Slide 1: Vodacom Interim results
Vodacom Interim results for the six months ended 30 September 2017
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: Operating review
Operating review
Slide 4: Group salient features
Group salient features +11.8% +4.6% 25.8% +7.0% Customers Revenue EBIT margin Net profit 71.1 million R42.0 billion R10.8 billion R6.7 billion +15.1% R5.4bn +1.1% 390 cents Data customers Capital HEPS Interim dividend expenditure per share 34.7 million 12.8% of revenue 445 cents per share Interim re
Slide 5: South Africa | Strong customer net adds underpins growth
South Africa | Strong customer net adds underpins growth +7.7% Key indicators 1H18 % change Revenue (Rm) 33 881 7.7 Revenue growth Service revenue (Rm) 26 670 4.7 EBITDA (Rm) 13 370 2.7 +4.7% Service revenue growth EBIT (Rm) 9 882 (2.2) +2.9million Customers (‘000) 40 000 12.1 Data customers (‘000)
Slide 6: International | Improving trends
International | Improving trends Key indicators 1H18 % change Normalised +5.5%* Revenue (Rm) 8 574 (5.2) 5.0 Service revenue growth Service revenue (Rm) 8 308 (4.8) 5.5 EBITDA (Rm) 2 405 2.3 3.1 +1.4million Customer net adds EBIT (Rm) 988 18.6 2.2 +27.2%* Customers (‘000) 31 092 11.4 Data customers
Slide 7: Safaricom | Continued strong performance, double digit growth
Safaricom | Continued strong performance, double digit growth +12.0% Key indicators 1H18 % change Revenue (KES’bn) 114 12.1 Service revenue growth Service revenue (KES’bn) 110 12.0 EBITDA (KES’bn) 54 6.8 +1.4million Customer net adds EBIT (KES’bn) 38 8.9 +16.2% Customers (‘000) 29 490 10.8 Data cust
Slide 8: Safaricom | Co-operation priorities
Safaricom | Co-operation priorities M-Pesa Enterprise Big data Kenya Penetration: Customer take-up Tanzania Moz Lesotho DRC Market maturity: Functionality and products • 27.4% of Service revenue • 32 countries • Vodafone big data incubator • USD6 billion transacted monthly • IoT leader • 1.1 billion
Slide 9: Growth drivers
Growth drivers
Slide 10: South Africa data | Device, pricing and network supporting demand
South Africa data | Device, pricing and network supporting demand Data revenue Data progression as a % of service revenue Million -4.8% +15.0% +12.1% +9.6% +14.8% +62.8% 6.0 45.6 38.8 41.5 42.6 3.7 35.7 40.0 18.2 19.9 15.1 17.3 1H17 1H18 Customers Data customers Active smart devices 4G customers 1H1
Slide 11: International | Data progressing
International | Data progressing Data contribution Data customers Thousand/% +23.3% Expanding data coverage 13.6% 42.9% 47.5% Number of sites of International service revenue 463 11 965 14 755 348 1H17 1H18 Data customers Contribution to total customers Smartphone penetration % 4 691 5 013 1H16 1H17
Slide 12: International | M-Pesa flying
International | M-Pesa flying International M-Pesa customers1 Thousand +26.4% 13.6% Africa’s biggest payment platform of International service revenue • R24 billion transacted monthly in 8 508 10 755 International 1H17 1H18 1. 30 day customers • R82 billion transacted monthly in Safaricom Safaricom
Slide 13: Enterprise | Growing service revenue contribution
Enterprise | Growing service revenue contribution SA Enterprise service SA Enterprise revenue of which SA fixed-line and BMS revenue revenue contribution R million R million +10.0% +11.7% R6.8bn 25.3% of service revenue 6 141 6 758 871 973 1H17 1H18 1H17 1H18 VBA service revenue impacted by currency
Slide 14: New services | IoT scaling up to drive vertical integration
New services | IoT scaling up to drive vertical integration Afrigis XLink Mezzanine Geo-location services Pay-point services Platform solutions NB IoT R399m IoT revenue 3.3m IoT connections 1st commercial transaction up +22.4% up +24.6% 1 100 base stations Metro areas Interim results | 30 September
Slide 15: New services | Capturing new revenue shares
New services | Capturing new revenue shares Fintech Insurance Advances Payment services 1.0 million policies R1.4bn purchases R342m airtime sales through airtime advance through Vodacom Improved margins up +47% Express Recharge up +53% Fibre Over 39 000 homes and businesses passed Wholesale partners
Slide 16: Strategy | Towards Vision 2020 – Digital first
Strategy | Towards Vision 2020 – Digital first Our Purpose To connect everybody to live a better today and build a better tomorrow Our Strategies Vision 2020 Segmented Best Customer Best Digital Our Brand and Propositions Experience Technology Organisation Reputation and Culture Responding to custom
Slide 17: Segmentation | Based on customer needs
Segmentation | Based on customer needs The new Youth Emerging market High value The old • Over 2 million subscribers • Free health info • Loyalty programmes • Music talent show • Free online learning • 24/7 premium customer One size fits all care agents • Exclusive access to events • Facebook Flex •
Slide 18: Segmentation | Sophistication through bundles
Segmentation | Sophistication through bundles Personalisation Machine learning Generic offers and Segment of one promotions Big Data Size Validity URL based small to large to cater for all short and long applied to your when you need it application 18.2 million 1.1 billion 24.2% 10.9% customers usin
Slide 19: Big data | The tip of the Iceberg
Big data | The tip of the Iceberg Credibility from Just for You Next steps Diversify the use cases Touch more of the business with big data • Call centre optimisation through voice recognition • Web scraping of deals to improve Machine learning Accelerate deeper learning competitiveness size - valid
Slide 20: Digital sales | From physical to digital
Digital sales | From physical to digital The enhanced USSD Online MyVodacom app The old Bricks and mortar Sales through 23 million +40.6% 2.4 million customers using USSD digital online sales Vodacom app users Social media Interim results | 30 September 2017 20
Slide 21: Best technology | South Africa maintaining our lead
Best technology | South Africa maintaining our lead Population coverage +9ppts ahead Urban Coverage % of nearest competitor network NPS 2017 MyBroadband Awards Winner 99.9 99.9 91.0 ‘Best Mobile Network’ 2G 3G 4G Benchmark data performance (4G) mbps Rural Coverage % Downlink speed Uplink speed 12 13
Slide 22: Best Technology | Information Technology - Leading IT systems
Best Technology | Information Technology - Leading IT systems Just 4 You New billing system New M-Pesa platform • Deployed in all markets • Improved single view of the customer • Standardised platform across all markets • Standardisation of platforms • Contract customer migration completed • New fun
Slide 23: Best Technology | International fending off the competition
Best Technology | International fending off the competition Data speeds mbps Tanzania DRC Moz Lesotho Vodacom 13.8 7.5 7.8 39.2 Network NPS to nearest competitor Next best competitor 10.7 6.0 3.8 21.5 • Tanzania 2nd 1st in all operations Source: Ookla Portal - All Technologies (September 2017) • DRC
Slide 24: Best customer experience | Differentiated quality service
Best customer experience | Differentiated quality service +8ppts ahead of nearest competitor Connectivity that is reliable Always excellent value Reward loyalty Easy access and secure “Network satisfaction “Control your costs with “Extra rewards and “Always available ask guarantee” no surprises” bet
Slide 25: Brand with a purpose | Empowering for a better tomorrow
Brand with a purpose | Empowering for a better tomorrow The future is exciting. Ready? Free internet access 3 000 to 19 universities schools connected 150 000 Moyo Lesotho challenge teachers trained through ARV access to all HIV + by 2020 92 teacher centres Vodacom e-school R300m free online learnin
Slide 26: Financial Review
Financial Review Interim results | 30 September 2017
Slide 27: Safaricom | Effects on reporting
Safaricom | Effects on reporting Purchase price allocation Analysis of investment held at cost Rm 12.5% Vodafone Kenya 87.5% Safaricom’s net asset value at acquisition 15 707 • Useful lives Limited (VKL) 39.93% Fair value adjustments net of tax 26 714 172 – 240 months Effective date 7 August 2017 Sa
Slide 28: Group income statement
Group income statement R million 1H18 1H17 % change % Normalised* Revenue 41 995 40 151 4.6 6.9 Service revenue 34 654 33 968 2.0 4.6 EBITDA 15 731 15 278 3.0 3.1 Depreciation and amortisation (4 981) (4 523) 10.1 EBIT 10 830 10 847 (0.2) (1.4) Net profit from associate and joint venture 349 - Opera
Slide 29: Group service revenue | Driven by data growth
Group service revenue | Driven by data growth Group service revenue by category R million +41.7%* 188 +27.2%* +2.0% 499 [+4.6%*] +14.2%* (847) 241 -3.1%* (486) -23.1%* -7.0%* (361) (102) 1 554 33 968 34 654 1H17 Mobile voice Mobile interconnect Mobile messaging Mobile data M-Pesa Fixed-line Other Tr
Slide 30: Group revenue | Supported by device sales
Group revenue | Supported by device sales Group revenue R million +17.9%* 106 +4.6% (884) [+6.9%*] +5.5%* 985 +4.7% 430 1 207 40 151 41 995 1H17 Revenue South Africa International Equipment revenue Other Forex 1H18 Revenue service revenue service revenue • Normalised growth presents performance on a
Slide 31: Group expenses | Impacted by device sales and roaming charges
Group expenses | Impacted by device sales and roaming charges Relative to R million 1H18 1H17 % change revenue Direct expenses 16 465 15 022 9.6 (12.0*) Staff expenses 2 839 2 764 2.7 (6.3*) Publicity expenses 990 967 2.4 (6.0*) Other operating expenses (excl. Forex) 5 950 5 877 1.2 (5.7*) Forex 76
Slide 32: Group EBIT | Improved International performance
Group EBIT | Improved International performance Group EBIT Group EBIT margin R million % 3.1%* 13.0%* 2.7%* 72 -0.2% 32.1% 353 [-1.4%] 29.2% ( 563) ( 16) 137 27.0% 25.8% 11.5% 9.2% 10 847 10 830 1H17 South Africa International Depreciation Other Forex 1H18 1H17 1H18 EBITDA EBITDA and amortisation #
Slide 33: Net finance charges | Flat and cost of debt maintained
Net finance charges | Flat and cost of debt maintained Group net finance charges Group net debt R million 1H18 1H17 % change R million 1H18 FY17 Finance income 317 388 (18.3) Bank and cash balances 6 874 8 873 Bank overdrafts (379) - Finance cost (1 405) (1 335) (5.2) Current borrowings (8 366) (3 7
Slide 34: Group tax | In line with expectation
Group tax | In line with expectation Group effective tax Reconciliation to effective rate R million/% % 1H18 28.0% HTT tower sale statutory tax rate adjustment in Tanzania Net profit from associate and joint venture (1.0%) Irrecoverable foreign taxes 0.8% 33.3% 30.5% Non-deductible operating 0.7% ex
Slide 35: Balance sheet | Boosted by acquisition of Safaricom stake
Balance sheet | Boosted by acquisition of Safaricom stake R million 1H18 FY17 Movement Assets Property, plant and equipment 40 878 40 181 697 Intangible assets 9 081 9 186 (105) Other non-current assets 50 982 2 760 48 222 Current assets 33 469 29 011 4 458 Total assets 134 410 81 138 53 272 Equity
Slide 36: Cash flow | Reduced, impacted by timing differences
Cash flow | Reduced, impacted by timing differences Group free cash flow R million +3.0% (3 915) (5 505) (17.6%) (1 128) (3 107) (48) (42.7%) 15 731 6 311 2 028 EBITDA Working capital Capital expenditure 1 Operating Net finance Tax paid Net dividends paid Free cash free cash costs paid flow 2 flow 2
Slide 37: Headline earnings | Strong growth, HEPS impacted by share issue
Headline earnings | Strong growth, HEPS impacted by share issue Headline earnings Headline earnings per share R million cents 1H18 445 +1.1% 446 (97) (75) 136 +6.4% Core business 8 Safaricom related WHT and NCI (5) Amortisation of fair valued asset (6) 6 446 6 856 1H17 Share of Amortisation of Safar
Slide 38: Dividend | Interim dividend of 390cps
Dividend | Interim dividend of 390cps Dividend per share cents 2015 2016 2017 2018 FY16 interim FY16 final FY17 interim FY17 final FY18 interim FY18 dividend of dividend of dividend of dividend of dividend of 395 cents 400 cents 395 cents 435 cents 390 cents final dividend 795 cents for FY16 830 cen
Slide 39: South Africa data journey | Bundle pricing transformation
South Africa data journey | Bundle pricing transformation Data customers using bundles OOB data revenue ‘000/% % 59.4% 51.4% 1H17 1H18 Reduced 18 158 19 905 exposure to OOB 1H17 1H18 by 15% Active data customers % unique data bundle users Data traffic Million MB +51.2% IB data revenue OOB data reven
Slide 40: International | Service revenue and customers
International | Service revenue and customers Tanzania DRC Service revenue Service revenue TZS billion/% USDm/% 6.0% (1.8%) 1.5% (0.5%) (3.4%) (6.9%) 452 462 479 205 196 203 1H17 2H17 1H18 1H17 2H17 1H18 Service revenue Reported growth Service revenue Reported growth Customers Customers Thousand Tho
Slide 41: International | Service revenue and customers
International | Service revenue and customers Mozambique Lesotho Service revenue Service revenue MZM billion/% Rm/% 33.3% 8.9% 9.9% 8.4% 17.6% 16.4% 6 692 7 153 7 787 513 541 564 1H17 2H17 1H18 1H17 2H17 1H18 Service revenue Reported growth Service revenue Reported growth Customers Customers Thousan
Slide 42: M-Pesa | Africa’s biggest mobile payment platform
M-Pesa | Africa’s biggest mobile payment platform Kenya Tanzania M-Pesa % of SR/Revenue growth M-Pesa % of SR/Revenue growth Customers 19.3 mil 60% Safaricom1 +15.8% +17.2% Transactions +18.8% 22.8% 27.3% 26.7% 29.6% Customers 6.2 mil 48% 1H17 1H18 1H17 1H18 Tanzania Transactions + 38.4% Mozambique
Slide 43: Targets | Group medium-term targets maintained
Targets | Group medium-term targets maintained Group service revenue Mid-single digit Group EBIT Mid-to-high single digit Group capital intensity 12% to 14% Group revenue These targets are on average over the next three years and are on a normalised basis in constant currency, excluding spectrum pur
Slide 44: Key priorities
Key priorities • Regulatory • Out-of-bundle • Data monetisation in International • Safaricom co-operation Interim results | 30 September 2017 44
Slide 45: Q&A
Q&A The future is exciting. Ready?
Slide 46: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom @ PopulationŦ (million) 56.7 57.3 81.2 29.7 2.2 49.7 GDP per capitaŦ (USD) 81 228η 869 463 394 1 078 1 514 GDP growth estimateŦ 2016 (%) 0.6 5.3 2.9 4.1 3.4 4.5 Ownership (%) 100# 61.6125+ 51 85 80 34.94* License expiry period 2029
Slide 47: Impact of foreign exchange
Impact of foreign exchange Revenue Average exchange rates YoY % growth 1H18 Reported Normalised* 1H18 1H17 % change South Africa 7.7 7.7 USD/ZAR 13.20 14.54 (9.2) ZAR/MZN 4.68 4.38 6.8 International (5.2) 5.0 ZAR/TZS 169.54 150.72 12.5 Group 4.6 6.9 EUR/ZAR 15.01 16.33 (8.1) ZAR/KES 7.82 6.99 11.9 S
Slide 48: 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 49: Forward-looking statements
Forward-looking statements This presentation which sets out the annual results for Vodacom Group Limited for the six months ended 31 September 2017 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 50: More information
More information Visit our website for more information FY18 upcoming dates Q3 results 31 January 2018 Annual results 14 May 2018 http://www.vodacom.com Contact us Follow us on social media VodacomIR@vodacom.co.za @vodacom Facebook.com/vodacom Interim results | 30 September 2017 50