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Q3 FY21 Trading Update
2Q3 FY21
Trading Update
14.7%
13.6%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
Q3
FY20
Q3
FY21
Q3 highlights ⫶ Resilient trading performance, FY21 guidance re-iterated
Back to
growth
• Capital markets day held
on 17 Nov’20
• Cornerstone JV in UK
commercialised &
transferred to Vantage
• Q3 trading update on
15 Feb’21
• IPO remains firmly on
track (early 2021)
vantagetowers.com
Consistent
momentum
0.8%
1.6%
(1.3%)
(0.4%)
0.4%
-3.5%
-2.5%
-1.5%
-0.5%
0.5%
1.5%
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
0.6%
1.5%1.8%
Ex. roaming & visitor revenue
• Underlying trends broadly
similar quarter-on-quarter
• Lower roaming & visitor drag
(Q3: -1.4pp, Q2: -1.9pp)
European mobile contract churn (year to date)
• Solid commercial
performance despite
further lockdown measures
• NGN broadband net adds
+330k, >1m year to date
-1.1pp
3Q3 FY21
Trading Update
Service revenue growth
Germany ⫶ Consistent commercial performance
41% of Group EBITDA1
153118
74 83 98
(60)(48) (44) (33) (42)
160
118
573
1813
99
-60
-10
40
90
140
190
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
DSL
Cable
Mobile contract
• All segments in growth
• QoQ improvement in retail SR (ex. R&V):
- higher call usage during lockdown
- strong business performance
• Cable ARPU uplift +2.9% YoY
1. Based on H1 FY21 EBITDA contribution
2. Unitymedia included in organic service revenue from FY21
3. Includes Unitymedia migrations of 63,000 in Q1 FY21 and 124,000 in Q2 FY21
Net customer additions (‘000)
• Robust commercial momentum despite Dec lockdown
• Quarter of cable base ≥400Mbps incl. >900k at 1Gbps
• Early benefits from combined sales teams &
harmonised premium TV portfolio
• Grey spot sharing with TEFD - MoU announced
1.3%1.2%
0.4%0.6%
1.5%
0.0%(0.1%)
0.0%(0.1%)
1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
Retail
Reported organic
service revenue
growth
1.8%1.8%Retail ex. roaming
& visitor (‘R&V’)
2
2.5%
4Q3 FY21
Trading Update
• Lower R&V drag offset by lapping of PY fixed price increase
• 2nd brand ho. reaching 2.4m customers
• Increase in low-end pricing in Jan
• NGN broadband coverage 8.3m households + c.3m FWA
Q2
FY21
Q3
FY21
Service revenue growth (0.5%) (0.4%)
Q2
FY21
Q3
FY21
Service revenue growth (8.0%) (7.8%)
Italy ⫶ Remains highly competitive
9% of Group EBITDA1
UK ⫶ Continued commercial momentum
11% of Group EBITDA1
• Net adds similar to Q2, despite lockdown restrictions
• Strong new iPhone sales (+30% YoY) o/w 50% digital
• Business fixed service revenue growth +4.9% in Q3
• Annual price escalator - CPI +3.9% on all new contracts
Vodafone Mobile Number Portability (‘000)
1. Based on H1 FY21 EBITDA contribution
2. Excludes a customer base restatement of 32,000
Net customer additions (‘000)
(289)
(86)
(1)
(49)(78)
Q3FY20
Q4FY20
Q1FY21
Q2FY21
Q3FY21
190
100 88
119 129
20
64 74
45 38
-
50
100
150
200
-
50
100
150
200
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
Mobile contract
+ VOXI
Fixed broadband
2
5Q3 FY21
Trading Update
Net customer additions (‘000) Service revenue growth
• Lower COVID-19 impact
• Broadband net adds +47k, total base now 4.2m
• PT spectrum auction ongoing, legal challenge filed
• Liberty integration on-track
• Market portability high in Q3 – increased promo activity
• Price increases implemented in mid-Nov
• Consumer contract MNP back to growth in Dec & Jan
• Low-end pricing pressure but Lowi competing well
Spain ⫶ Sustained service revenue trend
7% of Group EBITDA1 12% of Group EBITDA1
Other Europe ⫶ Improving performance
19
51
83
12
(45)
9 -
30 28
(22)
(160)
(110)
(60)
(10)
40
90
(160)
(110)
(60)
(10)
40
90
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
Mobile contract
Fixed broadband 3.0% 3.4%
(3.1%)
(1.8%)
(0.7%)(0.6%)
0.7%1.1%
-3.5%
-2.5%
-1.5%
-0.5%
0.5%
1.5%
2.5%
3.5%
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
Ex. roaming
& visitor drag
Q2
FY21
Q3
FY21
Service revenue growth (1.8%) (1.1%)
Q2
FY21
Q3
FY21
Service revenue growth (1.8%) (0.7%)
1. Based on H1 FY21 EBITDA contribution
6Q3 FY21
Trading Update
• SA government social grants starting to expire
• New roaming agreement with Cell C
• 13 million ‘ConnectU’ users
• M-Pesa zero rating lifted with structurally higher volumes
Service revenue growth
Q2
FY21
Q3
FY21
Egypt 4.9% 8.8%
Turkey 13.9% 17.7%
Turkey & Egypt ⫶ Acceleration in trends Vodacom ⫶ SA strong, M-Pesa charging
13% of Group EBITDA1
13.8 14.7
14.8
15.8
17.4
41.4 40.9 41.9
52.5
61.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
Q3
FY20
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
4G customers
in SA (m)
M-Pesa
quarterly
transaction
value (€bn)
Service revenue growth
Q3
FY21
Q2
FY21
Vodacom Group 3.3% 3.2%
South Africa 7.7% 5.4%
Internationals (4.9%) (0.3%)
8% of Group EBITDA1
• Both markets continue to grow ahead of inflation
• Egypt
- stc sale discussions ended in December
- Attractive market, strong ROCE
• Turkey
- More-4-more initiatives and strong data growth
driving acceleration in service revenue trends
- Good commercial momentum, mobile contract
net adds +315k
Q2
FY21
Q3
FY21
Service revenue growth 3.2% 3.3%
1. Based on H1 FY21 EBITDA contribution
2. Includes Safaricom
2
7Q3 FY21
Trading Update
Back to service revenue growth
Q3 results on 15 Feb’20, IPO remains firmly on-track
Summary ⫶ Continued resilient trading performance
On-track for FY21 guidance1
Good commercial momentum
1. FY21 guidance: Adjusted EBITDA €14.4-14.6 billion and free cash flow of at least €5 billion (pre-spectrum and restructuring)
8Q3 FY21
Trading Update
Appendices
I Definitions p9
II Supporting information p10
III Importance notice p11
8Q1 FY21
Trading Update
9Q3 FY21
Trading Update
Appendix I ⫶ Definitions
Term Definition
Adds Customer additions within a defined period
ARPU Average revenue per user, defined as customer revenue
and incoming revenue divided by average customers
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
EBITDA Earnings before interest, tax, depreciation & amortisation
FCF Free cash flow
Gbps / Mbps Gigabits (billions) / megabits (millions) of bits per second
Term Definition
MNP Mobile number portability
MoU A Memorandum of Understanding is an agreement expressing
the intent for two or more parties to work together.
NGN Fibre or cable networks typically providing high-speed
broadband over 30Mbps
Roaming
& Visitor
(R&V)
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
(SR)
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
10Q3 FY21
Trading Update
Appendix II ⫶ Supporting information
1. Quarterly revenue
2. Adjusted income statement
3. Regional results
4. Regional analysis
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
11Q3 FY21
Trading Update
Appendix III ⫶ Important noticeThis 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 1995with respect to the Vodafone Group’s financial condition, results of operations and businesses and certainof the Vodafone 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 and the guidance fororganic adjusted EBITDA and free cash flow (pre-spectrum and restructuring) for the financial year ending31 March 2021; the IPO and listing of Vantage Towers; prospects for the 2021 financial year, including theresponse to the COVID-19 crisis and Vodafone’s support for national governments’ digital agendas;expectations for the Group’s future performance generally; expectations regarding the operatingenvironment and market conditions and trends, including customer usage, competitive position andmacroeconomic pressures, price trends and opportunities in specific geographic markets; intentions andexpectations regarding the development, launch and expansion of products, services and technologies,either introduced by Vodafone or by Vodafone in conjunction with third parties or by third partiesindependently including 5G networks, sharing infrastructure and its benefits and sharing mobile networksin Europe; expectations regarding the integration or performance of current and future investments,associates, joint ventures, non-controlled interests and newly acquired businesses, including in respect ofVodafone Business’ partnership with Accenture.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the futureor such words as “will”, “anticipates”, “could”, “may”, “should”, “expects”, “believes”, “intends”, “plans” or“targets” (including in their negative form or other variations). By their nature, forward-looking statementsare inherently predictive, speculative and involve risk and uncertainty because they relate to events anddepend on circumstances 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 or implied by theseforward-looking statements. These factors include, but are not limited to, the following: external cyber-attacks, insider threats or supplier breaches; general economic and political conditions including as aconsequence of the COVID-19 pandemic, of the jurisdictions in which the Group operates, including as aresult of Brexit, and changes to the associated legal, regulatory and tax environments; increasedcompetition; increased disintermediation; levels of investment in network capacity and the Group’s abilityto deploy new technologies, products and services; rapid changes to existing products and services and theinability of new products and services to perform in accordance with expectations; the ability of the Group
to integrate new technologies, products and services with existing networks, technologies, productsand services; the Group’s ability to generate and grow revenue; a lower than expected impact of new orexisting products, services or technologies on the Group’s future revenue, cost structure and capitalexpenditure outlays; slower than expected customer growth, reduced customer retention, reductions orchanges in customer spending and increased pricing pressure; the Group’s ability to extend and expand its
spectrum position to support ongoing growth in customer demand for mobile data services; the Group’sability to secure the timely delivery of high-quality products from suppliers; loss of suppliers, disruption ofsupply chains and greater than anticipated prices of new mobile handsets; changes in the costs to theGroup of, or the rates the Group my charge for, terminations and roaming minutes; the impact of a failureor significant interruption to the Group’s telecommunications, networks, IT systems or data protectionsystems; the Group’s ability to realise expected benefits from acquisitions, partnerships, joint ventures,franchises, brand licences, platform sharing or other arrangements with third parties; acquisitions anddivestments of Group businesses and assets and the pursuit of new, unexpected strategic opportunities;the Group’s ability to integrate acquired business or assets; the extent of any future write-downs orimpairment charges on the Group’s assets, or restructuring charges incurred as a result of an acquisition ordisposition; a developments in the Group’s financial condition, earnings and distributable funds and otherfactors that the Board takes into account in determining the level of dividends; the Group’s ability tosatisfy working capital requirements; changes in foreign exchange rates; changes in the regulatoryframework in which the Group operates; the impact of legal or other proceedings against the Group orother companies in the communications industry and changes in statutory tax rates and profit mix.
Furthermore, 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-lookingstatements” and “Principal risk factors and uncertainties” in the Group’s annual report for the financialyear ended 31 March 2020. The annual report can be found on the Group’s website(https://investors.vodafone.com/reports-information/latest-annual-results). All subsequent written or oralforward-looking statements attributable to the Company or any member of the Group or any personsacting on their behalf are expressly qualified in their entirety by the factors referred to above. Noassurances can be given that the forward-looking statements in this document will be realised. Anyforward-looking statements are made of the date of this presentation. Subject to compliance withapplicable law and regulations, Vodafone does not intend to update these forward-looking statements anddoes not undertake any obligation to do so.
Any securities issued in connection with an IPO of Vantage Towers will not be registered under the USSecurities Act of 1933 (the “Securities Act”), and may not be offered or sold in the United States absentregistration under the Securities Act or pursuant to an exemption from registration.
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to VodafoneGroup Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone Speech Mark Devices,Vodacom and The future is exciting. Ready? are trade marks owned by Vodafone. The Vantage TowersLogo and the VT Monogram Logo are trade marks owned by Vantage Towers GmbH. Other product andcompany names mentioned herein may be the trade marks of their respective owners.
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