Vodacom Annual Results Presentation

Vodacom Group Annual Results

For the year ended

31 March 2020

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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 following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Group. Promotional material used in this presentation that is based on pricing or service offering may no longer be applicable.

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 they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to, the comparable GAAP measures. All growth rates quoted are year-on-year and refer to the year ended 31 March 2020 compared to the year ended 31 March 2019, unless stated otherwise.

IFRS 16 was adopted by the Group on 1 April 2019 with the cumulative retrospective impact reflected as an adjustment to equity on the date of adoption. As a result, information presented for the year ended 31 March 2019 is presented under the previous statement IAS 17, while the year ended 31 March 2020 is presented in accordance with IFRS 16. The reported change reflected in this document is done on this basis while normalised growth adjusts for differences in reporting of the current year and the prior year, to give the reader a like-for-like comparison of underlying performance. This presentation also contains forward-looking statements which are subject to risks and uncertainties because they relate to future events. These forwardlooking statements include, without limitation, statements in relation to the Group’s projected financial results. Some of the factors which may cause actual results to differ from these forward-looking statements are discussed on slide 44 of this presentation. Vodafone, the Vodafone logo, M-Pesa, Connected Farmer, Vodafone Supernet, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone Passport, Vodafone live!, Power to You, Vodacom, Vodacom 4 Less and Vodacom Change the World are trademarks of Vodafone Group Plc (or have applications pending). Other product and company names mentioned herein may be the trademarks of their respective owners.

Annual results | 31 March 2020

2

COVID-19 | Rapid, comprehensive and coordinated response

Essential service, ensuring vital connectivity to keep families connected, enable business to operate, students to learn, health care to be delivered and Government to provide critical services

Maintaining quality networks

• Maintaining reliability and speed across all markets.

• Zero-rating of public hospitals and clinics through the ConnectU Platform.

Dissemination of public

• Zero rating multiple Government services websites across all operations.

information

• 20 000 devices, incl. data and voice allocations donated to Ministry of Health for field workers.
• Free / Reduced fees for P2P M-Pesa money transfers to reduce contact payments and provide relief for consumers.

• Increased capacity pro-actively in hot spots.

M-pesa

• Temporary spectrum allocated in South Africa for demand surge.

• Aggregated and anonymised data of people movement.

Data insights

• Providing anonymised data to model the spread of the virus by epidemiologists.
• Tanzania donated US$1 million

• Preferential payment terms of less than 14 days to qualifying SMMEs on

Critical services

Work and live from home

a case by case basis.
• Partnership

Facilitating e-learning

with Discovery

• Zero-rating of all portals for public education institutions.
• Zero-rated e-School platform. Significantly increased learners.

health to provide free virtual consultations to 100 000 patients.

COVID-19 | Responses and looking ahead

Phase 1:

Phase 3:

Phase 2:

Crisis

New normal

Recovery

Supporting staff, Governments, customers and suppliers
Societal
Supporting

business and jobs
Economic resilience

focus

Our

Platform for new

growth trajectory
Enabling critical response actions
Supporting broad societal recovery

focus

• Deepening customer engagement through targeted personalised offers to customers, quality networks &
• Rapid, comprehensive and coordinated response
• Channel and

Our

distribution digitisation

response

• Digital transformation
• Operating model

leading customer care resilience

• Supporting supply chain

4

COVID-19 what are the trends

South Africa

Other

Voice volumes

Recharges

Data volumes

Roaming 80% down

On average

+20%

Consumer slightly up
Enterprise down

Slightly up

Up initially then

Flat

Less than 1% of Service revenue

evened out
High of 40%

+110% April yoy

Gross connections and Churn

International

Down

Negative trends in DRC and Lesotho
Tanzania in line due to no

10-15% up

M-Pesa Down

Up in all areas

Flat
Down

restriction

Growth rates are April 2020 versus March 2020.

5

Highlights

+4.8%

+11.6%

+13.2%

R13.2bn

(+3.5%)*

(+2.3%*)

(+2.2%*)

Capex

Revenue

Operating profit
EBITDA

R90.7 billion

14.6% intensity

R37.6 billion

R27.7 billion

845cps
945cps

61.5m

115.5m

Customers¹

Data customers¹

Total DPS

HEPS

+5.4%
+10.9%
+6.3%
+8.9%

1. Including Safaricom at 100% * Normalised growth presents performance on a comparable basis. This excludes merger, acquisition and disposal activities where applicable and adjusting for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using the current period as base) and IFRS 16 related adjustments in the current year and IAS 17 related adjustments in the prior year, to show a like-for-like comparison of results.

6

Diversified Group | Increasing contribution from International and Safaricom

Group EBITDA

Group service revenue

Group customers

+R5.0 billion

+R4.9 billion

+18.0%

+11.1%

+11.5%

13.9%
14.6%
14.2% 15.8%
15.2% 19.5%
33.4%

(+8.3%*)
(+4.8%*)

+38.8%

(+9.4%*)

23.5%
25.0%

+12.5%

(+7.1%*)

-4.3%

35.8%
30.8%

+2.3%

(+2.2%*)

+4.9%

(0.0%*)

+12.2%

70.0%

65.3%

62.6%

60.4%

FY19

FY20

FY19

FY20

1
1

South Africa

International

Safaricom

South Africa

International

Safaricom

South Africa

International

Safaricom

1. Represents Safaricom’s values in proportion to our stake of 34.94% * Normalised growth presents performance on a comparable basis. This excludes merger, acquisition and disposal activities where applicable and adjusting for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using the current period as base) and IFRS 16 related adjustments in the current year and IAS 17 related adjustments in the prior year, to show a like-for-like comparison of results.

7

Highlights | South Africa – Elasticity cements recovery

Reported % change

Key indicator

Key milestones

FY20

Underlying service revenue growth of 3.3% and EBITDA growth of 2.2%

Service revenue (Rm) EBITDA (Rm)
52 712 29 094 21 891 12 856 20 085 1.5
2.3 4.9 9.7

Pricing transformation successfully executed − +1.9 million data customers − +3.3 million 4G customers

Data customers (‘000) 4G customers (‘000) Active smart devices (‘000) Average GB per smart device
34.5
3.9

Regulatory progress − Competition Commission agreement reached
− Spectrum imminent − Temporary spectrum assigned

56.0

* Normalised growth presents performance on a comparable basis. This excludes merger, acquisition and disposal activities where applicable and adjusting for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using the current period as base) and IFRS 16 related adjustments in the current year and IAS 17 related adjustments in the prior year, to show a like-for-like comparison of results.

8

South Africa | New services contribution gaining momentum

SA service revenue contribution

New services contribution to service revenue

R billion

+4.9%
-1.6%

24.2

YoY % change
% contribution to service revenue
Rm

893

14.2

IoT revenue

1.7

6.0 2.8 3.7
38.5

Fixed revenue

3 189

1 494 1 971
13.5 13.2 21.5
Digital lifestyle services Financial services

14.3

+6.7%

Consumer contract service revenue

Prepaid service revenue

Enterprise and wholesale service revenue

9

Pricing transformation evolution | Elasticity shaping recovery

2017

2020

Added

1.9 million

Improve customer experience

OOB rate cut and regulation

More data

Data plus on contract consumer c40% more data

Affordability for prepaid

< 30 day bundles

Big bundles for sharing/family

Big data discounted

data customers to

21.9 million

Average data usage per smart devices up

75.0
54.6
41.7

56.0%

28.6

to

1.5GB

1H19

2H19

1H20

2H20

Data traffic growth (%)

Data bundles sold, Up

15.0%

1 April 2020

to

996 million

Free messages

Price reduced

up to 40%

30-day bundles

Deeper discount
ConnectU

2 free SMS
Free essential data

services

for poorer towns

1GB

>2 000 towns

^NR^ow9^o9^nly

30-day bundle

10

Highlights | International - sustained strong growth

Reported % change
Normalised*
% change

Key indicator
FY20
Key milestones

Strong M-Pesa and data growth

7.1

17.3

22.7
9.4
Service revenue (Rm)

Data revenue¹(Rm) M-Pesa revenue (Rm) EBITDA (Rm)

21 799

3 720

12.5

23.2

29.8 38.8 11.5
9.2

Strong growth in DRC and Mozambique

3 993 8 679

Customers (‘000)

38 595 14 738

M-Pesa customers (‘000)

1. Excluding integrated packages * Normalised growth presents performance on a comparable basis. This excludes merger, acquisition and disposal activities where applicable and adjusting for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using the current period as base) and IFRS 16 related adjustments in the current year and IAS 17 related adjustments in the prior year, to show a like-for-like comparison of results.

11

International | Growth sustained driven by data and M-Pesa

Service revenue LC yoy growth

International service revenue contribution

R billion

1.1
1.3

Tanzania

Impacted by customer registration; customer base 74% biometrically registered. Outperformed competition in highly competitive market

+0.9% +8.3%

6.6

DRC

5.5

Steady and strong growth, largest revenue contribution

Mozambique

Strong commercial growth despite impacts of hurricane Idai

+16.4%
+4.7%

7.4

Lesotho

Strong growth despite pricing transformation

Tanzania

DRC

Mozambique

Lesotho

VBA/Other

12

Commercial progress: International data | potential realising

Data¹contribution

Data users

Million

+11.5%
+17.3%*

R3.7bn

+13.1%
+4.2%

17.1%

34.6

38.6

17.7

20.0

9.8

10.2

of International service revenue

Customers

Data customers

Active smartphone users

FY19

FY20

Expanding data coverage

Number of sites

+22.5%

8 847

2 672

7 222

1 593

+67.7%

Data traffic up

52%
R3.4bn

of customers using data

5 629

FY19

6 175

FY20

capital investment

+30.9%

4G

3G

1. Excluding integrated packages

* Normalised growth presents performance on a comparable basis. This excludes merger, acquisition and disposal activities where applicable and adjusting for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using the current period as base) and IFRS 16 related adjustments in the current year and IAS 17 related adjustments in the prior year, to show a like-for-like comparison of results.

13

Highlights | Safaricom – Mobile data recovery gaining momentum

LC
% change

FY20

(Rm)

Key indicator

Key milestones

FY20

(KES’bn)

New services growth in M-Pesa up 43.4%

4.8
Service revenue

Data revenue M-Pesa revenue EBITDA

251

36 319

5 869

Connected 142 000 homes, up 31.9%

12.1

12.6
8.3

41

Dividend proposed of Ksh56.09 billion (R9.5 billion)

84

12 185

19 950 10 704
138 74
19.5 10.2 10.0

Net profit Data customers (‘000)

19 622 24 910

M-Pesa customers (‘000)

14

Strategy | Towards Vision 2025

765

Best customer

Our brand and

reputation

1

experience

Seamless, frictionless, personalised digital experience to our customers
Purpose-led organization, connecting for a better future by enabling a digital society, inclusive for all with the least environmental impact

Segmented

2

Digital organisation and culture proposition

Deep insight of our customers needs, wants and behaviours and provide propositions to lead in chosen segments
Build an organisation of the future, where digital is first for all employees, underpinned by innovation, agility and new skills

3

Financial Services

Best technology

We scale our financial services offerings to empower the lives of our customers through financial inclusion
Leading telco in all markets through the best network and IT excellence, with digital at the core

4

Digital services

Grow into new verticals of digital services to better serve our customers and create value