Vodafone Group Plc Results for the Quarter Ended 30 June 2017

Vodafone Group Plc Results For the quarter ended 30 June 2017

21 July 2017 Disclaimer

By reading these slides you agree to be bound by the following conditions. The presentation also contains non-GAAP financial information which the Vodafone Group’s management believes is valuable in understanding the Information in the following presentation relating to the price at which performance of the Vodafone Group or the Vodafone Group’s businesses. relevant investments have been bought or sold in the past or the yield on However, non-GAAP information is not uniformly defined by all companies such investments cannot be relied upon as a guide to the future and therefore it may not be comparable with similarly titled measures performance of such investments. This presentation does not constitute disclosed by other companies, including those in the Vodafone Group’s an offering of securities or otherwise constitute an invitation or industry. Although these measures are important in the assessment and inducement to any person to underwrite, subscribe for or otherwise management of the business, they should not be viewed in isolation or as acquire or dispose of securities in any company within the Vodafone replacements for, but rather as complementary to, the comparable GAAP Group. measures No person is under any obligation to update, complete, revise or keep Vodafone, the Vodafone Speech Mark, the Vodafone Portrait, Vodacom, current the information contained in this presentation. RED, Vodafone One Net, Vodafone One and M-Pesa are trademarks of the The presentation contains forward-looking statements, including within Vodafone Group. The Vodafone Rhombus is a registered design of the the meaning of the US Private Securities Litigation Reform Act of 1995, Vodafone Group. Other product and company names mentioned herein which are subject to risks and uncertainties because they relate to future may be the trademarks of their respective owners. events. These forward-looking statements include, without limitation, statements in relation to the Vodafone Group’s financial outlook and future performance. Some of the factors which may cause actual results to differ from these forward-looking statements are discussed on the final slide of the presentation.

2 Q1 17/18 highlights

Maintaining Fastest growing Leveraging scale Leading Strong data Clear NPS growth fixed broadband and reach in network growth leadership momentum provider Enterprise 2.2% 92% 63% 300k 1.5% 19/21 Group service 4G coverage1 growth in fixed broadband Enterprise markets as revenue growth mobile data net adds revenue growth consumer NPS to traffic co/leader €10.3bn 60% NGN coverage1

All growth rates in this document are organic unless otherwise stated, and are shown on a year on year basis, with Vodafone India and Vodafone Netherlands excluded from organic growth calculations 1. Europe 3 Trading update

Nick Read Group Chief Financial officer All three growth engines contributing

Q1 17 /18 organic service revenue growth contribution YoY (pp)

Mobile Data Convergence Enterprise

0.7 (0.7)

(0.3) 0.8

1.2 2.2

0.5

Europe consumer AMAP consumer Consumer Enterprise¹ EU regulation Carrier, wholesale Q1 17/18 mobile¹ mobile fixed line and other²

1. Excludes the impact of EU regulation. This is defined as out-of-bundle roaming declines and mobile termination rate changes 2. Other includes mobile and fixed wholesale, common functions and eliminations 5 Good commercial performance

Group service revenue growth YoY (%) Customer net adds2 (000s)

Group Europe ex. regulation1 Mobile contract Europe AMAP Fixed broadband 789 801 8.4 735 8.1 7.9 7.4 6.8 576 566 2.2 2.0 2.1 417 415 1.7 331 1.5 307 300 1.9 1.8 1.5 1.3 1.0 1.3 0.3 0.7 0.8 0.1 Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18

Q1 17/18 drivers: • Easier service revenue comparison vs. Q4 and underlying momentum improving • Sustained customer growth in large markets, slower growth in Ghana, Hungary, Turkey • Peak roaming impact in Q2, tougher comparison in Italy

1. Excludes the impact of EU regulation. This is defined as out-of-bundle roaming declines and mobile termination rate changes 2. Excludes Vodafone Netherlands and VodafoneZiggo in all periods 6 Key markets: Europe

Germany UK Italy Spain

Mobile Mobile Mobile Mobile Broadband Broadband Broadband Broadband contract contract total contract Customer 108 33 58 55 net additions 84 100 1 29 53 28 46 (000s) 26 (187) 15 8 (318) 1 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18

Reported Ex. regulation2 Reported Ex. Handset Financing Reported Reported Ex. Handset Financing

3.7 3.8 Service 3.0 3.2 4.1 3.0 (2.1) 2.8 2.5 2.6 (2.7) 2.2 3.5 revenue 3.1 2.0 (3.2) (2.2) growth (%) 1.8 (4.8) 1.2 1.6 0.6 0.0 0.8 1.3 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18

1. Excludes the phasing out of the Talkmobile brand. Reported mobile contract net adds in Q1 17/18 -2k 2. Excludes the impact of EU regulation. This is defined as out-of-bundle roaming declines and mobile termination rate changes 7 Key markets: AMAP

Vodacom South Africa Turkey Egypt International

Mobile Mobile Mobile Mobile Mobile Mobile Mobile Broadband contract prepaid contract prepaid contract contract prepaid Customer 13 268 790 51 2,486 345 61 net additions 11 286 97 519 (000s) 31 891 19 2 (416) Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18 Q1 16/17 Q1 17/18

24.6 22.8 19.6 Service 15.7 15.0 13.9 13.9 15.1 revenue 7.9 growth (%) 5.6 5.6 5.6 5.6 2.6 1.9 0.5

Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18

8 India: signs of stabilisation

Service revenue (INR bn) YoY growth % • Continued significant decline in voice and data unitary 6.4 5.4 (1.9) (11.5) (13.9) pricing, down 32% and 67% respectively

114 112 • Retaining high-end users with larger data bundles; gaining 105 98 98 low-end share • Smaller players losing RMS1 in Q4 (-3.4pp YoY to 26.2%) • Investment focus on leadership circles; gaining RMS in Q4

Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 (+1.1pp YoY)

Users and ARPU growth Capital additions mix in FY 16/17 (%) Prepaid customers (m) Data users (m) Prepaid ARPU growth (% QoQ) Other circles Leadership circles (1.9) (4.8) (9.3) (10.7) +0.3 18 • 20% capital intensity in FY 16/17, “high teens” outlook for FY 17/18 184.6 185.2 189.0 193.4 196.3 82 69.7 69.6 65.0 66.9 69.2

Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18

1. Revenue market share 9 Strategic progress

Vittorio Colao Group Chief Executive Monetising our leading customer experience

Market leading NPS More-for-more actions Mobile ARPU stabilising

Consumer NPS (points)1 Typical changes, April 2017 Consumer contract ARPU (% change Q1 17/18 local currency) • +€2 Gap to next best Germany Italy2 UK Spain • Extra 1 - 5GB Gap to third • Data rollover 17 15 8.7 8.7 14 • +£1 - 5 11 • Extra 1-3GB • Flexible upgrades

4 4 • Mobile +€2 2 • Convergent +€3 0.7 1.1 1.1 • Extra 6 - 10GB

(2) (0.9) (1.1) • Personalised offers (1.7) FY 14/15 FY 15/16 FY 16/17 Q1 17/18 Reported Underlying³

• Best/co-best data network in • Further opportunities from leveraging • Reported ARPU is suppressed by MTR 14/21 markets data analytics capability cuts, SIM-only/handset financing and roaming regulation

1. Gap to next best based on 21 markets, gap to third based on 20 markets 2. Consumer prepaid 3. Adjusted for out-of-bundle roaming declines, mobile termination rate changes and handset financing where applicable 11 Growth engines: mobile data

Group data usage is growing rapidly Market context

4G customers (m)1 Average data usage (GB)2

83.5 74.7 66.6 59.3 52.8 Video demand 4G /4G+ Compression Desire for 1.6 surging quality techniques worry-free

1.3 exceeding improving usage… 1.2 Wi-Fi 1.1 1.0

Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 ~60% ~75% >50% >60% of data usage of mobile reduction in of customers Data traffic growth +76% incl. India is via video/ usage is still traffic load at want worry- and Netherlands 3 4 68% 66% 63% 62% 63% social apps via Wi-Fi 480p free plans

1. Includes 4G customers from India, JVs and associates 2. Average monthly iPhone and Android smartphone data usage including India and Netherlands 12 3. EU 4 markets: Video, social and music applications 4. EU 8 markets Growth engines: mobile data - Vodafone Pass

Market research insights An innovative pricing model, targeting ARPU accretion1

Vodafone Pass: Italy App categories are easier to understand than Bytes… Music Social&Chat Video … ‘worry-free’ stimulates + Vodafone TV greater usage and customer satisfaction than data bundles… … encouraging Free all summer low-spending users to €3 then €5 €10 trade up…

... and retaining spend by higher-end users Current markets

Spain Italy Romania Hungary Greece

1. Allows customers to buy passes that give worry-free access to video, music and social/chat apps, without using up their data allowance 13 Growth engines: fixed/convergence

European homes marketable Q1 17/181 (m) Europe NGN broadband net adds3 (000s)

Total NGN 163 Not covered On-net NGN Total incl’ ADSL and NGN 136 NGN wholesale 467 98 430 Strategic wholesale 384 41 partnerships2 Excludes 323 314 strategic wholesale Own NGN network 243 256 36 196 182 122

% of homes 22 25 60 83 100 Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18

Build progress: Driving revenue: • Open Fiber: 1.5m homes marketable/ 1.7m passed; C&D area wins • EU broadband base 16.8m, including 11.3m NGN1 • New strategic partnership in Turkey, 2.7m homes marketable • On-net penetration 27%1; off-net 2.7% • Exploring fibre build business cases with high IRR thresholds

1. Includes VodafoneZiggo as of Q4 16/17 2. Includes Telefonica (selected areas in Spain), Open Fiber (Italy) and Siro (Ireland) 3. Excludes Vodafone Netherlands and VodafoneZiggo 14 Growth engines: fixed/convergence

Europe converged consumer net adds (LTM)1 (000s) Europe consumer converged customers(Q1 17/18) (m)

Fully converged customers and penetration of consumer broadband base

Europe 4.4 30%

Spain Total Europe Italy Spain 2.3 88% 689 Vodafone 220 165 0.6 21% Ziggo²

Italy 0.5 26%

Germany UK Germany 0.5 8% 195 93 UK 0.1 77% Other 0.4 28% Europe

• ~60% of European broadband net adds are converged • On average 2 SIMs per customer over the last 12 months • Significant penetration potential

1. Last 12 months (Q216/17 to Q1 17/18). Excludes VodafoneZiggo 2. VodafoneZiggo stated as at 3 April 2017 15 Growth engines: Enterprise

Service revenue growth Q1 17/18 (%) Strong platforms Net Promoter Score (Points)

3.6 9 IP-VPN ~2.5% 8 8 ex. roaming 75 regulation countries 1.5 275 PoPs

0.6 3 Cloud & IoT Mobile Fixed Total Hosting 59m SIMs 28 Share of Enterprise revenue +43% countries FY 14/15 FY 15/16 FY 16/17 Q1 17/18 70% 30% 100%

• Mobile: ARPU -3.7%, customers +3.8%; • Market leading position in IoT; • NPS co/ lead in 13/20 markets IoT revenue +15% Internet in the car in 18 markets • Increasing focus on building a • Fixed: share gains continue; led by IP-VPN digital business

16 Summary: a good start to the year

 Robust commercial performance  Continued momentum in Europe; AMAP accelerated; India signs of stabilisation  All three growth engines contributing: Mobile data: Vodafone Pass – unlocking ‘worry-free’ data demand, targeting ARPU accretion Convergence: strong broadband growth, increasing convergence penetration Enterprise: continued outperformance vs. peers

 ‘Fit for Growth’ execution progressing in line with plans

Outlook  FY 17/18 guidance reiterated: 4-8% organic EBITDA growth, FCF c.€5 billion 17

Appendix

19 Customer experience and commercial KPIs

Europe AMAP

Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 16/17 16/17 16/17 16/17 17/18 16/17 16/17 16/17 16/17 17/18

4G customers (m) 1 36.0 39.3 43.3 47.0 50.1 4G customers (m) 2 16.5 19.6 23.2 27.7 33.4

Broadband customers (m) 1 12.5 12.7 16.2 16.6 16.8 Broadband customers (m)2 1.1 1.2 1.3 1.3 1.7

Converged customers (m) 1 3.1 3.2 3.4 4.3 4.4 Converged customers (m) 0.1 0.1 0.1 0.1 0.1

Contract churn (%) 15.4 15.5 16.7 15.3 15.1 Contract churn (%) 16.7 16.4 17.7 18.7 17.7 4G % outdoor population 3G/4G outdoor coverage 89 90 91 92 92 85 85 86 86 86 coverage(%) 1 (%) % of data sessions >3Mbps 91 90 91 92 91 % of data sessions >3Mbps 90 86 85 86 86

% of dropped calls 0.47 0.48 0.41 0.38 0.39 % of dropped calls 0.50 0.49 0.51 0.48 0.51

All figures exclude India and VodafoneZiggo unless otherwise stated 1. Includes VodafoneZiggo from Q3 16/17, data for Q1 17/18 is stated as of Q4 16/17 2. Includes India JVs, and associates (Kenya, Australia) 20 21 European homes marketable with NGN (Q1 17/18)1

Wholesale Open Fiber (millions) Owned

Household coverage

65% 47% 67% 90% 54% 94%

13.6 9.0 26.0 8.3 12.6 1.5 10.3 0.2 7.2 3.5 2.5 Germany Italy² Spain UK Portugal VodafoneZiggo³

marketable including 98m 36m marketable on-net wholesale

60% coverage 22% coverage

1. Excludes 3.6 m wholesale NGN homes marketable in Greece and Ireland 2. Open Fiber has 1.5m homes marketable / 1.7m homes passed 3. VodafoneZiggo as at Q4 16/17 21 Forward-looking statements

This presentation, along with any oral statements made in connection therewith, contains “forward- licences and realise expected synergies and associated benefits; the Group’s ability to secure the looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 with timely delivery of high-quality products from suppliers; loss of suppliers, disruption of supply chains and respect to the Group’s financial condition, results of operations and businesses and certain of the greater than anticipated prices of new mobile handsets; changes in the costs to the Group of, or the Group’s plans and objectives. rates the Group may charge for, terminations and roaming minutes; the impact of a failure or significant interruption to the Group’s telecommunications, networks, IT systems or data protection systems; In particular, such forward-looking statements include, but are not limited to: statements with respect changes in foreign exchange rates, as well as changes in interest rates; the Group’s ability to realise to: expectations regarding the Group’s financial condition or results of operations including the benefits from entering into acquisitions, partnerships or joint ventures and entering into service confirmation of the Group’s guidance for the 2018 financial year; expectations for the Group’s future franchising, brand licensing and platform sharing or other arrangements with third parties; acquisitions performance generally; expectations regarding the Group’s operating environment and market and divestments of Group businesses and asset and the pursuit of new, unexpected strategic conditions and trends; intentions and expectations regarding the development, launch and expansion opportunities; the Group’s ability to integrate acquired business or assets; the extent of any future of products, services and technologies; growth in customers and usage; expectations regarding write-downs or impairment charges on the Group’s assets, or restructuring charges incurred as a result spectrum licence acquisitions; and expectations regarding, service revenue, adjusted EBITDA, free of an acquisition or disposition; the impact of legal or other proceedings against the Group or other cash flow, capital expenditure, and foreign exchange movements. companies in the mobile telecommunications industry; the Group’s ability to execute its strategy in fibre deployment, network expansion, new product and service roll-outs, mobile data, Enterprise and Forward-looking statements are sometimes, but not always, identified by their use of a date in the broadband in emerging markets; developments in the Group’s financial condition, earnings and future or such words as “ongoing”, “lead”, “surge”, “exceed”, “stabilise”, “maintain”, “sustain”, distributable funds and other factors that the Board takes into account when determining levels of “improve”, “plans”, “targets” “gain”, “grow”, “continue”, “retain” or “accelerate” (including in their dividends; the Group’s ability to satisfy working capital and other requirements; and/or changes in negative form). By their nature, forward-looking statements are inherently predictive, speculative and statutory tax rates and profit mix. involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results and Furthermore, a review of the reasons why actual results and developments may differ materially from developments to differ materially from those expressed or implied by these forward-looking the expectations disclosed or implied within forward-looking statements can be found under the statements. These factors include, but are not limited to, the following: changes in general economic headings “Forward-looking statements” and “Risk management” in the Group’s Annual Report for the or political conditions in markets served by the Group and changes to the associated legal, regulatory year ended 31 March 2017. The Annual Report can be found on the Group’s website and tax environments; increased competition; the impact of investment in network capacity and the (vodafone.com/investor). All subsequent written or oral forward-looking statements attributable to the deployment of new technologies, products and services; rapid changes to existing products and Company, to any member of the Group or to any persons acting on their behalf are expressly qualified services and the inability of new products and services to perform in accordance with expectation; the in their entirety by the factors referred to above. No assurances can be given that the forward-looking ability of the Group to integrate new technologies, products and services with existing networks, statements in or made in connection with this presentation will be realised. Subject to compliance with technologies, products and services; the Group’s ability to grow and generate revenue; a lower than applicable law and regulations, Vodafone does not intend to update these forward-looking statements expected impact of new or existing products, services or technologies on the Group’s future revenue, and does not undertake any obligation to do so cost structure and capital expenditure outlays; slower than expected customer growth and reduced customer retention; changes in the spending patterns of new and existing customers and increased pricing pressure; the Group’s ability to expand its spectrum position or renew or obtain necessary 22 More information

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