Transcription

Vodafone Group PlcInterim Management StatementFor the 3 months ended 30 June 201023 July 2010

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010DisclaimerInformation in the following presentation relating to the price at which relevant investments have been bought or sold inthe 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 anyperson to underwrite, subscribe for or otherwise acquire or dispose of securities in any company within the Group.The presentation contains forward-looking statements which are subject to risks and uncertainties because they relate tofuture events. These forward-looking statements include, without limitation, statements in relation to the Group’sprojected financial results for the 2011 financial year. Some examples of forward-looking statements and of the factorswhich may cause actual results to differ from these forward-looking statements are discussed on the final slide of thepresentation.The presentation also contains certain non-GAAP financial information. The Group’s management believes these nonGAAP measures provide valuable additional information in understanding the performance of the Group or the Group’sbusinesses because they provide measures used by the Group to assess performance. Although these measures areimportant in the management of the business, they should not be viewed in isolation or as replacements for, but rather ascomplementary to, the comparable GAAP measures.Vodafone, the Vodafone logo, Vodacom, O.tel.O, Vodafone Mobile Broadband and Vodafone Mobile Connect are trademarks of the Vodafone Group. Other product and company names mentioned herein may be the trade marks of theirrespective owners.2

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Agenda Overview Performance update Financial review Q&A3

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Q1 10/11 OverviewGroup returns to organic revenue growthImproving revenue trends in all regions - UK and Germany return to growthCommercial actions driving faster data growth 25%Accelerating growth in emerging marketsStrong cash flow generation funding investment and dividend growth policyFY 10/11 outlook confirmed4

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Return to organic revenue growthGroup service revenue growth (%)1Q110/11 bnQ1 10/11Growth(%)Q4 09/10Growth(%)10.6 1.1(0.6)1Europe6.8(1.7)(2.4)1Africa & Central Europe2.0 3.7 2.4(2.9)Asia Pacific & Middle East1.8 10.5 5.0Q2 09/10Voice & messagingrevenue8.2(3.0)(4.2)Data revenue1.2 25.4 20.3Fixed revenue0.8 4.5 6.0Capital expenditure21.0(11.6) 3.9Free cash flow21.8(6.8) 35.3Group service revenue1.1(1.3)Q3 09/10(0.6)Q4 09/10Q1 10/11 Third sequential quarterly improvement Europe 0.1% excluding 1.8pp MTR impact Emerging markets: India 14%, Turkey 24% Data and fixed growth compensate for voice& messagingAll growth figures are organic unless otherwise stated1. Adjusted for IFRIC 13 ‘Customer Loyalty Programmes’. Group reported growth: -3.0% in Q2 09/10, -1.2% in Q3 09/10, -0.2% in Q4 09/10. Europe reported growth: -1.7% in Q4 09/102. Not organic5

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Europe: revenue trends continue to improveService revenue growth - improving trend (%)1Q2 09/10Q3 09/10Q4 09/10Enterprise service revenue growth - now positive (%)Q2 09/10Q1 10/11Q3 09/10(1.7)Q1 10/110.2(1.9)(2.4)(3.2)(3.8)(5.1)(4.4)Outgoing voice growth - improving volumes (%)Q2 09/10Q4 09/10Data revenue growth - increases (%)Q3 09/10Q4 09/10Q1 10/112.83.14.04.817.916.3(9.9)(11.2)(11.5)(12.2)Q2 09/10Q3 09/10Usage23.3Effective rate per minuteAll growth figures are organic unless otherwise stated1. Adjusted for IFRIC 13 ‘Customer Loyalty Programmes’. Reported growth was -4.6% in Q2 09/10 and -1.7% in Q4 09/10618.8Q4 09/10Q1 10/11

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Emerging markets: growth remains strongAfrica & Central EuropeAsia Pacific & Middle EastService revenue growth (%)Service revenue growth (%)Q2 09/10Q3 09/10Q4 09/10Q1 10/1110.33.710.510.42.45.0(0.5)(3.9)Q2 09/10Q3 09/10Q4 09/10Q1 10/11 Turkey: turnaround delivering strongrevenue growth India: stronger revenue growth; no majorprice moves by leading competitors South Africa: strong overall performanceand excellent progress in data Egypt: continued price pressure; stablerevenue market share; strong data growth Central Europe: positive trends in a fragileeconomic environment, with large MTR cuts Australia: integration on track and strongrevenue growthAll growth figures are organic unless otherwise stated7

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Driving data growth and smartphone profitabilityGroup:Group data revenue growth (%)Increasing revenue20.117.725.420.3 51m data users; mostly Europe Mobile internet revenue 57% Mobile broadband 24%Q2 09/10 Q3 09/10 Q4 09/10 Q1 10/11Europe smartphone penetration (%)Driving penetration10.49.714.211.8Europe: 35% of customers use a data product Smartphone data attach rates 51% Data volumes 115%; but average peak hour3G utilisation broadly stable at 38%Q2 09/10 Q3 09/10 Q4 09/10 Q1 10/11Smartphone ARPU uplift ( )Smartphone ARPUupliftSmartphones:8-10 Aligning subsidy with customer spend Positive outlook assuming higher data attachrates and increased penetration of tiered plans2-5Non-smartphone toNon-smartphone tolow/mid tier smartphone high tier smartphone8

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Germany: return to revenue growth Economy improvingService revenue growth (%)Q2 09/10Q3 09/10Q4 09/10Q1 10/11 Service revenue:0.2––––(1.6)(2.8)(4.9) Commercial focus:– Investment in high value segments drives contractARPU up 0.5%– Driving data with smartphones and high data attachrates– Strong prepaid net adds due to“o.tel.o” 2nd brand– Cost reduction: Field force outsourcing (650 FTEs)Data revenue growth (%)26.717.2Mobile 0.2%, including 1.2pp QoQ MTR benefitData 31%; smartphones, netbooks and iPadsEnterprise 2.6% driven by account wins and roamingFixed line 0.1%, stable amid stronger competition31.117.7 Commercial use of 800MHz for LTE expected in Q41Q2 09/10Q3 09/10Q4 09/10Q1 10/11All growth figures are organic unless otherwise stated1. Total spectrum acquired in May 2010: 2x10 800 MHz, 2x5 2.1GHz, 2x20 2.6GHz, 25 MHz 2.6GHz unpaired9

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Italy: responding to competitive pricing pressure Challenging market environment:Service revenue growth (%)Q2 09/10Q3 09/10Q4 09/10– Southern Europe economic issues impacting consumersentiment– Significant increase in price-based competitionQ1 10/111.40.70.11 Service revenue drivers:– Mobile -4%; voice & SMS impacted by price pressure– Data 22%; mobile internet 52%, mobile broadband 27%– Fixed 12%; 1.4m broadband customers ( 90k2)– Enterprise 4%; driven by small business segment(2.5)Data revenue growth (%)23.8Q2 09/1019.821.5Q3 09/10Q4 09/10 Commercial focus:22.1– Remaining competitive in an aggressive pricingenvironment– Driving usage:“Infinity” offers and seasonal promos– Driving smartphone penetration and data attach rates ”Smarter with Vodafone” campaign– Enhanced enterprise customer base managementQ1 10/11All growth figures are organic unless otherwise stated1. IFRIC 13 ‘Customer Loyalty Programmes’ benefit c.2.2pp, reported growth 2.3%2. 100% basis10

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Spain: slight improvement in a challenging environment Difficult market conditions:Service revenue growth (%)Q2 09/10Q3 09/10Q4 09/10– High unemployment; household incomes squeezedQ1 10/11 Service revenue drivers:(6.9)(6.8)(6.2)– Mobile -6.2%1; broadly stable consumer contractrevenue offsetting continuing prepaid weakness– Outgoing voice usage continuing to improve– Data 14%; mobile broadband and mobile internet( 24% excluding content)– Fixed 7%; broadband revenue 8%(5.4)1Outgoing voice usage growth (%)Q2 09/10Q3 09/10Q4 09/10Q1 10/113.53.8 Commercial focus:– Driving smartphone penetration (iPhone from end July)and data attach rates– Increased penetration of contract flat tariffs– High value customers: 15% of enterprise customers onQoS tariffs– New prepaid value tariffs from June0.4(2.9)All growth figures are organic unless otherwise stated1. Reported service revenue decline of 6.2% and mobile service revenue decline of 7.0% adjusted for contract settlement in Q1 09/10 as disclosed in Q1 09/10 IMS11

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010UK: return to revenue growth Economy stabilisingService revenue growth (%)Q2 09/10Q3 09/10Q4 09/10Q1 10/11 Service revenue drivers:0.7– 3.3pp over Q4 driven by contract– Contract consumer and enterprise strong (1m netadds in last 12 months)– Focus on contract retention reducing churn to15.5%– Data 28%; mobile broadband and mobile internet– Improved roaming trends– Enterprise returns to growth, 6pp higher than Q4(2.6)(4.9)(6.6)Contract: net adds (‘000s) and churn (%)18.518.125716.2256244Q2 09/10Q3 09/10Net addsQ4 09/10 Commercial focus:15.5– Driving smartphone penetration; 17%– Vodafone VIP loyalty programme launch– Continued network enhancement; “Best Network”Mobile Industry award245Q1 10/11ChurnAll growth figures are organic unless otherwise stated12

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Emerging markets: data growth in Vodacom; Turkey turnaroundVodacomTurkeyService revenue growth (%)Service revenue growth (%)8.37.15.531.36.64.63.25.523.74.012.9(4.8)Q2 09/10Q3 09/10VodacomQ4 09/10Q1 10/11Q2 09/10Q4 09/10Q1 10/11South Africa Record quarterly service revenue: South Africa - excellent progress in data:–––––Q3 09/10Improving economic conditionsService revenue 8.3% excluding MTRs (Q4 8.0%)Data 34% driven by mobile broadband1Increased investment in 3G & fibre networksFurther MTR cuts expected–––––– Vodacom International - slowly recoveringAll growth figures are organic unless otherwise stated1. Underlying service revenue reflecting the change in the data carry over rule, reported growth was 43%13GDP recoveringService revenue 43% excluding MTRs (Q4 40%)ARPU 17%; despite MTR reductionsImproved customer mix: contract base 3.1m ( 1m YoY)Launch of strategic initiatives in targeted segmentsContinued distribution and network enhancement

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Emerging markets: strong performance in India Improving market trends:Service revenue growth (%)18.012.213.813.76.9Q2 09/10Q3 09/106.512.0 Service revenue 14%:6.5Q4 09/10Consolidated– No major price moves by leading competitors– 90% of customer base on new tariffs––––Q1 10/11MobileOutgoing price trend (QoQ %)Q2 09/10Q3 09/10Q4 09/10 4pp QoQ due to MTR impact unwindingContinued strong customer growth (109m base)Improving usage and price trendIndus Towers performing well (1.8 tenancy ratio) Operating free cash flow positiveQ1 10/11 3G services expected to commence in Q41:– Indus Towers as infrastructure provider(4)(6)(10)All growth figures are organic unless otherwise stated1. 2x5 MHz acquired in each of 9 circles in May 2010(10)14

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Strong cash generation funds investment and dividend policyFree cash flow ( bn) Q1 10/11 free cash flow 1.8bn– Broadly stable YoY after adjusting for foreign exchangeIncludes 0.2bn VZWdividend deferral1.92.11.81.8 Q1 10/11 capex 1.0bn1.4– Europe: continued network investment– Turkey: network enhancement– India: continued network rolloutQ1 09/10 Q2 09/10 Q3 09/10 Q4 09/10 Q1 10/11 Medium-term cash target supports dividend policyCapital expenditure ( bn)– 6-7bn p.a. free cash flow target until FY 12/13– At least 7% annual DPS growth targeted until FY 12/132.21.21.41.31.0Q1 09/10 Q2 09/10 Q3 09/10 Q4 09/10 Q1 10/1115

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Net debt stable after spectrum investment; strong liquidity Licences and spectrum in India, Germany andthe NetherlandsQ1 10/11 bnOpening net debt (31/03/10)Free cash flowLicences and spectrum(33.3) Net debt includes 3.3bn India options1(2.9)Foreign exchange1.1Other0.6Closing net debt (30/06/10) Foreign exchange rate benefits1.8 Liquidity: fully financed for 2010– New 4bn 2015 credit facility– Existing facility of 5bn matures 2012(32.7) Settlement of UK CFC dispute with HMRC:– 1.25bn payment: 0.8bn in H210/11, remainderover 5 years– 3.1bn provision (tax and interest) at March 2010– Settles all outstanding issues from 2001 to date– No further liabilities under current legislation– Longer term, no liabilities expected followingreforms of the regime1. The Essar options are exercisable between 8 May 2010 and 8 May 201116

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Progress on strategyIncreasingcompetitiveness anddriving data inmature marketsDelivering growth inemerging marketsEnhancingshareholder returns /capital discipline Delivering cost savings to fund increased commercial investmentNetwork enhancements for faster data speeds and capabilityEnhancement of billing systems to support data pricing evolutionEnhanced enterprise solutions for corporatesLeveraging broadband capabilities to drive total communication services Continued strong revenue growth in Africa and India Turnaround in Turkey delivering record revenue levels. Focus now on margin recovery Driving data opportunity At least 7% annual DPS growth targeted until FY 12/13, supported by 6-7bnp.a free cash flow target until FY12/13 Value maximisation of controlled and non controlled businessesResults of strategy update to be communicated in the Autumn17

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010A stronger Vodafone1. More commercially focused, executing on turnaroundsand regaining competitiveness2. Growing revenue beyond mature European voice3. Maintaining investment in capacity and quality4. Simplified organisation driving cost, efficiency and speed5. Delivering company-wide focus on free cash flow generation tosupport increased shareholder returns18

Question and Answer Session

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Definition of termsARPU: Service revenue excluding fixed line revenue, fixed advertising revenue, revenue related to business managed services and revenue from certaintower sharing arrangements divided by average customersChurn: Total gross customer disconnections in the period divided by the average total customers in the periodData attach rates: The number of complementary data plans sold as a percentage of data capable handsetsDPS: Dividend per shareEmerging Markets: Africa & Central Europe and Asia Pacific & Middle EastFree cash flow: Operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments and dividendspaid to non-controlling shareholders in subsidiariesIFRIC: 13 ‘Customer loyalty programmes’ - The interpretation addresses how companies that grant their customers loyalty award credits when buyinggoods and services should account for their obligations to provide free or discounted goods and servicesMark to Market: Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price of theasset or liabilityMobile broadband: A connection device which provides access to 3G services to users with an active PC or laptop connection. This includes VodafoneMobile Broadband data cards, Vodafone Mobile Connect 3G/GPRS data cards and Vodafone Mobile Broadband USB modemsMobile Internet: Browser-based access to the Internet or web applications using a mobile device, such as a smartphone, connected to a wireless networkMTR: Mobile termination rate. A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobilenetwork operatorNet adds: The number of new customers acquired less the number of customer leaving during the periodNet debt: Long-term borrowings, short-term borrowings and mark-to-market adjustments on financing instruments less cash and cash equivalentsOperating free cash flow: Cash generated from operations after cash payments for capital expenditure (excludes capital licence and spectrumpayments), and cash receipts from the disposal of intangible assets and property, plant and equipmentOrganic growth: Presents performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange ratesQoS tariff: Quality of service tariff. A tariff that provides enhanced levels of service, this could include priority access to the network, faster downlink speedsor a higher usage allowanceSmartphone: A mobile phone offering advanced capabilities including access to email and the internetSmartphone penetration: The number of smartphone devices divided by the number of registered sims excluding data only sims20

Vodafone Group Plc – IMS for the quarter ended 30 June 2010 23 July 2010Forward-looking statementsThis presentation contains “forward-looking statements” within the meaning of the US Private Securities Litigation ReformAct of 1995 with respect to the Group’s financial condition, results of operations and businesses and certain of the Group’splans and objectives. In particular, such forward-looking statements include: the financial guidance contained within slide4 and 15 and statements relating to the Group’s future performance generally; statements relating to the Group’s dividendper share growth policy contained on slides 4, 15 and 17; statements relating to the development and launch orenhancement of certain products, services and technologies, including network enhancement in Turkey and the launch of3G services in India; expectations regarding growth in customers and usage, mobile data growth, data attach rates andtechnological advancements; statements relating to movements in foreign exchange rates; expectations regardingadjusted operating profit, free cash flows, costs, tax settlements and capital expenditures; expectations regarding costefficiency programmes; and expectations regarding the integration or performance of current and futureinvestments, associates, joint ventures and newly acquired businesses. There are a number of factors that could causeactual results and developments to differ materially from those expressed or implied by these forward-looking statements.These factors include, but are not limited to, Vodafone’s ability to realise anticipated cost savings, the impact of legal orother proceedings, continued growth in the market for mobile services and general economic conditions .Furthermore, a review of the reasons why actual results and developments may differ materially from the expectationsdisclosed or implied within forward-looking statements can be found by referring to the information contained under theheading “Forward-looking statements” and "Principal risk factors and uncertainties" in Vodafone Group Plc's AnnualReport for the year ended 31 March 2010. The Annual Report can be found on the Group’s website(www.vodafone.com/investor). All subsequent written or oral forward-looking statements attributable to the Company orany member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factorsreferred to above. No assurances can be given that the forward-looking statements in this presentation will be realised.Except as otherwise stated herein and as may be required to comply with applicable law and regulations, Vodafone doesnot intend to update these forward-looking statements and does not undertake any obligation to do so.21

Vodafone, the Vodafone logo, Vodacom, O.tel.O, Vodafone Mobile Broadband and Vodafone Mobile Connect are trade marks of the Vodafone Group. Other product and compan y names mentioned herein may be the trade marks of their respective owners. Vodafone Group Pl