Transcription

1Vodafone Group PlcInterim Management StatementFor the 3 months ended 31 December 20094 February 2010

2Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010DisclaimerInformation in the following 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 guide to the futureperformance of such investments. This presentation does not constitute an offering of securities orotherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwiseacquire or dispose of securities in any company within the Group.The presentation contains forward-looking statements which are subject to risks and uncertaintiesbecause they relate to future events. These forward-looking statements include, without limitation,statements in relation to the Group’s projected financial results of the 2010 financial year. Some of thefactors which may cause actual results to differ from these forward-looking statements are discussed onthe final slide of the presentation.The presentation also contains certain non-GAAP financial information. The Group’s management believesthese measures provide valuable additional information in understanding the performance of the Group orthe Group’s businesses because they provide measures used by the Group to assess performance.Although these measures are important in the management of the business, they should not be viewed asreplacements for, but rather as complementary to, the comparable GAAP measures.Vodafone, the Vodafone logo, Vodacom, Vodafone 360 and Vodafone Station are trade marks of theVodafone Group. The RIM and BlackBerry families of trade marks, images and symbols are the exclusiveproperties and trade marks of Research in Motion Limited, used by permission. RIM and BlackBerry areregistered with the US Patent and Trademark Office and may be pending or registered in other countries.Other product and company names mentioned herein may be the trade marks of their respective owners.

3Agenda Highlights Business review Financial outlook Q&AVodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010

4Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Highlights: Q3 09/10Growth (%) bnQ3Q2Group service revenue10.7(1.2)(3.0) Europe7.2(3.2)(4.6) Africa & Central Europe2.0(0.5)(3.9) Asia Pacific & Middle East1.610.410.3Data revenue1.117.720.1Fixed revenue0.910.09.0Free cash flow (YTD)15.824.529.1All growth figures are organic unless otherwise stated1. Not organic Improved revenue trends in all regions Good progress in total communicationsstrategy Continued strong free cash flowgeneration FY 09/10 free cash flow range upgraded

5Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Europe: 1.4pp growth rate improvementService revenue growth (%)Q4 08/09Q1 09/10Q2 09/10Q3 09/10 Competitive intensity and economic environmentunchanged Improved trend in UK and Germany, continuedgrowth in Italy, stable trend in Spain(3.2)(3.3)(4.4)––––(4.6)Service revenue growth Q3 vs. Q2 (%)Q2 09/10MobileFixed Mobile -4.6%; decline slows vs. Q2Smartphone focus on data attachment ratesFull rollout of value enhancement offersStrong contract net adds 747kFocused A&R supported by cost reduction programmeQ3 09/10 Fixed Line 10%; positive trend continues– Strong net adds through own distribution– Vodafone Station success0.2(4.6)1.2All growth figures are organic unless otherwise stated(3.2)

6Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Europe: key performance trendsMobile service revenue - decline slows(%)Q4 08/09Q1 09/10Q2 09/10Q3 09/10Outgoing voice growth - stabilisation(%)6.0Q4 08/09(4.2)2.92.83.1Q1 09/10Q2 09/10Q3 09/10(9.5)(9.9)(4.6)(5.4)(5.9)(11.1)UsageFixed line revenue growth - positive trend continues(%)9.010.0(11.2)Effective rate per minuteEnterprise service revenue growth - improving trend(%)Q4 08/09Q1 09/10Q2 09/10Q3 09/105.74.6(1.3)(3.8)Q4 08/09Q1 09/10Q2 09/10Q3 09/10(5.6)All growth figures are organic unless otherwise stated(5.1)

7Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Regional performanceAfrica and Central EuropeAsia Pacific and Middle EastService revenue growth (%)Service revenue growth (%)1.318.1(0.4)2.5Q2 09/10Organic10.310.4Q2 09/10Q3 09/1014.3(0.5)(3.9)Pro forma3.9TurkeyVodacomOtherQ3 09/10 Turkey: return to growth South Africa: continued strong data growth Central Europe:Q4 08/09Q1 09/10 India: increasing revenue market share amidsignificant price pressure Egypt: price reductions offset by data revenue andcustomer growth–Challenging economic environment–Competitive pressure in Romania Qatar: successful growth of operations–Continued MTR impact Australia: JV performing in line with expectationsAll growth figures are organic unless otherwise stated

8Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Device portfolio: leading customer propositionsSmartphonesiPhone3GSBlackBerry Vodafone GoogleStorm2 Samsung H1 Nexus OneNokiaN900 Smartphone sales mix rising from 25% to 30-40% in FY 10/11 60% average data attachment rate in Europe All leading brands represented (iPhone in 14 markets including UK)Vodafone branded devicesVodafone 135 Vodafone 340 Vodafone 541 Vodafone 533(lowest cost) (mobile internet) (touchscreen)Crystal Cost from US 15; 23m sold since launch Realising data opportunity in emerging markets ( 5% of the base) Combining high-end features with low cost for European prepaid usersMobile connectivity 7.6m PC connectivity users ( 63% YoY) First to market with 21 Mbps USB sticks in Europe Continued innovation in device portfolio for consumer & enterprise21Mbps USBEmbeddedNetbookSure Signal(femto cell)

9Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Europe: managing data growth to maintain a quality networkTraffic (Petabytes) Strong data traffic growth expected to continue– Increased data penetration and usage per customer79 93%41 116%19– Data traffic mix shifting to smartphones Leading network212324FY 07/08FY 08/09FY 09/10eVoiceData–––– 45% of 3G network at 7.2Mbps (March target 60%)Average 35% utilisation in busiest hourOnly 7% of sites nearing capacity in busiest hour 1Network quality proven by independent drive-by testsCapacity management leversCost Reduction Continued strong investment in network capabilityNetwork sharingOther cost savingsLeveraging economies of scale– Over 3,000 new sites in FY 09/10TechnologyTraffic ManagementHSPA upgrades (efficiency gains)IP Backhaul Ethernet MicrowaveQoS capabilitiesFair usage policiesLevers– Traffic mgt and QoS optimisation tools across footprint– Femto/WiFi offload in 6 markets (1 nationwide)– Increased fixed broadband coverage (DSL and Fibre)– Further significant HSPA upgrades next yearSpectrumRefarmingNew purchases1. Share of sites 90% utilised during busy hourNetwork ManagementSite buildAdditional carriersFemto/WiFi offload

10Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Q3 results: on track to deliver strategic goals in FY 09/10Drive operationalperformance Value enhancement products across entire footprintIncreased commercial investmentCost reductions: 100% of original 1bn target by end FY 09/10Pursue growthopportunities in totalcommunications Data 17.7% (34% data user penetration in Europe1)Fixed 10.0% (5.3m broadband customers 1.1m YoY)Enterprise (3.8)%2 (4 converged services across 8 markets)Execute in emergingmarkets India gaining revenue market shareContinued strong data led growth in South AfricaTurkey returns to growthStrengthen capitaldiscipline 5.8bn YTD free cash flowLow single ‘A’ credit rating maintainedDisciplined approach to M&AFocus on free cash flow generation and commercial executionAll growth figures are organic unless otherwise stated1. Active data users / active customers2. Europe

11Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Germany: improved trends Mobile service revenue -4.9%Service revenue growth (%)Q2 09/10– 1.8pp improvement vs. Q2MobileFixedQ3 09/10– Improved contract net adds, focused A&R– Data 18%: mobile internet 22%, PC connectivity 30% Fixed service revenue 4.1%0.5(2.8)– Stronger net adds, ARPU decline moderates– Wholesale contributes 2.4pp to growth1.6(4.9) Enterprise revenue returns to growthSuperFlat customers (millions)0.10.3 Key initiatives– Smartphones: 90% data attachment rates, Vodafone 3602.73.0Q4 08/09Q1 09/103.23.3– Data: SuperFlat Internet delivering ARPU uplift– Prepaid: ‘o.tel.o’ no frills value brand launch, new pricingSuperFlat customersQ2 09/10Q3 09/10SuperFlat Internet customersAll growth figures are organic unless otherwise stated

12Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Italy: maintaining positive growth Mobile service revenue -1.2%Service revenue growth (%)– Prepaid: aggressive competition, spend optimisation1.4– Contract: strong net adds, customer base 19% YoY– Data 20%: mobile internet 56%0.7(0.6)Q2 09/10(0.1)MobileFixed– Continued strong net addsQ3 09/10Fixed line growth11.22152051951.0203– Focus on micro-business segment Key initiatives1250750Data: HSDPA upgrades, PC connectivity services,smartphone penetration– Fixed line: driving volume through all sales channels– Converged offers in business segment172155500Q4 08/09Q1 09/10Fixed line revenue ( M)– Tariffs: Christmas promos, prepaid “Autoricarica 10”1000 –191189175165 Enterprise revenue 0.8%1.10.9185 Fixed service revenue 22.3%Q2 09/10Q3 09/10Fixed broadband customers (millions)All growth figures are organic unless otherwise stated1. 100% basis

13Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Spain: remains a challenging market Economy still weak, unemployment 19%Service revenue growth (%)Q4 08/09Q1 09/10Q2 09/10Q3 09/10 Mobile service revenue -7.7%– Continued improvement quarter on quarter(6.9)(8.6)(6.8)(8.1) Fixed service revenue 10.7%– Strong net adds: Vodafone Station, national DSL offerFixed broadband customers (‘000s)460Q4 08/09– Consumer contract 1% driven by Tarifas Planas– Data 11%: PC connectivity 17%– Continued pressure on enterprise and prepaid due toeconomic environment500520Q1 09/10Q2 09/10All growth figures are organic unless otherwise stated580 Key initiatives– Value enhancement (Tarifas Planas)– Leveraging CRM for fixed / mobile cross-sell– Maintaining leadership in MVNO market for valuesegmentsQ3 09/10

14Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010UK: strategy driving improved trends Service revenue 1.7pp improvement on Q2Service revenue growth (%)Q4 08/09 1Q1 09/10– Continued competitive intensityQ2 09/10Q3 09/10(1.4)– Strong net adds in both consumer and enterprise– Data 22%: mobile internet 49%– Messaging 12% driven by unlimited plans(3.5)(4.7)(4.9) Steady progress on strategy– Smartphones: iPhone, Vodafone 360 devices, Nexus One– Differentiation: Sure Signal to boost indoor coverage(6.6)– Indirect distribution: Carphone Warehouse volume upliftContract net adds (‘000s)257244 Continuous investment in network capability– Increased coverage of 7.2 Mbps and 14.4Mbps– 21.6 Mbps capability introduced137– Further progress on network sharingQ4 08/09Q1 09/10Q2 09/10Q3 09/10(132)All growth figures are organic unless otherwise stated1. Updated treatment of inbound revenues matched by the interconnect costs

15Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010India: increased competitive pressureService revenue (Rs bn) Increasing competition pressuresConsolidatedYoY growth28%23%18%14%Mobile YoYgrowth21%16%12%7%56.457.158.456.0– Nationwide per second billing, increase in multi-SIMs Strong commercial response– Targeted price cuts: 50% of base on new tariffs– Service revenue 4% vs. Q2– Customers 51%, minutes 35%, MOU -11%, prices -21%Q4 08/09Q1 09/10MobileQ2 09/10Q3 09/10Indus TowersService revenue market share (%)1 Leveraging significant scale benefits24.623.323.4Q4 08/09Q1 09/1023.8Q2 09/10 Focused capex reductionsQ3 09/10All growth figures are organic unless otherwise stated1. Total revenue share of the four largest operators (Vodafone, Bharti, Reliance and Idea)––––Strong brand and distribution presence93k base station sites, 72% population coverage42% of Indus Towers - the largest tower companyAttractive 900 MHz in 12 circles, scaling up in new circles

16Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Turkey: turnaround continuing Economic recovery continuingService revenue growth (%)12.9– Rating agencies’ upgrade, outlook revised to stable– Positive GDP growth forecast for 20101 Competitive climate stabilisedQ4 08/09Q1 09/10Q2 09/10(4.8)Q3 09/10 Encouraging competitive performance(11.2)––––(18.4)Net ports (‘000s)704Q1 09/10Q2 09/10(399)All growth figures are organic unless otherwise stated1. Source: IMFNet MNP gains: market leadership since launchStrong contract growth from well received tariffsStabilisation in active prepaid customer baseStrong ARPU growth across the base Turnaround initiatives ongoing260175FY 08/09– Multi-SIM customers consolidating usage– 3G roll-out continuing, strong mobile data adoptionQ3 09/10– Call quality metrics continuing to improve– 3,000 3G sites added since launch, 60% pop coverage– 15,000 points of sale, over 900 exclusive

17Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Vodacom: South Africa data driving revenue growth Signs of stabilisation in economySouth Africa service revenue growth (%)– Positive GDP growth expected in 201019.58.37.1 Similar competitive intensity7.1 Data growth remains strong– Driven by increasing mobile internet penetrationand usageQ4 08/09Q1 09/10Q2 09/10 ID law continues to impact net addsQ3 09/10South Africa data growth4036.63536.834.460029.43050025400201510 Challenging conditions in other Vodacom markets700455660625550300200510000Q4 08/09Q1 09/10Q2 09/10PC connectivity devices ('000s)All growth figures are organic unless otherwise stated1. Source IMFQ3 09/10Data revenue growth (%)– Competitive pressures and tough economicenvironment

18Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Verizon Wireless1: driving growth through dataData revenue growth (%)Service revenue growth (%)26310.69.24436335.84.7Q4 08/09Q1 09/10Q2 09/10Q3 09/10EBITDA and capex (US bn)36.15.9Q4 08/09Q1 09/10Q2 09/10Q3 09/10 Increased pricing pressure in voice and data6.16.0 Data growth driven by mobile broadband andapplications1.71.81.6Q4 08/09Q1 09/10Q2 09/10EBITDACapexAll growth figures are organic unless otherwise stated1. Financial highlights reported on a 100% IFRS basis2. Organic revenue growth excludes divested properties3. Includes divested properties2.1Q3 09/10 2.2m nets adds, customer base now 91.2m Leading retail postpaid net adds share Maintaining strong cash flow

19Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Free cash flow: cash generation remains robust YTD 09/10 free cash flow 25%Cumulative free cash flow ( bn)5.84.7– Verizon Wireless dividends– Working capital1.8 Q3 capex 1.3bn; YTD 4.0bn1.62.11.51.61.9FY 08/09FY 09/10Q1Q2Q3– Overall rate of investment maintained– Targeted reductions in India– Continued investment in Europe, supportingnetwork quality and data growth Q4 free cash flow typically impacted by highercapex and tax payments FY 09/10 guidance upgraded

20Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Net debtQ3 09/10 bnOpening net debt (30/09/09)(34.0) Foreign exchange impact from US Dollar Other: mainly mark-to-market derivatives Competitive refinancing in debt markets:Free cash flow1.8Foreign exchange0.6–Dec ’09: US 0.5bn 2016, Libor 70bp(0.1)–Jan ’10: 1.25bn 2022, Euribor 100bpOtherClosing net debt (31/12/09)(31.7) Net debt includes 3.2bn India options

21Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Financial outlook for FY 09/10Adjustedoperating profit1May 2009Nov 2009Feb 2010 11.0 - 11.8bn 11.0 - 11.8bn 11.4 - 11.8bn EBITDA margin decline consistent with expectations Cost saving programmes on trackFree cash flowMay 2009Nov 2009Feb 2010 6.0 - 6.5bnAround 6.5bn 6.5 - 7.0bn Lower capital expenditure in India Working capital improvement1. Before Alltel integration costs of 0.2bnFY 09/10 principal currency assumptions: / 1.12 and US / 1.50. The impact on annual adjusted operating profit from a 1% change in / is 60m and 1% change in US / is 40m

22Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010SummaryImproved revenue trend in Q3Good progress across all strategic prioritiesTurnaroundplans delivering 5.8 billion freecash flow YTDGuidanceupgraded

Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Forward looking statementsThis presentation contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group’s financialcondition, results of operations and businesses and certain of the Group’s plans and objectives. In particular, such forward-looking statements include: the financialguidance contained within slides 4, 19, 21 and 22 and statements relating to the Group’s future performance generally; statements relating to the development and launchof certain products, services and technologies; expectations regarding growth in customers, Smartphone sales penetration, usage and mobile data growth andtechnological advancements; statements relating to movements in foreign exchange rates; expectations regarding debt refinancing; expectations regarding adjustedoperating profit, free cash flows, costs and capital expenditures; expectations regarding the cost efficiency programmes; and expectations regarding the integration orperformance of current and future investments, associates, joint ventures and newly acquired businesses. There are a number of factors that could cause actual results anddevelopments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, Vodafone’s ability torealise anticipated cost savings, the impact of legal or other proceedings, continued growth in the market for mobile services and general economic or political conditionsin the markets in which the Group operates.Furthermore, a review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-lookingstatements can be found by referring to the information contained under the heading “Other – Forward-looking statements” in Vodafone Group Plc’s Half-Year FinancialReport for the six months ending 30 September 2009 and “Forward-looking statements” and “Principal risk factors and uncertainties” in Vodafone Group Plc’s AnnualReport for the year ended 31 March 2009. The Half-Year Financial Report and the Annual Report can be found on the Group’s website (www.vodafone.com/investor). Allsubsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expresslyqualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this presentation will be realised. Except asotherwise stated herein, and as may be required to comply with applicable law and regulations, Vodafone does not intend to update these forward-looking statements anddoes not undertake any obligation to do so.

Vodafone Group Plc - Interim Management Statement Q3 09/10 4 February 2010Definition of terms ARPU: average revenue per user - service revenue, excluding fixed line revenue, fixed advertising revenue, revenue related to business managedservices and revenue from certain tower sharing arrangements, divided by average customers.Capital intensity: the aggregate of capitalised property, plant and equipment additions and capitalised software costs divided by total revenueEBITDA: operating profit excluding share of associates, depreciation and amortisation, gains/losses on the disposal of fixed assets, impairment lossesand other operating income and expense.Free cash flow: operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments, anddividends paid to non-controlling shareholders in subsidiaries.Interconnect costs: a charge paid by Vodafone to other fixed line or mobile operators when a Vodafone customer calls a customer connected to adifferent network.Net adds: net customers acquired during the period.Organic growth: the percentage movements in organic growth are presented to reflect operating performance on a comparable basis, both in termsof merger and acquisition activity and foreign exchange rates.Service revenue: 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.

Vodafone 340 (mobile internet) Vodafone 541 (touchscreen) Google Nexus One Vodafone 533 Crystal 21Mbps USB Nokia N900 Embedded Netbook Sure Signal (femto cell) iPhone 3GS. 21 23 24 19 41 79 . –Femto/WiFi offload in 6 markets (1 nation