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Vodafone Group Plc Results
21 July 2017
For the quarter ended 30 June 2017
By reading these slides you agree to be bound by the following conditions.
Information in the following presentation relating to the price at which
relevant investments have been bought or sold in the 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 any person to underwrite, subscribe for or otherwise
acquire or dispose of securities in any company within the Vodafone
Group.
No person is under any obligation to update, complete, revise or keep
current the information contained in this presentation.
The presentation contains forward-looking statements, including within
the meaning of the US Private Securities Litigation Reform Act of 1995,
which are subject to risks and uncertainties because they relate to future
events. These forward-looking statements include, without limitation,
statements in relation to the Vodafone Group’s financial outlook and
future performance. Some of the factors which may cause actual results
to differ from these forward-looking statements are discussed on the final
slide of the presentation.
Disclaimer
2
The presentation also contains non-GAAP financial information which the
Vodafone Group’s management believes is valuable in understanding the
performance of the Vodafone Group or the Vodafone Group’s businesses.
However, non-GAAP information is not uniformly defined by all companies
and therefore it may not be comparable with similarly titled measures
disclosed by other companies, including those in the Vodafone Group’s
industry. Although these measures are important in the assessment and
management of the business, they should not be viewed in isolation or as
replacements for, but rather as complementary to, the comparable GAAP
measures
Vodafone, the Vodafone Speech Mark, the Vodafone Portrait, Vodacom,
RED, Vodafone One Net, Vodafone One and M-Pesa are trademarks of the
Vodafone Group. The Vodafone Rhombus is a registered design of the
Vodafone Group. Other product and company names mentioned herein
may be the trademarks of their respective owners.
Q1 17/18 highlights
3
Maintaining
growth
momentum
2.2%Group service revenue growth to
markets as consumer NPS co/leader
Strong data
growth
Fastest growing
fixed broadband
provider
63%growth inmobile data traffic
300kfixed broadbandnet adds
Leveraging scale
and reach in
Enterprise
1.5%Enterprise revenue growth
Clear NPS
leadership
Leading
network
92%4G coverage1
19/21
All growth rates in this document are organic unless otherwise stated, and are shown on a year on year basis, with Vodafone India and Vodafone Netherlands excluded from organic growth calculations
1. Europe
60%NGN coverage1
€10.3bn
Trading update
Group Chief Financial officerNick Read
0.5
1.2
0.8
0.7 (0.7)
(0.3)
2.2
Europe consumer
mobile¹
AMAP consumer
mobile
Consumer
fixed line
Enterprise¹ EU regulation Carrier, wholesale
and other²
Q1 17/18
All three growth engines contributing
51. Excludes the impact of EU regulation. This is defined as out-of-bundle roaming declines and mobile termination rate changes
2. Other includes mobile and fixed wholesale, common functions and eliminations
Mobile Data Convergence Enterprise
Q1 17 /18 organic service revenue growth contribution YoY (pp)
Good commercial performance
6
Group service revenue growth YoY (%)
1.72.0 2.1
1.5
2.2
0.3
1.00.7
0.10.8
1.3
1.91.5
1.3
1.8
8.4 8.17.4
6.8
7.9
Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Q1 17/18 drivers:
• Easier service revenue comparison vs. Q4 and underlying momentum improving
• Sustained customer growth in large markets, slower growth in Ghana, Hungary, Turkey
• Peak roaming impact in Q2, tougher comparison in Italy
Customer net adds2 (000s)
789735
801
576 566
331 307
417 415
300
Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Mobile contract
Fixed broadband
Group
Europe
Europe ex. regulation1
AMAP
1. Excludes the impact of EU regulation. This is defined as out-of-bundle roaming declines and mobile termination rate changes
2. Excludes Vodafone Netherlands and VodafoneZiggo in all periods
Mobilecontract
BroadbandMobile
totalBroadband
Mobilecontract
Broadband
Key markets: Europe
7
Customer net additions(000s)
Service revenue growth (%)
8
84
Q1 16/17 Q1 17/18
Germany Italy SpainUK
108100
Q1 16/17 Q1 17/18
Mobilecontract
Broadband
(318)
(187)
Q1 16/17 Q1 17/18
46
58
Q1 16/17 Q1 17/18
5355
Q1 16/17 Q1 17/18
1
15
Q1 16/17 Q1 17/18
26
331
Q1 16/17 Q1 17/18
28 29
Q1 16/17 Q1 17/18
2.2
3.0 2.83.2
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
(2.1)
(3.2)
(4.8)
(2.7)
(2.2)
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
0.0 0.8 1.3 1.6
3.5
4.13.8
3.0
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Reported Ex. Handset Financing
3.1
1.8
1.20.6
3.7
2.5 2.62.0
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Reported Ex. regulation2 Reported Ex. Handset Financing
1. Excludes the phasing out of the Talkmobile brand. Reported mobile contract net adds in Q1 17/18 -2k
2. Excludes the impact of EU regulation. This is defined as out-of-bundle roaming declines and mobile termination rate changes
Reported
Key markets: AMAP
8
Customer net additions(000s)
Service revenue growth (%)
South AfricaVodacom International
Turkey Egypt
5.6 5.6 5.6 5.6
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
15.7 15.0 13.9 13.9
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
15.1
19.6
22.824.6
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
2.6 1.90.5
7.9
Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Mobilecontract
Mobileprepaid
Mobilecontract
BroadbandMobile
contractMobileprepaid
51
2
Q1 16/17 Q1 17/18
891
2,486
Q1 16/17 Q1 17/18
Mobilecontract
Mobileprepaid
345286
Q1 16/17 Q1 17/18
61
31
Q1 16/17 Q1 17/18
19
97
Q1 16/17 Q1 17/18
519
790
Q1 16/17 Q1 17/18
1113
Q1 16/17 Q1 17/18
(416)
268
Q1 16/17 Q1 17/18
114 112105
98 98
Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
184.6 185.2 189.0 193.4 196.3
69.7 69.6 65.0 66.9 69.2
Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
India: signs of stabilisation
Users and ARPU growth
Prepaid customers (m)
• Continued significant decline in voice and data unitary
pricing, down 32% and 67% respectively
• Retaining high-end users with larger data bundles; gaining
low-end share
• Smaller players losing RMS1 in Q4 (-3.4pp YoY to 26.2%)
• Investment focus on leadership circles; gaining RMS in Q4
(+1.1pp YoY)
Capital additions mix in FY 16/17
82
18
Leadership circles• 20% capital intensity in FY 16/17,
“high teens” outlook for FY 17/18
YoY growth %
Service revenue (INR bn)
(%)
6.4 5.4 (1.9) (11.5) (13.9)
(1.9) (4.8) (9.3) (10.7) +0.3
Data users (m)
Prepaid ARPU growth (% QoQ)
1. Revenue market share
Other circles
9
Strategic progress
Group Chief ExecutiveVittorio Colao
Monetising our leading customer experience
11
(2)
2 4 4
11
14
1715
FY 14/15 FY 15/16 FY 16/17 Q1 17/18
Gap to next best
Gap to third
Consumer NPS (points)1
1. Gap to next best based on 21 markets, gap to third based on 20 markets
2. Consumer prepaid
3. Adjusted for out-of-bundle roaming declines, mobile termination rate changes and handset financing where applicable
• Best/co-best data network in
14/21 markets
• Further opportunities from leveraging
data analytics capability
• Reported ARPU is suppressed by MTR
cuts, SIM-only/handset financing and
roaming regulation
• +€2
• Extra 1 - 5GB
• Data rollover
• Mobile +€2
• Convergent +€3
• Extra 6 - 10GB
• +£1 - 5
• Extra 1-3GB
• Flexible upgrades
• Personalised offers
Market leading NPS Mobile ARPU stabilising More-for-more actions
Germany
Consumer contract ARPU(% change Q1 17/18 local currency)
UKItaly2 Spain
(0.9)
0.7
8.7 8.7
(1.7)
1.1
(1.1)
1.1
Reported Underlying³
Typical changes, April 2017
Growth engines: mobile data
12
1. Includes 4G customers from India, JVs and associates
2. Average monthly iPhone and Android smartphone data usage including India and Netherlands
3. EU 4 markets: Video, social and music applications
4. EU 8 markets
4G customers (m)1
52.859.3
66.6
74.7
83.5
1.01.1
1.21.3
1.6
Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Average data usage (GB)2
Market context
4G /4G+
quality
exceeding
Wi-Fi
Compression
techniques
improving
~75%of mobile usage is still via Wi-Fi4
>50% reduction in traffic load at 480p
Desire for
worry-free
usage…
~60%of data usage is via video/ social apps3
Video demand
surging
68% 66% 63% 62% 63%
Data traffic growth
Group data usage is growing rapidly
+76% incl. Indiaand Netherlands
>60% of customers want worry-free plans
Music
Growth engines: mobile data - Vodafone Pass
13
Current markets
HungaryRomaniaItalySpain
An innovative pricing model, targeting ARPU accretion1
€3
Social&Chat
Free all summerthen €5
Video+ Vodafone TV
€10
Vodafone Pass: Italy
Greece
are easier to understandthan Bytes…
App categories
… ‘worry-free’ stimulates greater usage and customer satisfaction than data bundles…
… encouraginglow-spending users to trade up…
... and retaining spend by higher-end users
1. Allows customers to buy passes that give worry-free access to video, music and social/chat apps, without using up their data allowance
Market research insights
14
Growth engines: fixed/convergence
323 314
430467
384
196 182
243 256
122
Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18
Total NGN
On-net NGN
Europe NGN broadband net adds3
163Not covered
136Total incl’ ADSL and NGN
98
41
36
NGN wholesale
Own NGN network
Strategic wholesale
partnerships2
% of homes 22 25 60 83 100
(m)
Build progress:
• Open Fiber: 1.5m homes marketable/ 1.7m passed; C&D area wins
• New strategic partnership in Turkey, 2.7m homes marketable
• Exploring fibre build business cases with high IRR thresholds
Driving revenue:
• EU broadband base 16.8m, including 11.3m NGN1
• On-net penetration 27%1; off-net 2.7%
(000s)
1. Includes VodafoneZiggo as of Q4 16/17
2. Includes Telefonica (selected areas in Spain), Open Fiber (Italy) and Siro (Ireland)
3. Excludes Vodafone Netherlands and VodafoneZiggo
European homes marketable Q1 17/181
Excludes strategic
wholesale
15
Growth engines: fixed/convergence
0.4
0.1
0.5
0.5
0.6
2.3
4.4
Other
Europe
UK
Germany
Italy
Vodafone
Ziggo²
Spain
Europe
Fully converged customers and penetration of consumer broadband base
30%
8%
28%
26%
77%
88%
1. Last 12 months (Q216/17 to Q1 17/18). Excludes VodafoneZiggo
2. VodafoneZiggo stated as at 3 April 2017
Europe consumer converged customers (Q1 17/18) (000s) (m)Europe converged consumer net adds (LTM)1
• ~60% of European broadband net adds are converged
over the last 12 months
• On average 2 SIMs per customer
• Significant penetration potential
689Total Europe
220Spain
165Italy
93UK
195Germany
21%
0.6
3.6
1.5
Mobile Fixed Total
Growth engines: Enterprise
16
• Mobile: ARPU -3.7%, customers +3.8%;
IoT revenue +15%
• Fixed: share gains continue; led by IP-VPN
3
8 8
9
FY 14/15 FY 15/16 FY 16/17 Q1 17/18
• Market leading position in IoT;
Internet in the car in 18 markets
(%)Service revenue growth Q1 17/18 Strong platforms (Points)Net Promoter Score
70%
Share of Enterprise revenue
100%30%
• NPS co/ lead in 13/20 markets
• Increasing focus on building a
digital business
75countries
IP-VPN
275 PoPs
IoT
59m SIMs+43%
Cloud &Hosting
28 countries
~2.5% ex. roaming regulation
Summary: a good start to the year
17
Robust commercial performance
Continued momentum in Europe; AMAP accelerated; India signs
of stabilisation
All three growth engines contributing:
Mobile data: Vodafone Pass – unlocking ‘worry-free’ data demand,
targeting ARPU accretion
Convergence: strong broadband growth, increasing convergence
penetration
Enterprise: continued outperformance vs. peers
‘Fit for Growth’ execution progressing in line with plans
Outlook
FY 17/18 guidance reiterated: 4-8% organic EBITDA growth,
FCF c.€5 billion
Appendix
19
Customer experience and commercial KPIs
Q1
16/17
Q2
16/17
Q3
16/17
Q4
16/17
Q1
17/18
4G customers (m) 2 16.5 19.6 23.2 27.7 33.4
Broadband customers (m)2 1.1 1.2 1.3 1.3 1.7
Converged customers (m) 0.1 0.1 0.1 0.1 0.1
Contract churn (%) 16.7 16.4 17.7 18.7 17.7
3G/4G outdoor coverage
(%)85 85 86 86 86
% of data sessions >3Mbps 90 86 85 86 86
% of dropped calls 0.50 0.49 0.51 0.48 0.51
Q1
16/17
Q2
16/17
Q3
16/17
Q4
16/17
Q1
17/18
4G customers (m) 1 36.0 39.3 43.3 47.0 50.1
Broadband customers (m) 1 12.5 12.7 16.2 16.6 16.8
Converged customers (m) 1 3.1 3.2 3.4 4.3 4.4
Contract churn (%) 15.4 15.5 16.7 15.3 15.1
4G % outdoor population
coverage(%) 1 89 90 91 92 92
% of data sessions >3Mbps 91 90 91 92 91
% of dropped calls 0.47 0.48 0.41 0.38 0.39
Europe AMAP
20
All figures exclude India and VodafoneZiggo unless otherwise stated
1. Includes VodafoneZiggo from Q3 16/17, data for Q1 17/18 is stated as of Q4 16/17
2. Includes India JVs, and associates (Kenya, Australia)
12.6
3.510.3
2.57.21.5
13.6
8.3
9.026.0
0.2
Germany Italy² Spain UK Portugal VodafoneZiggo³
European homes marketable with NGN (Q1 17/18)1
21
(millions)
marketable on-net98mmarketable including
wholesale
60% coverage coverage
36m
22%
Wholesale
Open Fiber
21
Owned
1. Excludes 3.6 m wholesale NGN homes marketable in Greece and Ireland
2. Open Fiber has 1.5m homes marketable / 1.7m homes passed
3. VodafoneZiggo as at Q4 16/17
Household coverage
65% 47% 67% 90% 54% 94%
This presentation, along with any oral statements made in connection therewith, contains “forward-
looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 with
respect to the Group’s financial condition, results of operations and businesses and certain of the
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 including the
confirmation of the Group’s guidance for the 2018 financial year; expectations for the Group’s future
performance generally; expectations regarding the Group’s operating environment and market
conditions and trends; intentions and expectations regarding the development, launch and expansion
of products, services and technologies; growth in customers and usage; expectations regarding
spectrum licence acquisitions; and expectations regarding, service revenue, adjusted EBITDA, free
cash flow, capital expenditure, and foreign exchange movements.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the
future or such words as “ongoing”, “lead”, “surge”, “exceed”, “stabilise”, “maintain”, “sustain”,
“improve”, “plans”, “targets” “gain”, “grow”, “continue”, “retain” or “accelerate” (including in their
negative form). By their nature, forward-looking statements are inherently predictive, speculative and
involve risk and uncertainty because they relate to events and depend on circumstances that may or
may not occur in the future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to, the following: changes in general economic
or political conditions in markets served by the Group and changes to the associated legal, regulatory
and tax environments; increased competition; the impact of investment in network capacity and the
deployment of new technologies, products and services; rapid changes to existing products and
services and the inability of new products and services to perform in accordance with expectation; the
ability of the Group to integrate new technologies, products and services with existing networks,
technologies, products and services; the Group’s ability to grow and generate revenue; a lower than
expected impact of new or existing products, services or technologies on the Group’s future revenue,
cost structure and capital expenditure outlays; slower than expected customer growth and reduced
customer retention; changes in the spending patterns of new and existing customers and increased
pricing pressure; the Group’s ability to expand its spectrum position or renew or obtain necessary
Forward-looking statements
22
licences and realise expected synergies and associated benefits; the Group’s ability to secure the
timely delivery of high-quality products from suppliers; loss of suppliers, disruption of supply chains and
greater than anticipated prices of new mobile handsets; changes in the costs to the Group of, or the
rates the Group may charge for, terminations and roaming minutes; the impact of a failure or significant
interruption to the Group’s telecommunications, networks, IT systems or data protection systems;
changes in foreign exchange rates, as well as changes in interest rates; the Group’s ability to realise
benefits from entering into acquisitions, partnerships or joint ventures and entering into service
franchising, brand licensing and platform sharing or other arrangements with third parties; acquisitions
and divestments of Group businesses and asset 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 or impairment charges on the Group’s assets, or restructuring charges incurred as a result
of an acquisition or disposition; the impact of legal or other proceedings against the Group or other
companies in the mobile telecommunications industry; the Group’s ability to execute its strategy in fibre
deployment, network expansion, new product and service roll-outs, mobile data, Enterprise and
broadband in emerging markets; developments in the Group’s financial condition, earnings and
distributable funds and other factors that the Board takes into account when determining levels of
dividends; the Group’s ability to satisfy working capital and other requirements; and/or changes in
statutory tax rates and profit mix.
Furthermore, a review of the reasons why actual results and developments may differ materially from
the expectations disclosed or implied within forward-looking statements can be found under the
headings “Forward-looking statements” and “Risk management” in the Group’s Annual Report for the
year ended 31 March 2017. The Annual Report can be found on the Group’s website
(vodafone.com/investor). All subsequent written or oral forward-looking statements attributable to the
Company, to any member of the Group or to any persons acting on their behalf are expressly qualified
in their entirety by the factors referred to above. No assurances can be given that the forward-looking
statements in or made in connection with this presentation will be realised. Subject to compliance with
applicable law and regulations, Vodafone does not intend to update these forward-looking statements
and does not undertake any obligation to do so
More information
23
www.vodafone.com/investor
For definitions of terms please see www.vodafone.com/content/index/investors/glossary
+44 (0) 7919 990 230
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14 Nov
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28 July
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4 Aug
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