delivering our total communications strategy 10.6% 12.9% % of Group revenue £4.6bn 1% Advertising • Launched services in 11 markets; more to come 13% and other • Remains a significant opportunity £3.3bn <1% Fixed • 7.4m business and consumer users (+33% YoY) 12% 38% location across 13 markets serv
Slide 16: Total communications solutions - Data
2 Total communications solutions - Data Organic data revenue growth1 Drivers £2.2bn 41% • More functional and easy to use devices £1.4bn - 100% growth in Vodafone Mobile Connect 50% cards and HHBDs2 c.50% Business 45% Consumer • Faster networks in Europe c.30% 50% - ubiquitous 3.6Mbps with 7.2Mbps i
Slide 17: Total communications solutions - DSL
2 Total communications solutions - DSL Strategic approach Achievements • Low penetration (c.45- Attractive 60%) in key markets • In 13 European and 4 EMAPA markets environment - recent acquisitions in Italy, Spain, Ireland • Longer term trend to bundled products • £1.7bn revenue; 3.6m customers1 • C
Slide 18: Delivering strong growth in emerging markets
3 Delivering strong growth in emerging markets Revenue and customer growth1 • EMAPA revenue mainly driven by customer (%) 53 base and voice usage - 45% revenue growth; organic 14.5%; pro forma 30 (including India & Turkey) 22% 24 25 23 20 18 17 • Strong revenue growth despite increased competition a
Slide 19: Actively managing our portfolio to maximise returns
4 Actively managing our portfolio to maximise returns EMAPA Europe • Gained control of Vodafone Essar, India - cash consideration £5.5bn1 • Acquisition of Tele2 Italy and Spain • Disposal of 4.99% stake in Bharti, - consideration £0.5bn India - received £0.7bn2 • Acquired Arcor minority interests -
Slide 20: Consistent shareholder returns policy
5 Consistent shareholder returns policy 5: Dividend Returns and capital structure policy +11.1% 7.51p 6.76p • Dividends - 60% target payout of full year adjusted earnings per share • Capital structure - low single A long term credit ratings - 31 March 2008 net debt of £25.1bn FY 06/07 FY 07/08 20
Slide 21: Outlook for the operating environment in FY 08/09
Outlook for the operating environment in FY 08/09 Europe EMAPA • Ongoing competition and • Strong growth due to rising regulatory pressures penetration • Modest revenue growth as data • Increasing contribution from India and messaging offset voice dilutes margin Key drivers • Continued focus on cost
Slide 22: Financial guidance for FY 08/09
Financial guidance for FY 08/09 Guidance Revenue £39.8bn - £40.7bn Adjusted operating profit1 £11.0bn - £11.5bn Capitalised fixed asset additions2 £5.3bn - £5.8bn Free cash flow2 £5.1bn - £5.6bn Currency assumptions: €/£ 1.30 and US$/£ 1.96 1 Excludes non-operating income of associates, impairment l
Slide 23: Summary
Summary Solid performance reflecting continuing execution of strategy Strong usage and data growth in Europe and tight cost control Delivering strong profitable growth in emerging markets Leading operational and financial performance at Verizon Wireless 11% increase in dividends per share supported