Competition

and Policy in

Regional Australia

Dan Lloyd

Director , Strategy &

Corporate Affairs

•£44BN in capital expenditure

•£14BN on spectrum

Substantial global investments in capital

expenditure and spectrum

2

Investments made across challenging and

competitive markets

3 3

Vodafone India – points of distribution expanded from only

434,000 to 1,250,000

Key role in defining LTE standards, and driving

4G LTE adoption

4

Leading efficient investment partnerships

• Spain & Czech Republic, 3G reciprocal roaming

• India:

– Indus Towers, 112,000 towers, 232,000

tenancies.

– 2G National Roaming – largest wholesale

roaming provider

– 3G National Roaming with Bharti and Idea

• South Africa, New Zealand, Egypt

– National roaming provision

• UK single-grid with Telefonica

5

Australia is a very unusual market in

revenue share ...

6

Canada Germany Australia France

66%

51%

Spain

52% 51%

UK Italy

49%

39%

31%

Incumbent share of Total Telecoms Revenue

2013, %

Source: Vodafone Group Analysis based on company reports.

Australia is a very unusual market in

EBITDA share ...

7

UK Spain Australia France

75%

61%

Italy

68%

57%

Canada Germany

55%

43%

37%

Incumbent share of Total Telecoms EBITDA

2013, %

Source: Vodafone Group Analysis based on company reports.

Australia is a very unusual market in

Operating Free Cash Flow share

8

UK Spain Australia Italy

85%

65%

France

79%

63%

Canada Germany

62%

48%

35%

Incumbent share of Total Telecoms OFCF

2013, %

Source: Vodafone Group Analysis based on company reports.

Substantial impact on consumers...

9

0

20

40

60

80

100

120

140

160

180

Canada

€49

Germany

€ 68

UK

€ 65

France

€ 65

Australia

€ 164

Spain

€ 103

Italy

€ 85

Eu

ro/

Po

p

International benchmarking OFCF / Population

2013, Euro

OFCF/BITDA minus Capex. Source: Vodafone Group Analysis based on company reports.

Mobile regarded as more

important than fixed

10

Regional consumers:

Which is MOST important

52% Mobile

Fixed

48%

64% Regional consumers agree that

mobiles will be more essential than

fixed line in the next 5-10 years

Yet $200m a year

USO goes towards

proprietary fixed

infrastructure

Source: Empirica

of regional consumers agreed

that being able to choose their

mobile provider is important

83% of regional consumers agreed

that they would change providers

if another provider offered the

same or better coverage

59%

What do regional consumers want?

12

regional consumers believe the Federal

Government $100m black-spot program

should be used to deliver a mobile

solution for customers of ALL providers.

regional consumers believed it was

very/extremely important that

Government funding should be provided

to both fixed and mobile coverage.

77%

Consumers resent

lack of choice

‘...it’s like being held

to ransom.’

‘I want

competition...’

Source: Empirica research

What do regional consumers want?

Conclusions

• Not seeking more regulation, seeking better regulation

• Seeking recognition of the structural barriers to investment and

competition not only in fixed, but in regional mobile

• Reconsideration of policies which subsidise, entrench

advantages and protect from competition

• Backhaul priced above cost maintains a substantial barrier to

competition

• NBN presents great opportunities in backhaul and regional

mobile

• Serious commercial discussion about how to invest to deliver

choice and competition

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