Vodacom Annual Results Presentation

Vodacom Group Annual Results For the year ended 31 March 2020 The future is exciting. Ready? 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. <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">2</li></ul>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. Annual results | 31 March 2020 COVID-19 | Responses and looking ahead <ul style="display: flex;"><li style="flex:1">Phase 1: </li><li style="flex:1">Phase 3: </li><li style="flex:1">Phase 2: </li></ul><ul style="display: flex;"><li style="flex:1">Crisis </li><li style="flex:1">New normal </li></ul>Recovery Supporting staff, Governments, customers and suppliers Societal Supporting business and jobs Economic resilience focus <ul style="display: flex;"><li style="flex:1">Our </li><li style="flex:1">Platform for new </li></ul>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 <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">4</li></ul>COVID-19 what are the trends South Africa Other <ul style="display: flex;"><li style="flex:1">Voice volumes </li><li style="flex:1">Recharges </li><li style="flex:1">Data volumes </li></ul>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. Annual results | 31 March 2020 5Highlights <ul style="display: flex;"><li style="flex:1">+4.8% </li><li style="flex:1">+11.6% </li><li style="flex:1">+13.2% </li></ul>R13.2bn <ul style="display: flex;"><li style="flex:1">(+3.5%)* </li><li style="flex:1">(+2.3%*) </li></ul>(+2.2%*) <ul style="display: flex;"><li style="flex:1">Capex </li><li style="flex:1">Revenue </li></ul>Operating profit EBITDA <ul style="display: flex;"><li style="flex:1">R90.7 billion </li><li style="flex:1">14.6% intensity </li></ul><ul style="display: flex;"><li style="flex:1">R37.6 billion </li><li style="flex:1">R27.7 billion </li></ul>845cps 945cps <ul style="display: flex;"><li style="flex:1">61.5m </li><li style="flex:1">115.5m </li></ul><ul style="display: flex;"><li style="flex:1">Customers1 </li><li style="flex:1">Data customers1 </li></ul><ul style="display: flex;"><li style="flex:1">Total DPS </li><li style="flex:1">HEPS </li></ul>+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. <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">6</li></ul>Diversified Group | Increasing contribution from International and Safaricom Group EBITDA <ul style="display: flex;"><li style="flex:1">Group service revenue </li><li style="flex:1">Group customers </li></ul>+R5.0 billion +R4.9 billion <ul style="display: flex;"><li style="flex:1">+18.0% </li><li style="flex:1">+11.1% </li></ul>+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% <ul style="display: flex;"><li style="flex:1">70.0% </li><li style="flex:1">65.3% </li></ul><ul style="display: flex;"><li style="flex:1">62.6% </li><li style="flex:1">60.4% </li></ul><ul style="display: flex;"><li style="flex:1">FY19 </li><li style="flex:1">FY20 </li><li style="flex:1">FY19 </li><li style="flex:1">FY20 </li></ul>1 1<ul style="display: flex;"><li style="flex:1">South Africa </li><li style="flex:1">International </li><li style="flex:1">Safaricom </li></ul><ul style="display: flex;"><li style="flex:1">South Africa </li><li style="flex:1">International </li><li style="flex:1">Safaricom </li></ul><ul style="display: flex;"><li style="flex:1">South Africa </li><li style="flex:1">International </li><li style="flex:1">Safaricom </li></ul>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. <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">7</li></ul>Highlights | South Africa – Elasticity cements recovery Reported % change <ul style="display: flex;"><li style="flex:1">Key indicator </li><li style="flex:1">Key milestones </li></ul>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. <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">8</li></ul>South Africa | New services contribution gaining momentum <ul style="display: flex;"><li style="flex:1">SA service revenue contribution </li><li style="flex:1">New services contribution to service revenue </li></ul>R billion +4.9% -1.6% 24.2 YoY % change % contribution to service revenue Rm 893 14.2 <ul style="display: flex;"><li style="flex:1">IoT revenue </li><li style="flex:1">1.7 </li></ul>6.0 2.8 3.7 38.5 <ul style="display: flex;"><li style="flex:1">Fixed revenue </li><li style="flex:1">3 189 </li></ul>1 494 1 971 13.5 13.2 21.5 Digital lifestyle services Financial services 14.3 +6.7% <ul style="display: flex;"><li style="flex:1">Consumer contract service revenue </li><li style="flex:1">Prepaid service revenue </li></ul>Enterprise and wholesale service revenue <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">9</li></ul>Pricing transformation evolution | Elasticity shaping recovery <ul style="display: flex;"><li style="flex:1">2017 </li><li style="flex:1">2020 </li></ul>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 <ul style="display: flex;"><li style="flex:1">1H19 </li><li style="flex:1">2H19 </li><li style="flex:1">1H20 </li><li style="flex:1">2H20 </li></ul>Data traffic growth (%) Data bundles sold, Up 15.0% 1 April 2020 to 996 million <ul style="display: flex;"><li style="flex:1">Free messages </li><li style="flex:1">Price reduced </li></ul>up to 40% 30-day bundles Deeper discount ConnectU 2 free SMS Free essential data services for poorer towns 1GB >2 000 towns NRow9o9nly 30-day bundle <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">10 </li></ul>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. <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">11 </li></ul>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 <ul style="display: flex;"><li style="flex:1">Tanzania </li><li style="flex:1">DRC </li><li style="flex:1">Mozambique </li><li style="flex:1">Lesotho </li><li style="flex:1">VBA/Other </li></ul><ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">12 </li></ul>Commercial progress: International data | potential realising <ul style="display: flex;"><li style="flex:1">Data1 contribution </li><li style="flex:1">Data users </li></ul>Million +11.5% +17.3%* R3.7bn +13.1% +4.2% 17.1% <ul style="display: flex;"><li style="flex:1">34.6 </li><li style="flex:1">38.6 </li><li style="flex:1">17.7 </li><li style="flex:1">20.0 </li><li style="flex:1">9.8 </li><li style="flex:1">10.2 </li></ul>of International service revenue <ul style="display: flex;"><li style="flex:1">Customers </li><li style="flex:1">Data customers </li><li style="flex:1">Active smartphone users </li></ul><ul style="display: flex;"><li style="flex:1">FY19 </li><li style="flex:1">FY20 </li></ul>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% <ul style="display: flex;"><li style="flex:1">4G </li><li style="flex:1">3G </li></ul>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. Annual results | 31 March 2020 13 Highlights | Safaricom – Mobile data recovery gaining momentum LC % change FY20 (Rm) <ul style="display: flex;"><li style="flex:1">Key indicator </li><li style="flex:1">Key milestones </li><li style="flex:1">FY20 </li></ul>(KES’bn) New services growth in M-Pesa up 43.4% 4.8 Service revenue Data revenue M-Pesa revenue EBITDA <ul style="display: flex;"><li style="flex:1">251 </li><li style="flex:1">36 319 </li></ul>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) <ul style="display: flex;"><li style="flex:1">84 </li><li style="flex:1">12 185 </li></ul>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) <ul style="display: flex;"><li style="flex:1">Annual results | 31 March 2020 </li><li style="flex:1">14 </li></ul>Strategy | Towards Vision 2025 765<ul style="display: flex;"><li style="flex:1">Best customer </li><li style="flex:1">Our brand and </li></ul>reputation 1experience 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 2Digital 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<ul style="display: flex;"><li style="flex:1">Financial Services </li><li style="flex:1">Best technology </li></ul>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 4Digital services Grow into new verticals of digital services to better serve our customers and create value

Vodacom Annual Results Presentation

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