Presentation to PPC Cost to communicate (3)

21 September 2016

Contents

1. Price transformation journey continues

2. SADC initiatives

Price transformation journey continues

Our 5 pillar strategy

Customer Growth Operations People Reputation Market share, NPS Diversify revenue to Deliver cost and Best talent, best Transform society and and brand leadership deliver growth process efficiency practice build stakeholder trust

Best network Grow data Reduce costs Transformation Proactive engagement Best service Grow new services Maximise efficiencies Engagement Reputation leadership Best value Grow enterprise Grow International The components …

• Offer more value Transform • Bundles to target low end users prices • Worry free innovations – RED, PowerHour, My5, Everyday Extra, J4U • Reduce voice and data prices

• Simplify tariffs – On net, All net, Anytime Simplify prices • Improve transparency • Retire old tariffs and proactively migrate customers to better value

Increase network capacity to carry more traffic as prices reduce Invest • • Increase high speed data coverage

Grow data • Stimulate data growth to supplement declining voice revenues

Control costs Contain and reduce operational costs

…. of our price transformation strategy. Transform and simplify prepaid prices

Flat rate

…. to offer best value. This year we’ve retired 5 high cost tariffs

Retired 5 tariff plans All Day per All Day per Per Second Minute Second Plus Day Saver Vodago

On-net R 1.40 R 1.70 R2.25 / R1.18 R1.99 / R1.30 R2.25 / R1.40

Off-net R 1.40 R 1.80 R2.65 / R1.30 R2.38 / R1.60 R2.60 / R1.65

47%

Power bonus …. towards best value. Affordable prepaid data bundles

35

30

25

20 Millions 15

10

5

0

Hourly Daily Weekly Fortnightly Monthly

…. towards best value. Significant progress voice and data

1 Reducing effective voice pricing 2 Stimulating bundle adoption Total bundles sold (m)

48% 0.79

0.65 17% 0.54

0.55 0.45 18% 0.37

775 1 149

2014 2015 2016 2015 2016 Blended ppm Prepaid ppm

…. best value achieved. Transform and simplify contract prices Talk 75s Transformation is supported with the MM4M strategy giving 75 ANAT min • customers more value in the form of integrated plan for more Subscription R189.00

MM4M • Simplified price plans with any network anytime pricing • Substantial value added Smart S 75 ANAT min + 200 MB + 200 SMS • Integrated price plans with included to drive data Subscription R209.00 adoption

Vodacom Smart/Red Voice Data SMS

Smart S 75 200 200 Smart M 120 300 300 Smart L 250 500 500 Smart XL 400 800 800 Red Advantage 700 1 GB Limitless Red Premium 1 200 2 GB Limitless Red VIP Limitless 5 GB Limitless …. towards best value. Significant progress voice

1 More inclusive value 2 Migration to new postpaid plans 3 Migration to new hybrid plans

71.3% 69.3% 88% 64.6% 94%

21 105 21 292 22 587

2014 2015 2016

12% Contract revenue 6% In bundle revenue as % of contract revenue Mar-14 Mar-15 Mar-16 Mar-14 Mar-15 Mar-16 Intergrated Legacy Voice uChoose Integrated uChoose Flexi

…. best value achieved. Transform fixed dedicated and MPLS prices

R4.5

R3

R1.3 R104k

R11k R944k R0.8

kbps

R1k R8k R70k

2010 2016 Improve transparency

Retail Call Centre Online Self Service

Direct

…. towards informed decisions on service provider, service and tariff. Accelerated capital investment secures network lead

Capital expenditure R million/% 89%

14.6% 14.0%

11.6% 99% 99% FY16 58%

+1 276 +3 352 +5 134

6 858 8 646 8 747

FY14 FY15 FY16 FY14 2G 4G Capital investment. Capital intensity

…. towards best network. 14 Significant progress data - best network for customers

Estimated population coverage Average download speeds % Source: MyBroadband (March 2016) (Mbps)

96% 99% 35% 58% 23 18 17 10

3G 4G FY15 FY16 FY15 FY16 Vodacom SA Operator A Operator B Operator C

Drop call ratio % 44.6% 1st MyBroadband download speed test reduction • in dropped 1st with commercial mobile LTE-A calls • 0.74% 0.65% • 1st in Group performance testing

0.43% 0.45% 0.41%

4Q15 1Q16 2Q16 3Q16 4Q16

…. to carry more traffic as prices are reduced and increase addressable market.

Doing even more …

Worry free Customer care

• Travel Saver extended to 180 • 15% decline in calls to call countries; prepaid voice in 135 centre countries when roaming • Named agent for large • Free call and App assistance enterprise • 1GB free @ upgrade to set up • Call back for RED customers • Data education campaign launched • Perfect start-up

MyVodacom App Network

• Easier login • Proactive for enterprise • Click to call network improvement • In-App data bundle • Proactively monitoring Top purchased 500 000 customers • SIM trial

…. for best experience for customers. What our customers say Consumer NPS points differentiation % Network Value

+6 ppts Service +15 ppts

FY15 FY16 • Only operator with increased score • Network drives differentiation Vodacom Competitor A Competitor B • Value perception improved

…. value perception and network satisfaction driving improved results. Significant progress data - best value for growth

Data progression Device sales 2.5m Vodacom Million Thousand branded • Data revenue devices grew 27.7% Data traffic +22.3% • grew 46.8%

2.8 • Effective price 32.1 34.2 16.6 18.7 11.6 14.2 1.5 10 450 5 322 10 485 6 508 reduced 13.6% Active Active data Active smart 4G customers FY15 FY16 customers customers devices FY15 FY16 Total devices sold Smart devices

Data bundles sold 4G Coverage Million Doubled +85.9% 4G sites • Data bundle 58.2% sales up 86%

34.8% • 98.9% 3G coverage 8.3% • Widest 4G 184 343 coverage FY15 FY16 Sep-13 Mar-15 Mar-16 …. to supplement declining voice revenues.

What others say RIA’s new Value for Money Index shows how well some operators, like …. Vodacom …. , supplement their 4G adoption is slow, but there are a few affordable prices with quick average regional outperformers download speeds. This displays what the “… 4G is gaining traction … , particularly …. consumers receive in South ”. return for their money.

“Technology migration well under way in Value for money exercise demonstrates SADC, …. South Africa will account the importance of price in for more than half of new 4G relation to the speed offered and the connections … , reflecting an advertised speed established 4G ecosystem and continued investment in infrastructure rollout by operators”.

There has been significant “A survey by GeoPoll and World Wide growth in competition within the broadband internet market, with Worx … in the South Africa leads The lack of access the 2.6GHz bands for mobile broadband connections far number of app downloads in the region, 4G is impacting negatively on exceeding those of fixed broadband. reflecting the high rate of the quality of the mobile broadband data adoption in the networks in the country., country”. …. about mobile broadband SA. Data growth and cost control

SPECTRUM RIGHTS OF WAY

Measures Grow data Control costs EVIDENCED-BASED & FEES PROPORTIONATE REGULATION

…. can be improved with assistance from Regulatory and Policy measures. SADC roaming initiatives

Standard Rates - SADC

Then (Pre December 2015) Now (Post Dec 2015) Calls to Receiving Country Network Local calls SMS Data/MB SA & Int’l a call Celtel R 8.00 R 10.00 R 6.00 R 2.75 R 17.50 Flat country rate: Mobitel R 8.00 R 10.00 R 6.00 R 2.75 R 102.40 Tanzania Vodacom R 2.90 R 5.00 R 2.90 R 1.50 R 5.00 • All calls R5/min Zantel R 8.00 R 10.00 R 6.00 R 2.75 R 17.50 Celtel R 8.00 R 10.00 R 6.00 R 2.75 R 17.50 • R1/SMS Orange R 8.00 R 10.00 R 6.00 R 2.75 R 102.40 • Data at R5/MB DRC Tigo R 8.00 R 10.00 R 6.00 R 2.75 R 102.40 1. Discount Vodacom R 2.90 R 5.00 R 2.90 R 1.50 R 5.00 2. Simplicity 3. Transparency MCEL R 6.00 R 6.00 R 6.00 R 2.75 R 51.20

Mozambique VM, S.A.R.L. R 2.90 R 5.00 R 2.90 R 1.50 R 5.00

Movitel R 6.00 R 6.00 R 6.00 R 2.75 R 51.20 • Up to 50% reduction on calls Econet R 6.00 R 6.00 R 6.00 R 2.75 R 51.20 (R10/min) Lesotho

Vodacom R 2.90 R 5.00 R 2.90 R 1.50 R 5.00 • Up to 95% reduction on data (R102.40/MB) Swaziland MTN R 6.00 R 6.00 R 6.00 R 2.75 R 17.50 • Up to 64% reduction on all SMS Standard Rates – Rest of World

Up to 96% data rate cuts from R128/MB to R5/MB for data usage in Europe, Asia and the USA. Up to 79% call rate cuts from R23.50/min to R5/min for calls back home (to South Africa) Up to 79% call rate cuts from R8/min to R5/min for local calls

3 countries

17 countries USA

9 countries 3 countries 23 Vodacom Travel Saver

Rates and countries

R30 daily – 33 countries R60 daily – 150 countries

VOICE SMS DATA VOICE SMS DATA

R2.50 R0.80 R2.00 R7.50 R2.00 R7.50

SADC countries SADC countries NAMIBIA LESOTHO ZAMBIA SWAZILAND BOTSWANA MOZAMBIQUE MALAWI DEMOCRATIC REPUBLIC OF CONGO SEYCHELLES Tanzania

MADAGASCAR Exceptions: Angola, Mauritius, and Zimbabwe

SADC then and now

Then (2015 rates) Now Travel Saver Travel Saver Local Calls to SA & Receiving calls (excl. data (excl. calls Int’l a call Data/MB daily fee) daily fee) Angola R 8.00 R 10.00 R 6.00 R 102.40 Angola Botswana R 6.00 R 6.00 R 6.00 R 51.20 Botswana R 7.50 R 7.50 DRC R 8.00 R 10.00 R 6.00 R 102.40 DRC R 2.50 R 2.00 Lesotho R 6.00 R 6.00 R 6.00 R 51.20 Lesotho R 2.50 R 2.00 Madagascar R 8.00 R 10.00 R 6.00 R 102.40 Madagascar R 7.50 R 7.50 Malawi R 8.00 R 10.00 R 6.00 R 17.50 Malawi R 7.50 R 7.50 Mauritius R 8.00 R 10.00 R 6.00 R 102.40 Mauritius Mozambique R 6.00 R 6.00 R 6.00 R 51.20 Mozambique R 2.50 R 2.00 Namibia R 6.00 R 6.00 R 6.00 R 17.50 Namibia R 7.50 R 7.50 R 7.50 R 7.50 Seychelles R 8.00 R 10.00 R 6.00 R 102.40 Seychelles Swaziland R 6.00 R 6.00 R 6.00 R17.50 Swaziland R 2.50 R 2.00 Tanzania R 8.00 R 10.00 R 6.00 R 102.40 Tanzania R 2.50 R 2.00 Zambia R 8.00 R 10.00 R 6.00 R 17.50 Zambia R 7.50 R 7.50

Zimbabwe R 6.00 R 6.00 R 6.00 R 17.50 Zimbabwe changes

• SMS Notification on Entry

• Welcome message - customer care

• Zero-rated customer care, even while roaming

• All tariffs included in roaming arrival messaging

• Zero-rated Vodacom App

• Spend notifications across the world Website changes

• Up to date information • Transparent rates and services • Rates comparison • Link to website on roaming message

27 IOT progress in SADC region

• All SADC countries covered by at least one IOT discount deal

SADC networks

27% IOT's 73% AA14 Since December 2014 survey • 13 IOT discounts negotiated and implemented • Continuous renegotiations to lower

Thank you