50
Vodafone Group H1 2018/19 Results & Strategy Update 13 November 2018
Vodafone Group H1 2018/19 Results
& Strategy Update
13 November 2018
2
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forward-looking statements include, without limitation, statements in relation to
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 this presentation.
This presentation also contains non-GAAP financial information which the
Vodafone Group’s management believes is valuable in understanding the
performance of the Vodafone Group. However, non-GAAP information is not
uniformly defined by all companies and therefore it may not be comparable with
similarly titled measures disclosed by other companies, including those in the
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be viewed in isolation or as replacements for, but rather as complementary to, the
comparable GAAP measures.
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Speechmark Outline, Vodacom, Vodafone One, The future is exciting. Ready? and
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Disclaimer
• Good performance in most markets, Italy and Spain challenging
• Narrowing EBITDA guidance to mid-point of 3% underlying1 organic growth,
FCF raised to c.€5.4bn
• Driving business performance:
– Focus on operational execution and organic growth, supporting more
consistent commercial performance
– Radically simpler commercial propositions; internal emphasis on a few
key value drivers
– Openness to partnering to improve returns
• Multiple value drivers supporting structural FCF growth, deleveraging and
a sustainable dividend
Overview
3
1. Excludes the impact of UK handset financing and prior year settlements in UK and Germany
4
My long-term ambition
• Gaining profitable total comms market share
• Lower churn rates
• Capturing announced deal synergies
• Capital-smart strategic partnerships
• Virtual TowerCo in Europe
• Agile, tech-company operating model
• More consistent commercial performance
• >€1.2bn opex reduction in Europe1
• Significant FCF growth, supporting 3-year LTIP ambition of c.€17bn FCF
• Sustainable dividend payout
Customer engagement Asset utilisationDigital transformation Shareholder Returns
AcceleratingDeepening Improving Driving
Creating shareholder value through a focus on operational excellence and organic growth
+ +
1. Opex reduction includes Europe and Common functions where referenced throughout the presentation
Value drivers
5
1. By the fifth full year post closing
• Fixed on-net share gains
• 5G opportunities
• ‘One more product’ per
customer/lower churn
• Leading fixed challenger
• Digital enabler to
SoHo/SMEs
• Industrialising IoT/5G
• Smartphone & data
penetration
• Digital and financial
services
• Radically simpler
• Digital first
• Leverage Group scale
• Capture M&A synergies
• Virtual TowerCo
49%of group service revenues
30%of group service revenues
17%of group service revenues
>€1.2bn net opex savings in Europe by FY21
>€0.5bncost/capex synergies from Germany/CEE1
Deepening customer engagement
Vodafone BusinessEurope Consumer Emerging Consumer Digital transformation Asset utilisation
6
H1 18/19 progress
• 30% of Europe fixed new sales from digital channels
• ‘Vodafone-Bit’ digital only product launched in Spain
• EU opex down €0.2bn YoY
• Adjusted EBITDA +2.9%2
• Vodafone-Idea merger closed,
Bharti Infratel/Indus Towers
merger progressing
• Liberty Global Germany/CEE;
regulatory submissions filed
• Merger announced in Australia
of VHA and TPG
All growth rates in this document are on an IAS 18 basis, organic and year-on-year, unless otherwise stated, with Vodafone India and Vodafone Qatar excluded from organic growth calculation
1. Excludes UK handset financing
2. Excludes UK handset financing and settlements
3. Excludes the impact of UK handset financing and prior year settlements in the UK and Germany
Commercial momentum
• Group service revenue +0.8%1
• Europe Consumer broadband
base +250k, convergedcustomers +611k
• Vodafone Business +1.0% service revenue growth, led by fixed/IoT
• Emerging Consumer mobile data
users +2.3m
Digital transformation Asset utilisation€
Narrowing full year guidance to c.3% underlying EBITDA3 growth, raising FCF guidance to c.€5.4bn, stable interim DPS
12.110.3 10.2
7.34.8
(9.7)
(20.7)
UK¹ Other Europe Other AMAP Germany Vodacom Italy Spain²
7
Good EBITDA growth in most markets, Spain and Italy challenging
H1 18/19 EBITDA growth (%)
Servicerevenue growth (%)
0.8 5.79.42.4 2.0 -6.4
1. Adjusted for handset financing and one-off settlement from the prior year
2. Adjusted for one-off items and intercompany charges
-4.7
Jun Jul Aug Sep
8
Italy: clear response to competitive intensity
Actions Outcomes
ho customer base
€
Active base management
More for more offers
Fixed line momentum
121k broadband net adds, price increase
Successful launch of second brand
+491k net ports
Strong cost discipline
Opex reduced by 8% Offer
6.99 6.99 7.99 9.99
30GB 30GB 40GB 50GB
(25) (22)
(10)
3
(41)
(62)
(45)
(18)
Q3 17/18 Q4 17/18 Q1 18/19 Q2 18/19
9
Spain: commercial repositioning; cost transformation underway
Outcomes
Repositioning the Vodafone brand
Stable ports vs. Orange
Actions
Strengthened Lowi
Ports to MasMovil reduced to target
Exiting unprofitable football rights, focus on movies/series
€240m annual savings by FY21 (€150m FY20)
Redesigning our operating model
Lower cost base, launch of ‘Vodafone Bit’
Mobile contract
net ports (000s)
Vodafone vs. competitor A
• Lost 60k football customers in Aug/Sept
• Promos ended, porting activity stabilising
Vodafone vs. competitor B
10
Good performance in key markets
Germany UK Vodacom Group
Environment
Q2 service revenue growth (%)
H1 EBITDA growth (%)
H1 customer net adds (000s)
195
4,956
Mobile Contract Mobile Prepaid
466
115
Mobile Contract Fixed broadband
1. Excluding handset financing
2. Adjusted for handset financing and one-off settlement from the prior year
18197
Mobile Contract Fixed broadband
+7.3
Stable
+12.12
Stable Macro pressure in SA
+4.8
+1.7 +1.11 +6.3
Financial reviewMargherita Della Valle
Group Chief Financial Officer
1.9 2.1
2.5 2.3
H1 17/18 H1 18/19
12
Half year financial highlights (IAS18 basis)
Service revenue
(€bn)
20.619.7
H1 17/18 H1 18/19
+0.8%1
Adjusted EBITDA
(€bn)
6.7 6.9
7.4 7.1
H1 17/18 H1 18/19
+2.9%2 +8.6%2
Adjusted EBIT
(€bn)
Free cash flow
0.4 0.6
1.30.9
H1 17/18 H1 18/19
Growth despite pressures
in Italy & Spain
Underlying EBITDA margin2
+30bps YoY
Lower capital creditors
(€bn)
All percentage growth rates in this document are organic unless otherwise stated
1. Organic growth excluding UK handset financing
2. Organic growth excluding UK handset financing and settlements
Underlying Underlying
Underlying growth
Pre-spectrum
Post-spectrum
Adjusted EBITDA growth
and lower D&A
13
1. Reported excluding impairment losses, the loss on disposal of Vodafone India, restructuring costs, significant one-off items and amortisation of acquired intangible customer bases and brand intangible assets
2. Weighted average number of shares includes a dilution of 765 million shares (2016: 1,292 million shares) following the issue of £2.9 billion of mandatory convertible bonds (‘MCB’) in February 2016
€3.4bn loss on disposal following merger with Idea
Spain (€2.9bn)
Mark to market losses on MCB put options & FX movements
Group effective tax rate 25.9%, reflecting change in mix
of profits, mid-term rate still low to mid-20s
(€m)H1 18/19
IFRS 15
H1 17/18
IAS 18
Adjusted EBIT 2,100 2,457
Impairment loss (3,495) -
Associates (8) 171
Restructuring (95) (33)
Amortisation of brand assets/other (317) (543)
Other income and expense (256) (44)
Operating profit (2,071) 2,008
Financing costs/income (815) 152
Tax expense (1,409) (579)
Non-controlling interests (132) (104)
Non-operating income and expense (3) (1)
Discontinued operations (3,535) (345)
Non-controlling interests 132 104
Profit/(loss) for the period (7,833) 1,235
Adjusted earnings1 979 1,773
Weighted average number of shares2 (m) 27,462 28,067
Adjusted earnings per share (eurocents)1 3.56 6.32
26,697m ex. mandatory convertible bond (MCB)
Impacted by lower EBIT, move to IFRS15, FX, higher net interest
Includes 1 month of Vodafone Idea
Adjusted and reported earnings
2.2
1.3 1.11.4
1.6 1.6
2.1
Q1 17/18 Q2 17/18 Q3 17/18 Q4 17/18¹
1.1
0.5
0.3
(0.5)
0.9
0.3
Q1 18/19 Q2 18/19
14
Service revenue growth
Quarterly trends2
(%) Ex. UK handset financing IFRS 15 basis Reported (IAS18)
Impacts of IFRS 153
H1 18/19 (%) IFRS 15IAS 18 (ex. UK handset financing)
7.3
(1.0)
5.4
(4.3)
1.4
(6.8)
1.1
7.4
(0.7)
5.7
(4.7)
0.8
(6.4)
2.0
AMAP
Europe
Vodacom
Spain
UK
Italy
Germany
1. Excluding the benefit of a German legal settlement
2. From Q1 18/19 and onwards wholesale voice transit revenue is excluded from organic growth
3. Q1 18/19 IFRS15 service revenue growth rate restated from 1.1% to 0.9%
0.8
0.4
0.5
1.2
0.3
(1.2)
(0.4)
Europe
Consumer mobile
(excl. IT/ES)
Europe
Consumer fixed
Emerging
Consumer
Vodafone
Business
Italy/Spain
Consumer
mobile
Wholesale¹ H1 18/19
(ex. HF)
15
Service revenue growth drivers
H1 18/19 organic service revenue growth contribution
(pp)
1. Includes common functions and eliminations
0.16.7
6.9
H1 17/18
organic EBITDA
Direct margin Net A&R Europe opex¹ AMAP opex H1 18/19
organic EBITDA
16
Opex reducing for the third year in a row
EBITDA growth
(€bn)
Europe1 opex savings accelerating:
0.2
(0.1)
0.3
FY 17/18 FY 18/19e
0.4
1. Europe and common functions opex
17
Targeting >€1.2bn of net opex savings in Europe
Group opex
(€bn)
9.2
2.0
FY 17/18 FY 20/21e
Growing < inflation
>€1.2bn of net savings
Europe1 opex mix
(€bn)Europe1 AMAP
Multi-year net opex savings
11.2
Targets:
4.1 3.7
1.4
Functional targets:
- Customer ops: >30% net reduction
- Retail footprint: >15% reduction
- IT ops: >40% savings
- Shared Services: >25% efficiency saving
Commercial Technology Support
1. Europe and common functions opex
18
Digital transformation: cost reduction levers
Radically simpler
• New simplified pricing models
• Digital only plans
• Accelerated timeframe (5yr 3yr)
• Increased ambition
Leverage Group scale
Opportunities
Progress
• 40% of products retired over 3 years
• 50% reduction in price plans
Opportunities
Progress in H1
• 10% reduction in frequency of human contact2
• 30% fixed sales from digital channels
Opportunities
Progress
• Expanding shared services
• Centralise network design & IT operations
• ‘Virtual TowerCo’
• Shared Services now 20,000 FTEs- c.900 role reduction in H1
• Centralisation savings:- 75% in finance ops, 40% in network ops
Addressable cost base €8.0bn1
€2.5bn €1.0bnRetail
footprint
€1.5bn €3.0bnCustomeroperations
OperationsCommissions
1. Addressable cost base: total identified spend within which savings can be made through the Digital transformation programme
2. Excludes Spanish commercial repositioning impact
Digital first
Digital transformation: Germany broadband case study
19
• Improved website design
• Online NPV >2x retail channel NPV
• Substitute calls by selfcare journeys
• Push status and digital contacts
from day 1
• Grow automated and selfcare
installation
• Manage technician appointments
Über-style
• TOBi support
• Ability to predict service needs
33% of broadband gross
adds now online
Onboard
DSL calls down 30%
Install
Successful installations now 98%
Get help
20% of contacts now automated
Buy
End-to-end process costs down c.25%
20
• Vertical internal organisation with
dedicated management team for
controlled operations
• Driving operating efficiencies and
improving tenancy ratios
• Conducting due diligence to determine
optimal strategic and financial direction for
all tower assets
Driving asset utilisation: creating a virtual TowerCo
Opportunities
CEE: 9,500 (1.4)
9,100 (1.4)
4,200 (1.4)
11,000 (1.6)
20,000 (1.3)
3,100 (1.2)
19,200 (1.1)1,500 (1.7)
JVsVirtual TowerCo
Number of sites (tenancy ratio)
GR: 2,300 (1.4)
Total cost and
capex CY16
Total cost and
capex LTM
9.1
8.6
Total cost and
capex FY14
Total cost and
capex FY18
4.84.4
Total cost and
capex FY14
Total cost and
capex FY18
Vodafone GermanyKDG synergy target: €300m pa
21
Driving asset utilisation: strong synergy track record
Vodafone SpainOno: synergy target: €240m pa
VodafoneZiggoVZ synergy target: €210m pa
(€bn) (€bn) (€bn)
€0.4bn synergies
Germany/CEE acquisitions: targeting €535m annual run-rate cost & capex synergies2
€0.3bn synergies
>1/3 of synergies realised
1. Pro-forma for KDG in Germany, ONO in Spain (excluding Ono wholesale costs), and Ziggo in the Netherlands
2. By the fifth full year post completion
Synergies delivered from previous transactions1:
3.23.0
22
Group adjusted EBITDA margin
(%)
30.7%
29.3%
28.5% 28.6%
29.5%
30.8%31.0%
H1 12/13 H1 13/14 H1 14/15 H1 15/16 H1 16/17 H1 17/18 H1 18/19
Ex. handset financing
& settlementsAmbition
On track for fourth consecutive year of EBITDA margin expansion
16.1%15.7% c.16%
FY 16/17 FY 17/18 FY 18/19
Full year
23
Capital intensity stable
Capital intensity
Evolving capex mix
Smart capex planning
– €170m saved in FY19
IT migration to the Cloud
– 40% of applications now migrated
European NGN self build
largely complete
4G coverage now 95% in EU
5G investment
5G ambitions funded within mid-teens1 capital intensity envelope
985 1,631 2,541H1 Group data
traffic (PB):
14.7%17.6%
14.1%
17.3%
13.6%
Driving asset utilisationH1 H2
1. Excluding Gigabit plan
0.3
1.51.6 1.6
0.4 0.4
3.4
0.5
1.1c.1
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19e FY 20 FY 21
24
10 year averagespectrum cash spend €1.2bn
Spectrum amortisationbelow €1bn2
Upcoming
5G auctions3
Historical cash spectrum spend1
(€bn)
1. Ex. India and Netherlands
2. Annual spectrum amortisation charge, adjusted for the assumption that the 3G auctions in 2000 in Germany, Italy and UK had taken place at the average price /MHz/pop for European 3G auction since 2008
3. Major markets only
Nearing the peak of the 5G spectrum cycle
25
Free cash flow
1. Relates to non-cash movements on share based payments and disposal of capital assets
2. At guidance FX rates
(€m)H1 18/19
IAS 18
H1 17/18
IAS 18
Adjusted EBITDA 7,078 7,385
Capital additions (3,067) (3,263)
Capital creditors (821) (576)
Working capital (1,704) (1,718)
Net interest (369) (343)
Taxation (395) (400)
Dividends received from associates & investments 305 284
Dividends to non-controlling interests (185) (154)
Other1 52 74
Free cash flow (pre-spectrum) 894 1,289
Spectrum (231) (747)
Restructuring (97) (127)
Free cash flow 566 415
UK 5G spectrum acquired (3500MHz)
Net cost of debt 2.4% (ex. Liberty)
Liberty funding cost 2.4% to date
FY 18/19 now expected to be c.€5.4bn2
31.5
(1.8)
(2.1)
c.(5.4) 4.0
c.3
0.80.8
March
2018
KDG put
option
reclassified
VZ loan
note
FY 18/19
FCF
guidance¹
Dividends Spectrum
(accrued)²
Net cash
outflow to
India on
closing
Start of MCB
share
buyback
Other³ March
2019
26
Net debtEstimated year
end net debt c.€31-32bn
1. At guidance FX
2. Includes Italy, Spain & the UK, excludes other potential auctions in major markets
3. Includes FX, restructuring and BEE special dividend
~3.0x
pro-forma
leverage
post LBTY
(€bn)A robust investment
grade balance sheet:
• Headroom above
minimum credit rating
• Long term maturities
• Hedged against EM
FX volatility
Committed to pro-forma target leverage range of 2.5x – 3.0x
FY 2018/19 net debt outlook
27
Recurring FCF supporting €4bn annual dividend
Headwinds vs. plan:
• Spain repositioning
• Emerging market FX
Tailwinds vs. plan:
• Accelerating cost transformation
+• DE/CEE acquisitions expected
to be materially accretive to FCF1
(€bn)
1.3
4.1
5.4 c.5.4
FY 16 FY 17 FY 18 NEW
FY 19 guidance
FY 20 FY 21
Dividend Dividend
Normalised
spectrum
Normalised spectrum
1. Not included in the FY 2017/18 LTIP
Free cash flow pre-spectrum
c.€17bn cumulative 3yr LTIP ambition
Strategy updateNick Read
Group Chief Executive
29
Our purpose: We connect for a better future
Leading global IoT platform
77m sims
Europe’s largest
TV and content
distribution platform
22m TV customers1
Europe’s largest Tower Co
58k sites across Europe
M-Pesa Africa’s largest payment platform
35m customers
Best Gigabit Network Digital “First” Radically Simpler
Our strategy
Europe Consumer Vodafone Business Emerging Consumer
Deeper customer engagement
Scaled platforms & Partner of choice
1. Includes VodafoneZiggo and proforma for the acquisition of Liberty Global’s Unitymedia asset in Germany and UPC assets in Central and Eastern Europe
OpenFibre fully funded, rollout accelerating
CityFibre funding to build 5m homes, option for exclusivity
Network sharing agreement with MasMovil
for up to 1m homes
30
Europe Consumer: Vodafone’s leading NGN footprint
European marketable homes (proforma)1 (m)
168 Total homes
145Total incl. ADSL and NGN
117
61
54
NGN incl. wholesale
Owned NGN network
Strategic wholesale partnerships2
% of homes 32 37 70 86 100
1. Includes VodafoneZiggo and proforma for the acquisition of Liberty Global’s Unitymedia asset in Germany and UPC assets in Central and Eastern Europe
2. Includes Telefonica (selected areas in Spain) and Open Fiber (Italy)
Strengthening our reach and economics
Strategic partnerships
Gigabit upgrades in Germany / Spain
Germany /CEE acquisitions
• c.24m NGN marketable homes in Germany
• Transform CEE assets into fixed/converged challengers
31
Europe Consumer: driving on-net penetration, lowering churn
1. Includes VodafoneZiggo and proforma for the acquisition of Liberty Global’s Unitymedia asset in Germany and UPC assets in Central and Eastern Europe
2. Mid-term ambition for on-net penetration
… upsell more products and services
46
2
13
21
12
21
29
0 10 20 30 40 50
Netherlands
Greece
Ireland
Portugal
Italy
Spain
Germany
• Every 1m on-net Broadband customers increases cash flow by c.€0.25bn
TV & entertainment
Incremental churn benefit through
convergence and additional services
On-net penetration1
Super Wi-Fi Gigaholiday
Always connected
Secure Net
converged
Increase our on-net penetration and…
(%)
FY
22/232H1
18/19
95% 4G coverage
98% single RAN
96% have high capacity backhaul
32
Best Gigabit Network: building Europe’s largest 4G/5G network
A densified and modernised network 88k4G sites
already have 3.5GHz spectrum for 5GA leading 4G/5G spectrum position 8
markets
in cities with more than 100k population are 5G ready1Co-lead in 5G deployment 66%of sites
1. Includes 13 European markets (incl. NL). ‘5G ready’ defined as sites that are single RAN enabled with backhaul capability of >1Gbps
5G ambition: leader in network perception, differentiation vs. value players
100
102 102
FY 15/16 FY 16/17 FY 17/18
33
Best Gigabit Network: efficient gigabit factory
H1 +57%
YoY
3G 4G 5G
Costs stable
Indexation of unit costs
Relative radio cost of delivery
Europe network costs1 Europe data traffic (PB)
-70%
-80%
Targeting stable network costs despite strong expected traffic growth
1. Opex and depreciation, FY used to avoid seasonality
34
Europe Consumer: 5G brings more opportunities
2.5bn European Consumer IoT devices by 20251
Mobile gaming population to reach 157m by 20252
Tiered offers based on quality of service and/or speed differentiation
Targeting rural, semi-rural and non-fibre areas
1. GSMA report, April 2018
2. Global Gaming Report 2018, Newzoo Research, forecasting mobile gaming population in Germany, Italy, the UK and Spain
Opportunities
Actions ESL ‘premium partner’Launching in 2020(using 3.4 - 3.7GHz bands)
V-brand CIoT platform and products launched
Building intelligent network capabilities for 2020+ launch
One more product per customer in a gigabit converged world
QoS Consumer IoT Fixed wireless access E-Gaming
35
Vodafone Business: a unique asset
• Leading fixed challenger
• Minimal exposure to legacy products and low margin IT projects
• Attractive contribution margins
Vodafone markets
Partner markets
• Owner economics in multiple markets
• 248,200 kms of fibre
• Security and end-to-end control for customers
Mobile
IoT
Cloud
Global footprint Product mix
30% of group service revenues, growing at 1.0% in H1
60%30%
7% 3%
Fixed
Business Consumer
0%
50%
100%
Business Consumer Business Consumer Business Consumer
Mobile revenue share1
36
Vodafone Business: the challenger to incumbents
Enterprise fixed revenuemarket share
Vodafone
Competitor 1
Competitor 2
Competitor 3
Competitor 4
8% 7% 9% 13%
1. Latest full year available
c.78%
c.60%
Business
Consumer
Vodafone Business: Gigabit solutions for large corporates
• Disrupt legacy relationships with lower cost solutions
• Differentiate through mobile integration and
applying Analytics and AI
CAGR 17–25
13%
12%
8%
11%
Connectivity
Hardware
Total
Services
30 43 49 53 5513
17 22 28 3454
7497
121143
FY17 FY19 FY21 FY23 FY25
97
134
168
202
232
• Scale and improve connectivity platform
• Grow services in selective verticals beyond automotive
(services 24% of IoT revenues today)
Global IoT enterprise market – Total value chain (€bn2)
37
1. Software Defined – Wide Area Networks
2. Mason Feb 2017 global forecast includes fixed, mobile and LPWA communication based services
Gain in fixed market share with SD-WAN1 Leveraging our IoT global leadership
38
Emerging Consumer: Material data growth opportunities
1. In Vodafone footprint, excluding JVs in Kenya and India
• Data revenue is 50% of Emerging Consumer mobile service revenues
• Data revenue growing at 18%
2G 3G 4G
Africa and Middle East data customers1
Customers
Active data users
Smartphone customers
4G customers
161m
78m
36
69m
• 43% smartphone penetration
• Leading/co-leading network NPS in all our markets
+22%
+13%
ARPU uplift in South Africa
32
11
30
39
Emerging Consumer: M-Pesa as a financial services platform
P2P transfers, international
transfers
1. Money transfer & core services 2. Enterprise payments 3. Financial services 4. Mobile commerce
B2B, bank transfers, bills,
salaries
Loans, handset financing,
insurance, finance tools
Merchant in-store
and online
Progress by market
Kenya
Tanzania
Mozambique
7Lesotho
7DRC
0.7Ghana
0.1Egypt
% of service
revenue
% M-Pesapenetration
into the customer
base
58
63
26
37
8
1
83
Summary
40
Supporting a sustainable dividend and improved shareholder returns
Clear focus on
operational execution
Strong ambition to
transform our
operating model
Five value drivers for
revenue growth
and margin expansion
Consistent investment
in the best Gigabit
networks
Free cash flow growth
41
Q&A
42
Appendix
217
144
212
258
208
94 8979
46
69
Q2 17/18 Q3 17/18 Q4 17/18 Q1 18/19 Q2 18/19
43
Germany: continued operational momentum, margin expansion
OutcomesActions
Mobile contract and broadband net adds
Investing for network leadership
DOCSIS 3.1 upgrade in 30% of footprint
Growing in higher value channels
Direct >40% of gross adds
Driving convergence
1.2m converged customers, +513k H1 net adds
Digital transformation delivering savings
EBITDA margin +150bps YoY
Mobile contract Fixed broadband
• Wholesale drag in H2, Gigabit Plan ramping up
26
41
6
77
104
3338
66
5344
Q2 17/18 Q3 17/18 Q4 17/18 Q1 18/19 Q2 18/19
44
UK: building commercial and financial momentum
OutcomesActions
Mobile contract and broadband net adds
Investing for network leadership
#1 in London
Consumer focus on fixed and youth segment
Broadband base +201k yoy, VOXI net adds +39k
Fixed enterprise recovery
+1.9% growth in Q2, 15 networks closed
Driving efficiencies, partly through digitalisation
Opex reduced by 6%
Mobile contract1 Fixed broadband
• EBITDA up 12%, H2 expected to improve further
1. Excludes the phasing out of Talkmobile customers. Reported contract net adds in FY 17/18: Q2 -3k, Q3 +6k, Q4 -14k, and in Q1 18/19 +60k.
6.76.9
7.17.4
(0.1) (0.1) (0.1) (0.1)(0.3)
0.2
H1 17/18
reported EBITDA
FX/other Qatar
deconsolidation
India recharges UK settlement UK handset
financing
H1 17/18
organic
underlying
EBITDA
H1 18/19
organic
underlying
EBITDA
UK handset
financing
H1 18/19
EBITDA reported
45
H1 YoY EBITDA walk
(€bn)
+2.9%
46
12.7
3.2
10.32.7 7.22.6
11.0
6.4
5.0
12.5
11.228.1
0.2
Germany Italy Spain UK Portugal VodafoneZiggo NLJV CEE¹
117m Households passed with NGN (incl. wholesale)
70% Coverage
54m Households passed with own NGN
32% Coverage
Vodafone pro-forma NGN footprint by country1
Household coverage
(m)2
1. Includes VodafoneZiggo and proforma adjustments for the announced acquisition of Liberty Global’s Unitymedia asset in Germany and UPC assets in Central and Eastern Europe
2. As of 30 Sep 2018. Excludes 3.8m wholesale & self built NGN homes passed in Greece and Ireland
3. Of the 3.3m homes passed by Open Fiber, 2.6m were marketable by Vodafone at the end of Sep 2018 (up from 2.2m at the end of June 2018)
70% 64% 75% 88% 58% 93% 38%
Owned Strategic partnership3 Acquired Assets Wholesale Household coverage%
47
Q2
17/18
Q3
17/18
Q4
17/18
Q1
18/19
Q2
18/19
4G customers (m)2,3 34.3 47.2 56.2 68.4 73.8
Broadband customers (m)2 1.7 1.8 1.9 1.9 2.0
Converged customers (m) 0.1 0.1 0.1 0.1 0.1
Contract churn (%) 14.3 15.4 15.6 13.8 13.2
3G/4G outdoor coverage (%) 86 86 87 87 88
% of data sessions >3Mbps 87 88 88 87 86
% of dropped calls 0.56 0.52 0.51 0.50 0.48
Q2
17/18
Q3
17/18
Q4
17/18
Q1
18/19
Q2
18/19
4G customers (m)1,4 54.3 56.8 59.1 61.0 62.2
Broadband customers (m)1 17.1 17.5 17.8 17.9 18.3
Converged customers (m)1 4.7 5.0 5.3 5.8 6.0
Contract churn (%) 16.8 18.1 16.5 15.8 17.4
4G % outdoor population
coverage(%)1 93 93 94 94 95
% of data sessions >3Mbps 91 91 92 92 90
% of dropped calls 0.41 0.36 0.34 0.36 0.36
All figures exclude India and VodafoneZiggo unless otherwise stated
1. Includes VodafoneZiggo
2. Includes Vodafone-Idea and other associates, excludes Qatar
3. AMAP restated from Q1 18/19 onwards due to Egypt clean-up
4. Europe restated from Q2 17/18 onwards due to UK clean-up
Europe
Customer experience and commercial KPIs
AMAP
48
HY 18/19
(€m)
HY 17/18
(€m)
Net financing costs (815) 152
Mark to market - Mandatory convertible bonds 180 (176)
Foreign exchange1 215 (302)
Adjusted net financing costs (420) (326)
Other mark to market of derivative positions 5 (19)
Interest expense arising on settlement of outstanding tax issues (15) 33
Net financing costs before settlement of outstanding tax issues (430) (312)
Other FX/FV including Share buyback irrevocable2 - (25)
Liberty financing costs 65 -
Other 13 (30)
Underlying net financing costs (a) (352) (367)
Average net debt (b) (29,906) (29,465)
Net cost of debt3 2.4% 2.5%
Financing costs (excluding Liberty financing costs)
1. Comprises foreign exchange rate differences reflected in the income statement primarily in relation to sterling and US dollar balances
2. FX/FV on Share buyback irrevocable is in HY17/18 only
3. Cost of debt: ((a/b)x2) x 100
49
This presentation, along with any oral statements made in connection therewith, contains “forward-looking
statements” including within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to
the Group’s financial condition, results of operations and businesses and certain of the Group’s plans and objectives.
In particular, such forward-looking statements include, but are not limited to, statements with respect to: expectations
regarding the Group’s financial condition or results of operations; expectations for the Group’s future performance
generally; expectations regarding the Group’s operating environment and market conditions and trends; intentions
and expectations regarding the development, launch and expansion of products, services and technologies; growth in
customers and usage; expectations regarding spectrum licence acquisitions; and expectations regarding, service
revenue, adjusted EBITDA, free cash flow, capital expenditure, and foreign exchange movements.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such
words as “plans”, “targets” “gain”, “grow”, “continue”, “retain” or “accelerate” (including in their negative form). By
their nature, forward-looking statements are inherently predictive, speculative and 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 developments to differ materially from those expressed or
implied by these forward-looking statements. These factors include, but are not limited to, the following: external
cyber-attacks, insider threats or supplier breaches; changes in general economic or political conditions in markets
served by the Group and changes to the associated legal, regulatory and tax environments; increased competition;
increased disintermediation; the impact of investment in network capacity and the deployment of new technologies,
products and services; rapid changes to existing products and services and the inability of new products and services
to perform in accordance with expectation; the ability of the Group to integrate new technologies, products and
services with existing networks, technologies, products and services; the Group’s ability to grow and generate revenue;
a lower than expected impact of new or existing products, services or technologies on the Group’s future revenue,
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 licences and realise expected synergies
and associated benefits; the Group’s ability to secure the timely delivery of high-quality products from suppliers; loss
of suppliers, disruption of supply chains and greater than anticipated prices of new mobile handsets; changes in the
costs to the Group of, or the 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;
changes in foreign exchange rates, as well as changes in interest rates; the Group’s ability to realise benefits from
entering into acquisitions, partnerships or joint ventures and entering into service franchising, brand licensing and
platform sharing or other arrangements with third parties; acquisitions and divestments of Group businesses and
assets and the pursuit of new, unexpected strategic opportunities; the Group’s ability to integrate acquired businesses
or assets; the extent of any future write-downs or impairment charges on the Group’s assets, or restructuring charges
incurred as a result of an acquisition or disposition; the impact of legal or other proceedings against the Group or
other companies in the mobile telecommunications industry; loss of suppliers or disruption of supply chains;
developments in the Group’s financial condition, earnings and distributable funds and other factors that the Board
takes into account when determining levels of dividends; the Group’s ability to satisfy working capital and other
requirements; and/or changes in statutory tax rates and profit mix.
Furthermore, a review of the reasons why actual results and developments may differ materially from the
expectations disclosed or implied within forward-looking statements can be found under the headings “Risk factors”
and “Other information – Forward-looking statements” in the Vodafone Group’s Half-Year Financial Report for the six
months ended 30 September 2018 and “Forward-looking statements” and “Risk management” in the Group’s Annual
Report for the year ended 31 March 2018. The Half-Year Financial Report and the Annual Report can be found on the
Group’s website (vodafone.com/investor). All subsequent written or oral forward-looking statements attributable to
the Company, to any member of the Group or to any persons acting on their behalf are expressly qualified in their
entirety by the factors referred to above. No assurances can be given that the forward-looking statements in or made
in connection with this presentation will be realised. Any forward-looking statements are made as of the date of this
presentation. Subject to compliance with applicable law and regulations, Vodafone does not intend to update these
forward-looking statements and does not undertake any obligation to do so.
Forward-looking statements
www.vodafone.com/investor
For definitions of terms please see www.vodafone.com/content/index/investors/glossary
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Interimdividend paid
1 Feb
Prelim results
14 May
Q3 results
25 Jan
50
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