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H1 FY22 Results16 November 2021
H1 FY22 Results
November 2021 2
Highlights Nick ReadChief Executive
p3
Financial performance
Margherita Della ValleChief Financial Officer
p8
Strategy, operations & portfolio
Nick ReadChief Executive
p20
Appendices p35
Agenda & contents
We connect for a better future
The new generation connectivity & digital services provider for Europe & Africa enabling
an inclusive & sustainable digital society
H1 FY22 Results
November 2021 3
Good performance inline with expectations & regaining commercial momentum
Conclusions
Near-term operational & portfolio optimisation priorities
Our strategy is focused on sustainable growth to drive returns
Committed to improving returns through growth & portfolio action
Highlights
H1 FY22 Results
November 2021 4
€6.9bn
€7.1bn€7.0bn
€7.6bn
H1
FY1 9
H1
FY2 0
H1
FY2 1
H1
FY2 2
Highlights ⫶ Demonstrating growth in both Europe & Africa
Service revenue growth Adjusted EBITDAaL growth ROCE inflecting
• Continued good growth in Q2 FY22
• Europe in growth in 9/11 markets in Q2
• Consistent growth in Germany
• Strong recovery & growth
• Good margin improvement on pre-pandemic levels
• Top-quartile efficiency in sector
• EBITDAaL growth driving improving ROCE
• Pre-tax ROCE back to pre-pandemic levels
• Committed to drive further
(1.3)%
(0.4)%0.4%
0.8%
3.3%
2.4%
Q1
FY2 1
Q2
FY2 1
Q3
FY2 1
Q4
FY2 1
Q1
FY2 2
Q2
FY2 2
0.6%
1.5%
Ex-roaming & visitor revenue
1.8% 1.7%
31.7%
32.4% 32.7%33.6%
Increased FY22 Adjusted FCF guidance to >€5.3b + interim dividend of 4.5c
6.3%
5.1%
5.5%
6.3%
H2
FY2 0
H1
FY2 1
H2
FY2 1
H1
FY2 2
Pre-tax ROCE (LTM)+6.5%
+120bps
H1 FY22 Results
November 2021 5
Highlights ⫶ Our growth strategy to organically improve returns
Revenue
Growth in both Europe & Africa
Adjusted EBITDAaL1
Mid-single digit growth+ + +Adjusted FCF2
Mid-single digit growth
Leverage2.5-3.0x range
ROCE3 > WACCMin. dividend 9c p.a.
Medium-term ambition
The new generation connectivity & digital services provider for Europe & Africa, enabling an inclusive & sustainable digital society
Vision
Strategy
Deep &
trusted
customer
relationships
Enabled
through
Group scale
& expertise
Best connectivity products &
services
Leading innovation in
digital services
Outstanding digital
experiences
Simplified & most efficient
operator
Leading gigabit networks
Social Contract shaping the
digital society
24hr
1Adjusted EBITDAaL is equivalent to prior year definition & calculation of Adjusted EBITDA.2Adjusted FCF is free cash flow before spectrum payments, restructuring costs & Vantage Towers growth capex3Pre-tax controlled ROCE
Medium-term ambition based on prevailing
assessment of global economic outlook in November 2021
H1 FY22 Results
November 2021 6
Highlights ⫶ Structured for value creation
Infrastructure assets Shared operations Growth platforms Retail & service
Passive mobile
€15b market cap.1
€1b revenue2
Digital services
€3.5b revenue
IoT
€0.9b revenue
Africa FinTech
€1.3b revenue
IoT
Europe Consumer
€20b revenue
Business
€10b revenue
Africa Consumer
€6b revenue
€15b market cap.1
Fixed network
20 markets³
Active mobile
20 markets³
1.6m km fibre + coax
>180,000 radios
Supplier management
Network & digital operations
Inter-network operations
>€600m savings p.a.
>€400m savings p.a.
>€250m revenue & savings p.a.
1Market capitalisation as at 15 November 20212 Based on annualised H1-FY223 Excluding Vodafone Ziggo
H1 FY22 Results
November 2021 7
Highlights ⫶ Creating & realising value for shareholders
Operational priorities Portfolio action
Strengthen commercial momentum in Germany A
Position Vodafone Business to maximise EU funding opportunitiesC
Accelerate operational & strategic transformation in SpainB
1
2
3
Passive mobile
Active pursuit of value creating bolt-on M&A & industrial merger, likely deconsolidation + monetisation over time
Europe Consumer
Pragmatic pursuit of value accretive in-market consolidation
Africa Consumer
Integrate Vodafone Egypt into Vodacom to create pan-African powerhouse
H1 FY22 Results
November 2021 8
Financial performance
Margherita Della ValleChief Financial Officer
H1 FY22 Results
November 2021 8
H1 FY22 Results
November 2021 9
Financial summary ⫶ Good performance in line with expectations
H1 FY21€m
H1 FY22€m
Organic change2
Group service revenue 18,418 19,010 2.8%
Adjusted EBITDAaL 7,011 7,565 6.5%
Adjusted EBITDAaL margin 32.7% 33.6% +0.7pt
Capital additions (3,363) (3,365)
Adjusted free cash flow1 n/a 23
Free cash flow (101) (983)
• Good service revenue trend – growth in both Europe & Africa
• Mid-single digit EBITDAaL growth & margin expansion
• Free cash flow weighted to H2, reflecting seasonality of working capital
• Increase in net debt driven by MCB buy-back, timing of dividend payments & FCF phasing
• +0.8pt improvement in pre-tax ROCE, driven by higher EBITDAaL & lower spectrum amortisation
FY21 H1 FY22
Adjusted net debt (€m) (40,543) (44,298)
Controlled ROCE pre-tax 5.5% 6.3%
ROCE post-tax 3.9% 4.3%
Statutory results summary in Appendix V1. Free cash flow before spectrum, restructuring & integration costs and Vantage Towers growth capex2. Includes the benefit of an Italian legal settlement of €105 million in H1 FY22 in EBITDAaL
H1 FY22 Results
November 2021 10
• Strong step-up in Consumer adds during Q2 - supported by ‘back to school’ campaigns
• Retail store footfall still -40% vs pre-COVID - but sales conversion rate 50% higher
• Mobile contract churn +1.2pt YoY in Q2
Apr- 21 May-21 Jun-21 Jul-21 Aug-21 Sep-21
(2.6%)
(1.8%)
(1.1%) (1.1%)
1.1%
0.3%
Q1
FY21
Q2
FY21
Q3
FY21
Q4
FY21
Q1
FY22
Q2
FY22
6.4%
7.7%
5.4%
8.6%
5.2%
2.2%
Q1
FY21
Q2
FY21
Q3
FY21
Q4
FY21
Q1
FY22
Q2
FY22
Trading performance ⫶ Strong service revenue trend
Group YoY quarterly service revenue growth
Growing in both Europe & Africa
(1.3%)
(0.4%)
0.4%0.8%
3.3%
2.4%
Q1
FY21
Q2
FY21
Q3
FY21
Q4
FY21
Q1
FY22
Q2
FY22
of pre-COVIDlevels
c.1.0pt
Europe South Africa
Consumer sales moving towards pre-pandemic levels
European Consumer - Gross customer additions (mobile contract + broadband) >90%
Prior yearCOVID one-offs
H1 FY22 Results
November 2021 11
Germany ⫶ Improving commercial momentum
Q2 growth
H1 22€m
H1 22 growth
Service revenue 1.0% 5,777 1.2%
Adjusted EBITDAaL 2,892 7.7%
38% of Group EBITDAaL1 Service revenue growth
• Mobile contract net adds higher than last year ex. Unitymedia migrations
• Gradual reacceleration of cable net adds
• Continued broadband ARPU growth supported by new promotion structures
• Converged benefits program launched, without discounting
• Strong EBITDAaL growth supported by synergies
1. Based on H1 FY22 EBITDAaL contribution2. Includes Unitymedia migrations of 63,000 in Q1 FY21 and 124,000 in Q2 FY21
0.4%
0.6%
1.5%
1.8% 1.9%
1.5%
0.0%(0.1%)
1.0%1.2%
1.4%
1.0%
Q1
FY2 1
Q2
FY2 1
Q3
FY2 1
Q4
FY2 1
Q1
FY2 2
Q2
FY2 2
Retail
Reportedorganic
Net additions (‘000)
Cable
DSL
Mobile contract
(44)(33) (42)
(21)
(26) (21)
74
83 98
4633
53572
1812
99
(20)
(27)
81
Q1
FY2 1
Q2
FY2 1
Q3
FY2 1
Q4
FY2 1
Q1
FY2 2
Q2
FY2 2
H1 FY22 Results
November 2021 12
119 129
59
83
120
45 38 35 29 22
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Mobile contract+ VOXI
Fixed broa dband
Italy ⫶ Performance stabilising UK ⫶ Good commercial momentum
Q2 growth
H1 22€m
H1 22 growth
Service revenue 0.6% 2,521 1.2%
Adjusted EBITDAaL 638 1.8%
Q2 growth
H1 22€m
H1 22 growth
Service revenue (1.4%) 2,187 (2.5%)
Adjusted EBITDAaL 917 14.7%
8% of Group EBITDAaL112% of Group EBITDAaL1
• Poste MVNO customer migration completed in August
• ho. customer base 2.7m, market leading NPS
• Q2 broadbands net adds +31k incl. FWA
• EBITDAaL growth +1.6% ex. legal settlement
Service revenue growth
• Q2 SR: lapping strong Business comp in prior year
• New flex contracts, driving iPhone share and net adds
• Digital sales mix 33% in Q2 (+9pt vs. pre-COVID)
• CityFibre/OR deals: FTTH to c.8m households by Spring ‘22
Net additions (‘000)
1. Based on H1 FY22 EBITDAaL contribution
(6.5%)
(8.0%) (7.8%) (7.8%)
(3.6%)
(1.4%)
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
H1 FY22 Results
November 2021 13
12
(45)
20 27
40
28
(22) (15)
(50)(32)
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Mobile contract Fixed broadband
Spain ⫶ Low-end highly competitive Other Europe ⫶ All markets growing
Q2 growth
H1 22 €m
H1 22 growth
Service revenue 2.4% 2,502 3.3%
Adjusted EBITDAaL 836 4.5%
Q2 growth
H1 22€m
H1 22 growth
Service revenue (1.9%) 1,866 (0.6%)
Adjusted EBITDAaL 445 (0.6%)
6% of Group EBITDAaL1 11% of Group EBITDAaL1
Service revenue growth
(3.1%)
(1.8%)
(0.7%)
(0.2%)
4.2%
2.4%
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
• Positive roaming contribution offset by MTR headwind
• H1 net adds: mobile contract +221k, broadband +64k
• Stable competitive dynamics
• Liberty integration on-track
• SR trends: unwinding of Q1 COVID effects
• Commercial performance impacted by July price increase
• EU recovery funding: €3b to SMEs via ‘digital toolkit’
• EBITDAaL stable - ongoing cost transformation
1. Based on H1 FY22 EBITDAaL contribution
Net additions (‘000)
H1 FY22 Results
November 2021 14
Q2 growth
H1 22 €m
H1 22 growth
Service revenue 3.1% 2,271 5.4%South Africa 2.2% 1,670 3.7%Internationals 5.7% 615 9.9%
Adjusted EBITDAaL 1,062 5.6%
Vodacom ⫶ Lapping prior year highs VodafoneZiggo ⫶ Performing well
14% of Group EBITDAaL1 50% joint venture
• SA: lapping COVID support measures in prior year
• Social grants now re-instated
• International: Tanzania money transfer levy impacting growth
• Financial services: VodaPay super app launched
1.9%2.3%
0.5%
1.8%
3.0%
1.8%
Q1FY21
Q2FY21
Q3FY21
Q4FY21
Q1FY22
Q2FY22
Total revenue growth
• Continued good growth in revenue & EBITDA
• Converged NPS gap +10pt, continued customer initiatives- fixed speed upgrades & smart WiFi roll-out
• 2021 guidance range narrowed: - c.2% EBITDA growth (1-3% previously)- At least €600m shareholder distributions (€550-650m
previously)
1. Based on H1 FY22 EBITDAaL contribution
Financial Services – Africa’s leading FinTech platform
1.1 1.3
1.61.7
2.02.4
H1FY21
H1FY22
South Africa
Interna tionals(M-Pesa)Sa faricom(M-Pesa)
Safaricom(M-Pesa)
South Africa12.5
14.7
21.1
26.8
FY19 FY20 FY21 H1FY22
57 millionFinancial services customers
US$26.8bnM-Pesa monthly transactions
12.5 12.8
15.6 15.7
26.8 28.7
H1FY21
H1FY22
H1 FY22 Results
November 2021 15
€7.1bn
€7.6bn
0.5
0.10.0
(0.1)
OrganicH1 21
EBITDAaL
Directmargin
Roaming& vis itor
Europeannet opexsavings
Rest of worldopex
Net A&R OrganicH1 22
EBITDAaL
Adjusted EBITDAaL ⫶ Strong margin progression
• Strong EBITDAaL growth +6.5%2
• Gradual recovery in roaming & visitor revenue- International travel still c.-60% vs. pre-pandemic
• European opex flat YoY- lapping COVID actions in prior year & restart of
above-the-line advertising
1. Europe, Common Functions & Vantage Towers2. Including an Italian legal settlement of €105 million in H1 FY223. On an IAS18 basis
1
+6.5%YoY
Group EBITDAaL margin
31.6%331.9%
33.1%32.8%
33.6%
FY18 FY19 FY20 FY21 H1FY22
• Restarting margin progression post-COVID
• 3pt margin growth vs. FY18 from cumulative €1.3b European opex reduction (c.-15%)
H1 FY22 Results
November 2021 16
95%
89%
85%
78%
0% 20% 40% 60% 80% 100%
Customer management
Support & Other
Sales & marketing
Technology
Efficiency benchmarking ⫶ Top quartile, with further opportunities
• Efficiency score improved with gap to best-in-class reduced further, despite Unitymediaacquisition
• Recent unification of European technology teams to maximise efficiency & standardisation
New benchmarking study1 shows strong cost efficiency… … with further opportunities ahead
• Top quartile position reconfirmed for EU42
• Italy & UK now amongst the top 3 most efficient operators in Europe
Efficiency score3 by area
1Costs benchmarked relative to revenue 2Vodafone operations in Germany, Italy, Spain & UK – includes relative share of central costs3Efficiency score calculated as 1 minus the theoretical gap to best-in-class in each of the 65 processes as a proportion of total costs
Top quartile
European telecommunications operator
Vodafone EU42
IT
UK
ESDE
Theoretical
maximum potential
100%
H1 FY22 Results
November 2021 17
Free cash flow ⫶ Progressing in line with expectations
• H1 reflects working capital seasonality
- c.60% capex spend in H2- Q4 handset receivable sales timing
• 5G spectrum acquired in Spain (€350m)
• Restructuring & integration: - includes Liberty integration costs,
last year of significant spend- Spain charge in H2
€7.6bn
€0.0bn
€0.0bn -
(€1.0bn)
€0.1bn
(€1.2bn)
(€3.2bn)
(€3.3bn)1
(€0.5bn)
(€0.4bn)
EBITDAaL
Interest& tax
Working capital & other
Dividends(assoc. & JV)
Capital additions
Adjusted freecash flow
Spectrum
Restructuring& integration
Vantage Towersgrowth capex
Free cash flow
(€0.1bn)
1. Excludes Vantage Towers growth capex
H1 FY22 Results
November 2021 18
Capital allocation ⫶ Returns improving
H1 21€m
H1 22€m
YoY∆
Network & IT maintenance 1,024 1,094 7%
Network coverage & capacity 1,085 1,165 7%
Digital transformation 370 308 (17%)
New products & digital services 492 483 (2%)
Success based CPE 392 315 (19%)
Total capital additions 3,363 3,365 -
Capital intensity 15.7% 15.0% (0.7pp)
NB: Vantage Towers growth capex n.a. 124
Return on Capital Employed improvingCapital additions
• Network investment- Fixed and mobile capacity expansion & 5G rollout
• New products & digital services- Developing standardised platforms
• FY22 capex still expected to be c.€8bn (ex-VT growth)
5.5%
6.3%
+0.7%+0.2%
(0.1%)
FY21pre-taxROCE
HigherEBITDAaL
Loweramortis ation
Other H1 FY22pre-taxROCE
• Post-tax ROCE, 4.3% (+0.4pt), lower growth due to:
- tax effect of profit growth
- effective tax rate ex. one-off credits in the UK & Italy
H1 FY22 Results
November 2021 19
FY22 guidance updated⫶ On-track to deliver upper half of EBITDAaL range
Adjusted EBITDAaL
€15.2 – 15.4 billionEBITDAaL is equivalent to FY21 definition & calculation of Adjusted EBITDAaL
€14.6bn
€15.0-15.4bn
FY21 re-based
OriginalFY22
guidance
Upda tedFY22
guidance
€5.1bn>€5.2bn
FY21re-based
OriginalFY22
guidance
Upda tedFY22
guidance
FY22 Adjusted EBITDAaL FY22 Adjusted FCF
Adjusted FCF
>€5.3 billionAdjusted FCF1 is free cash flow before spectrum, restructuring and
Vantage Towers growth capex
€15.2-15.4bn
Currency Guidance rate
ZAR 17.15
TRY 9.74
EGP 18.89
GBP 0.86
>€5.3bn
FY22 guidance based on prevailing assessment
of global economic outlook in October 2021
1Excludes M&A
H1 FY22 Results
November 2021 2020H1 FY22 Results
November 2021
Strategy, operations & portfolio
Nick ReadChief Executive
H1 FY22 Results
November 2021 21
A new generation connectivity & digital services provider
Our strategy is focused on growth & improving shareholder returns1
We have clear near-term operational priorities…2
… and further strategic opportunities through portfolio optimisation3
H1 FY22 Results
November 2021 22
We delivered strong operational & strategic progress over the last 3 years…
Cumulative M&A transactions & value
Acquisition value
Disposal value
# transactions
Improving
asset
utilisation
Optimising
the
portfolio
Accelerating
digital
transformation
Cumulative net EU opex savings
European mobile contract churn (LTM)
Systematically
addressing the
challenges we
face to improve
returns
Avg. monthly terabytes transmitted per €1m invested capital
€0.2bn
€0.4bn
€0.6bn
€0.8bn
€1.1bn
€1.3bn
H1
FY1 9
H2
FY1 9
H1
FY2 0
H2
FY2 0
H1
FY2 1
H2
FY2 1
16.1%
15.5%
15.0%
14.6%
13.7% 13.7%
H1
FY1 9
H2
FY1 9
H1
FY2 0
H2
FY2 0
H1
FY2 1
H2
FY2 1
€18.6bn €18.8bn €18.8bn
€20.7bn
-€7.4bn -€7.4bn -€9.5bn -€11.6bn -€12.9bn -€15.1bn
3 36
11
15
19
H1
FY1 9
H2
FY1 9
H1
FY2 0
H2
FY2 0
H1
FY2 1
H2
FY2 1
32
5563
107
130
157
H1
FY1 9
H2
FY1 9
H1
FY2 0
H2
FY2 0
H1
FY2 1
H2
FY2 1
Deepening
customer
engagement
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
H1 FY22 Results
November 2021 23
… enabling consistent revenue performance
Our actions have delivered material improvements in relative performance across major markets
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
Vod vs. Incumbent A
Vod vs. Incumbent B
Vod vs. Incumbent CVod vs. Incumbent D
H1 FY22 Results
November 2021 24
Our ambitionOur strategy
Our growth strategy to meet sector challenges & improve returns
1Adjusted EBITDAaL is equivalent to prior year definition & calculation of Adjusted EBITDA.2Adjusted FCF is free cash flow before spectrum payments, restructuring costs & Vantage Towers growth capex3Pre-tax controlled ROCE
Revenue
Growth in both Europe & Africa
ROCE3 > WACCMin. dividend 9c p.a.
Adjusted FCF2
Mid-single digit growth
Adjusted EBITDAaL1
Mid-single digit growth
Leverage
2.5-3.0x range
+
+
+
European sector challenges
• Price deflation
• Lower EBIT
• Higher capex
• Lower cash flow
• Lower ROCE
• Revenue growth
• Margin expansion
• Revenue growth
• Margin expansion
• Revenue growth
• Cost efficiency
• Cost efficiency
• Capex efficiency
• Capex efficiency
• Investable ROCE
Best connectivity products & services
Outstanding digital experiences
Simplified & most efficient operator
Social Contract shaping the
digital society
Leading innovation in digital services
Leading Gigabit networks
24hr
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
Medium-term ambition based on prevailing
assessment of global economic outlook in November 2021
Historical spectrum
burden
Policy & market
structure issues
Technology upgrade
cycle
H1 FY22 Results
November 2021 25
Vodafone Business ⫶ Investor briefing investors.vodafone.com/vbbriefing
We continue to make good progress…
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
Best connectivity products &
services
Outstanding digital
experiences
Simplified & most
efficient operator
Social Contract
shaping the digital society
Leading innovation
in digital services
Leading Gigabit
networks
24hr
Flexible contract & handset financing
Digital services ⫶ Investor briefing investors.vodafone.com/digital-services Technology ⫶ Investor briefing investors.vodafone.com/vtbriefing
Social Contract ⫶ Investor briefing to be held in 2022
• VodaPay ‘super-app’ successfully launched in SA
• V-Hub supporting 150,00 SMEs with digital tools
• Cloud, Security, IoT growing 14% in Q2 FY22
• MyVodafone App used by 50m customers
• 29m AI conversations per month in 16 countries
• Super-WiFi launched in 4 countries
• Rational spectrum auctions in Spain, UK & Greece
• Significant taxation relief in Spain
• Targetting EU recovery funding opportunities
• 5G deployed in 248 cities in 13 countries
• 143m marketable NGN homes
• OpenRAN moving from trial to deployment in FY23
• Benchmarking study shows top quartile efficiency in sector with further opportunity
• 3G decommissioned in 4 markets
• Pre-tax ROCE increased 80bps to 6.3%Strong iPhone 13
launch
Investment-linked pricing option in 4 markets
H1 FY22 Results
November 2021 26
… and we are structured for value creation & realisation
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
1Market capitalisation as at 15 November 2021
Infrastructure assets Shared operations Growth platforms Retail & service
1Market capitalisation as at 15 November 20212 Based on annualised H1-FY223 Excluding Vodafone Ziggo
Passive mobile
€15b market cap.1
€1b revenue2
Digital services
€3.5b revenue
IoT
€0.9b revenue
Africa FinTech
€1.3b revenue
IoT
Europe Consumer
€20b revenue
Business
€10b revenue
Africa Consumer
€6b revenue
€15b market cap.1
Fixed network
20 markets³
Active mobile
20 markets³
1.6m km fibre + coax
>180,000 radios
Supplier management
Network & digital operations
Inter-network operations
>€600m savings p.a.
>€400m savings p.a.
>€250m revenue & savings p.a.
H1 FY22 Results
November 2021 27
Near-term operational priorities ⫶ Areas of enhanced focus for in-year delivery
Strengthen commercial momentum in GermanyA Accelerate operational
transformation in Spain
Position Vodafone Business to capture
EU funding opportunitiesB C
Consistentgrowth
Position
Challenges
Accelerators
Aim
• Leading converged challenger
• Structural network advantage
• Slower commercial momentum
• Traditional channel mix
• Leverage structural network advantage
• Hybrid network upgrades
• Adjacent opportunities
Strong incremental growth & ROCE
Position
Challenges
Accelerators
Aim
• Marketing leading position in B2B connectivity & SME
• Strong track record in B2B digital services
• Influencing funding allocation mechanisms
• Readiness to access funding
• Investment in digital services
• Co-ordinated pan-European approach
Acceptable ROCE
Position
Challenges
Accelerators
Aim
• Converged customer base
• Effective second brand• Strong B2B position
• Market fragmentation
• Intense price competition
• Digital transformation
• Government sector support
• Structural opportunities
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
H1 FY22 Results
November 2021 28
A ⫶ Strengthen commercial momentum in Germany
The leading converged challenger… … in Europe’s most attractive market
€34.4bn
€34.9bn €34.9bn €34.8bn€35.0bn
18.3%
18.7%18.9%
19.2%19.4%
2017 2018 2019 2020 2021
Total Germany connectivity retail revenue
Germany as a percentage of Total Europe
The biggest connectivity
market in Europe2…
… with a more sustainable
pricing environment2
-18.3%
-6.8%
-0.4% -3.2%
9.5%9.5%
-7.0% -6.1%-1.3%
1.4%
ITA ES P FRA UK GER
Change in market ARPU, 2017-2021 Mobile Fixed
1As at 31 March 20212Source: Analysys Mason, Western European telecoms market: trends and forecasts
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
The largest Gigabit
footprint in Germany…
… with a compelling
convergence opportunity1
24%
10%20%
64%
13%
54%
47%
91%
DE UK IT ES
Converged % Mobile base Converged % BB base
23.1m
21.8m
9.4m
1.2m
2.3m
3.4m
12.1m
11.8m
18.3m
4.0m
4.5m
9.2m
Q2
FY2 2
Q2
FY2 1
Q1
FY2 0
Own-Gigabit Own-Cable VDSL wholesale ADSL wholesale Not-marketa ble
H1 FY22 Results
November 2021 29
A ⫶ Strengthen commercial momentum in Germany
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
1Source: Analysys Mason, Western European telecoms market: trends and forecasts
Clear network roadmap beyond 1 Gbps
DOCSIS 3.1 enables 1.8Gbps downstream speeds today
‘High-split’ DOCSIS 3.1 delivers upstream speeds of up to 1 Gbps
by re-allocating spectrum
Distributed cable architecture allows digital transmission
improving signal quality
‘Node splitting’ bringing fibre closer to our customers
Strengthening our position
Summ
er‘B
ack-to-school’
Further opportunities
• Primary focus on existing customers & convergence opportunities
• 600k legacy migrations: NPS +12
• Personalised ‘GigaKombi’ convergent packages
• ‘CableMax’ promotion
• ~50% new subs taking 1Gbps
• Further customer experience & product enhancements
• Engage with MDUs on regulatory change opportunities
• Explore off-footprint partnerships
• Consider incremental wholesale opportunities
Case study video ⫶ Gigabit hybrid fibre cableinvestors.vodafone.com/vtbriefing
H1 FY22 Results
November 2021 30
B ⫶ Accelerate operational transformation in Spain
Market dynamics have been challenging We rapidly restructured to stabilise financial performance
We are actively pursuing structural improvements Further operational transformation acceleration
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
1Source: Analysys Mason, Western European telecoms market: trends and forecasts
2017 2018 2019 2020 2021
Contract A RPU Prepai d ARPU
-16%
Intense mobile price competition1
Social Contract helping shape digital policy
• Spectrum acquired at below European benchmark
• Spectrum life doubled to 40 years
• Potential spectrum license fee deferral
• Potential TV tax cessation in 2022
Market structure opportunities
(30)%
(20)%
(10)%
0%
10%
H1
FY1 8
H2
FY1 8
H1
FY1 9
H2
FY1 9
H1
FY2 0
H2
FY2 0
H1
FY2 1
H2
FY2 1
H1
FY2 2
Service revenue growth EBITDAaL growth
ConsolidationNetwork sharing
• Further network sharing to increase asset utilisation/ROCE
• Further market consolidation still necessary to improve sector ROCE
Investment-linked pricing Revenue & margin growth
Multi-product penetration Revenue & margin growth
Digital-enabled efficiency Margin growth
EU recovery funding Revenue growth
45 5
65
6166
7176 78
2017 2018 2019 2020 2021
Nati onal operators Brands
Evolving competition over time
H1 FY22 Results
November 2021 31
Country Total funds Released so far Digital Green
Germany €25.6b grants €2b 52% 42%
Italy €68.9b grants + €122.6b loans €25b 25% 37%
Spain €69.5b grants €9b 28% 40%
Greece €17.8b grants + €12.7b loans €4b 23% 38%
Portugal €13.9b grants + €2.7b loans €2b 22% 38%
Czechia €7b €1b 22% 42%
Ireland €1b None 32% 42%
Romania €14.2b grants + €14.9b loans None 21% 41%
Digital SMEs
• Clear alignment to existing Vodafone Business SME Champion strategy
• Engage national governments to shape incentive mechanisms
eHealth
• Focus on hospital digitalisation, telemedicine & patient monitoring
• New partnership with Deloitte in UK, DE, ES and IT
Smart Cities
• Focus on tourism, utilities, air quality, forests
• Plans to industrialise solutions available
Digital for Green
• Solutions that drive sustainability – using carbon calculator to show carbon savings
• VB focus on agriculture, EV charging, smart building & supply chain
Connected Education
• Leveraging existing strategic partnerships
• Focus on connectivity, devices, collaboration tools, security & managed infrastructure
C ⫶ Position Vodafone Business to capture EU funding opportunities
We have a more detailed understanding of the opportunity...
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
… and clear priorities to maximise
May EU recovery funding plan approval from all member states
Jul’ to
Oct’
20 member states receive approval to access funding(approval for Hungary & Netherlands plans outstanding)
Now Initial EU funded contract wins commence
H1 FY22 Results
November 2021 32
Strategic opportunities ⫶ Value creation actions to improve shareholder returns
Infrastructure assets Shared operations Growth platforms Retail & service
Passive mobile Digital services
IoT for Business
Africa FinTech
Europe Consumer
Business
Africa ConsumerFixed network
Active mobile
• Create industrial value & maximise growth, likely deconsolidation with monetisaton
• Further enhance utilisation through active network sharing
• Actively engage in open access & network sharing opportunities
• Visibility of growth
• Focused investment
• Demonstrable ROCE
• Evaluate separation & financial reporting
• Scale & explore monetisation
• Legal separation & financial reporting
• Expand platform into Egypt
• Scale & explore monetisation
• Actively seek consolidation opportunities
• Accelerate growth outperformance
• Focused investment in product & service portfolio
• Maximise EU recovery funding opportunity
• Integrate Egypt
• Expand connectivity lead via partnerships
Portfolio priority
Supplier management
Network & digital operations
Inter-network operations
• Further & digital service standardisation to drive increased efficiency
• Unified pan-European technology operating model transformation
• Further enhance utilisation through active network sharing and Partner Markets
Portfolio priority
Portfolio priority
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
H1 FY22 Results
November 2021 33
Passive mobile
Vantage TowersEurope Consumer
Major marketsAfrica Consumer
Egypt
Actively pursue bolt-on M&A & industrial merger to create value,
likely deconsolidation with monetisation over time
Pragmatic pursuit of value accretive in-market consolidation to deliver
sustainable market structures
Integrate Vodafone Egypt with Vodacom creating
a pan-Africa powerhouse
Ongoing Ongoing Imminent
Deconsolidation + monetisation
Drive growthRealise value
In-market consolidation
GrowthSynergies
Simplification
SynergiesFinancial services acceleration
Action
Complete
Event
Portfolio
Initial priorities ⫶ Active portfolio simplification & value realisation
1 2 3
1 ⫶ Strategy focused on growth & returns 3 ⫶ Portfolio optimisation priorities2 ⫶Near-term operational priorities
H1 FY22 Results
November 2021 34
Conclusions
Near-term operational & portfolio optimisation priorities
Good performance inline with expectations & regaining commercial momentum
Our strategy is focused on sustainable growth to drive returns
Committed to improving returns through growth & portfolio action
H1 FY22 Results
November 2021 35
AppendicesI More information p36
II Our regional footprint p37
III Definitions p38
IV Supporting information p39
V Statutory results summary p40
VINet debt, liquidity & total funding obligations
p41
VII Importance notice p42
H1 FY22 Results
November 2021 35
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H1 FY22 Results
November 2021 36
Appendix I ⫶More information
Vodafone Business ⫶ Investor briefinginvestors.vodafone.com/vbbriefing
Technology ⫶ Investor briefinginvestors.vodafone.com/vtbriefing
Vantage Towers ⫶ Capital Markets Dayinvestors.vodafone.com/reports-information/investor-events/VTCMD
• 5-part video presentation
• 8 video case studies
• 64-page documents
• Analyst Q&A video replay
• 5-part video presentation
• 5 video case studies
• 67-page documents
• Analyst Q&A video replay
• 7-part video presentation
• 5 video case studies
• 8-part document
• Analyst Q&A video replay
Digital services & experiencesInvestor briefing
Leading digital services & outstanding experiences
Welcome & introduction
1
2
Appendices
Deep & trusted customer relationships1
The leading FinTech in Africa3
The global IoT connectivity leader4
Leading digital consumer services2
• 5-part video presentation
• 13 video case studies
• 77-page document
• Analyst Q&A video replay
Digital services ⫶ Investor briefinginvestors.vodafone.com/digital-services
H1 FY22 Results
November 2021 37
2 ⫶We are the leading connectivity provider in Europe & Africa.
31m
11m
25m
1m
13m
3m
17m
1m2m
0.3m
5m
1m
18m
3m
9m
1m
5m
3m
4m
1m
3m
1m
4m
1m
1m
0.1m
#m
#m
# mobile connections
# fixed connections# mobile connections
Appendix II ⫶ Our regional footprint
Europe ⫶ converged connectivity leader Africa ⫶ leading data & payments provider
43m
10m
17m
42m
49m
#m
9m
2m
15m
H1 FY22 Results
November 2021 38
Appendix III ⫶ Definitions
Term Definition
Adds Number of new customers within a defined period
Adjusted EBITDA Operating profit after depreciation on lease-related right of use assets and interest on leases but excluding depreciation, amortisation
Adjusted EBITDAaL
Renaming of Adjusted EBITDA. Equivalent in definition & calculation of Adjusted EBITDA prior to FY22
Adjusted Free Cash Flow
Free cash flow before spectrum, restructuring, Vantage Towers growth capital investment and any one-off material transactions
AI Artificial intelligence / machine learning
A&R Acquisition & retention costs
B2B Business to business
Churn Total gross customer disconnections in the period divided by the average total customers in the period
Converged A customer who receives both fixed and mobile services (also known as unified communications) on a single bill or who receives a discount across both bills
CPE Customer premises equipment
E2E End to end
FCF Free cash flow
IoT Internet of Things. Network of physical objects embedded with electronics, software, sensors & network connectivity, including built-in mobile SIM cards, that enables collection of data & exchange communications with one another or a database
IPO Initial public offering
Term Definition
LTM Last twelve months
Mbps Megabits (millions) of bits per second
MEC Mobile edge computing
MPN Mobile private network
MVNO Mobile virtual network operator
NGN Fibre or cable networks typically providing high-speed broadband >30Mbps
On-net Direct connections to Vodafone owned or operated fixed-line infrastructure
Organic growth
An alternative performance measure which presents performance on a comparable basis, in terms of M&A activity, movements in foreign exchange rates
Roaming & Visitor
Roaming: allows customers to make calls, send and receive texts and data on our and other operators’ mobile networks, usually while travelling abroad. Visitors: revenue received from other operators or markets when their customers roam on one of our markets’ networks
ROCE Return on capital employed
Service revenue
Service revenue comprises all revenue related to the provision of ongoing services including, but not limited to, monthly access charges, airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls
SMEs Small and medium-sized enterprises
ULL Unbundled local loop
WACC Weighted average cost of capital
H1 FY22 Results
November 2021 39
Appendix IV ⫶ Supporting information
1. Quarterly revenue
2. Adjusted income statement
3. Segmental information
4. Income statement information
5. Cash flow
6. Mobile customers
7. Fixed-line broadband customers
8. Marketable homes passed
9. TV & fixed-line voice customers
10. Converged customers
11. Mobile customer churn
12. Mobile data usage
13. Mobile ARPU
14. Average foreign exchange rates
The information opposite is available in spreadsheet format via investors.vodafone.com
H1 FY22 Results
November 2021 40
Appendix V ⫶ Statutory results summary
Consolidated income statementSix months ended 30
September
2021 20201
€m €mRevenue 22,489 21,427Cost of sales (15,097) (14,754)Gross profit 7,392 6,673Selling and distribution expenses (1,675) (1,676)Administrative expenses (2,870) (2,580)Net credit losses on financial assets (230) (378)
Share of results of equity accounted associates and joint ventures 111 260Other (expense)/income (108) 1,055Operating profit 2,620 3,354Investment income 129 183Financing costs (1,473) (1,610)Profit before taxation 1,276 1,927Income tax credit/(expense) 1 (459)Profit for the financial period 1,277 1,468
Attributable to:– Owners of the parent 996 1,269– Non-controlling interests 281 199Profit for the financial period 1,277 1,468
Profit per shareTotal Group: – Basic 3.40c 4.30c – Diluted 3.39c 4.29c
H1 FY22 Results
November 2021 41
H1FY22 FY21€m €m
Bonds (48,584) (46,885)
Bank loans (1,508) (1,419)
Other borrowings including spectrum (4,166) (4,215)
Gross debt (54,258) (52,519)
Cash and cash equivalents 5,824 5,821
Short term investments 4,043 4,007
Derivative financial instruments (63) 3
Net collateral liabilities 156 2,145
Net Debt (a) (44,298) (40,543)Other funding obligations
Lease liabilities (12,428) (13,032)
Mandatory convertible bonds (1,904) (1,904)
KDG put option liabilities (502) (492)
Guarantees over Australia joint venture loans (1,510) (1,489)
Pension liabilities (329) (513)
Equity content of hybrid bonds 4,971 3,971
Total funding obligations (b) (56,000) (54,002)
LTM Adjusted EBITDAaL (c) 14,940 14,386Depreciation on right of use assets 3,968 3,914
Interest on leases 384 374
LTM Adjusted EBITDAaL before leases (d) 19,292 18,674
Ratio of net debt to adjusted EBITDAaL (a/c) 3.0x 2.8xRatio of total funding obligations to adjusted EBITDAaL before leases (b/d) 2.9x 2.9x
40.5
44.3
0.5 0.41.3
1.1 0.5
FY21 H1 FY22adjust ed
FCF
Spect rum Restructuring FY21final
dividend
MCBshar e
buyback
M&A/Other
FY21
Appendix VI ⫶ Net debt, liquidity & total funding obligations
Net debt progression (€ billion)
9.9
1.5 1.8 2.53.7 2.8
1.02.7
8.8 9.52.0
1.1
0.6 1.4 2.3
1.8 0.8
Currentliquidity
FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30-40 FY41+
Cash & equivalents Senior Hybrid
Bond maturity profile (€ billion)
FY21 H1FY22
2.8x
3.0x
Total funding obligations
H1 FY22 Results
November 2021 42
Appendix VII ⫶ Important notice
You have been provided access to this presentation on the basis that you are an investmentprofessional for the purposes of Article 19 or a member of the press for the purposes of Article47 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. No otherperson should act or rely on the information presented and you agree to be bound by thefollowing conditions. You may not disseminate these slides or any recording of thisconference, in whole or in part, without the prior consent of Vodafone.
This presentation contains forward-looking statements, including within the meaning of theUS Private Securities Litigation Reform Act of 1995, which are subject to risks anduncertainties because they relate to future events. These forward-looking statements include,without limitation, statements in relation to Vodafone Group’s financial outlook and futureperformance. See the final slide of this presentation for further information.
This presentation also contains non-GAAP financial information which the Vodafone Group’smanagement believes is valuable in understanding the performance of the Vodafone Group.However, non-GAAP financial information is not uniformly defined by all companies andtherefore it may not be comparable with similarly titled measures disclosed by othercompanies, including those in the Vodafone Group’s industry. Although these measures areimportant in the assessment and management of the Vodafone Group’s business, they shouldnot be viewed in isolation or as replacements for, but rather as complementary to, thecomparable GAAP measures.
Information in this presentation relating to the price at which relevant investments have beenbought or sold in the past or the yield on such investments cannot be relied upon as a guideto the future performance of such investments.
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are toVodafone Group Plc and its subsidiaries unless otherwise stated. Vodafone, the VodafoneSpeech Mark Devices, Vodacom and Together We Can are trade marks owned by Vodafone.The Vantage Towers Logo and the VT Monogram Logo are trade marks owned by VantageTowers AG. Other product and company names mentioned herein may be the trade marks oftheir respective owners.
This presentation, along with any oral statements made in connection therewith, contains“forward- looking statements” including within the meaning of the US Private SecuritiesLitigation Reform Act of 1995 with respect to the Vodafone Group’s financial condition, resultsof operations and businesses, including the Vodafone Group’s FY22 EBITDAaL and AdjustedFCF guidance and certain of the Vodafone Group’s plans and objectives.
Forward-looking statements are sometimes, but not always, identified by their use of a date inthe future or such words as “plans”, “targets”, “gain”, or “accelerate” (including in theirnegative form). By their nature, forward-looking statements are inherently predictive,speculative and involve risk and uncertainty because they relate to events and depend oncircumstances that may or may not occur in the future. There are a number of factors thatcould cause actual results and developments to differ materially from those expressed orimplied by these forward-looking statements.
A review of the reasons why actual results and developments may differ materially from theexpectations disclosed or implied within forward-looking statements can be found under“Forward-looking statements” and “Risk management” in the Vodafone Group Plc AnnualReport for the year ended 31 March 2021 and under “Forward looking statements and othermatters” in the Vodafone Group Plc Half-Year Financial Report for the six months ended 30September 2021. These Reports can be found at investors.vodafone.com.
All subsequent written or oral forward-looking statements attributable to Vodafone, to anymember of the Vodafone Group or to any persons acting on their behalf are expresslyqualified in their entirety by the factors referred to above. No assurances can be given that theforward-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. Except asotherwise stated and as may be required to comply with applicable law and regulations,Vodafone does not intend to update these forward-looking statements and does notundertake any obligation to do so.
investors.vodafone.com
1 Kingdom Street, London, W2 6BY
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FY22 results
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