Vodafone Group Plc Trading update
4 February 2016
For the three months ended 31 December 2015
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 Group.
The presentation contains forward-looking statements 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. 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
The presentation also contains non-GAAP financial information
which the Group’s management believes is valuable in
understanding the performance of the Group or the 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 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 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.
2
Commercial review
Group Chief Executive Vittorio Colao
All growth rates shown are organic unless otherwise stated 4
All growth rates shown are organic unless otherwise stated
1. Adjusting for inter-quarter timing differences
• Group service revenue +1.4%: sixth consecutive quarter of improvement
• Continued momentum in AMAP +6.5%, further recovery in Europe -0.6%
• Strong commercial progress: Europe mobile contract net adds 0.5m, Group fixed broadband
customers +0.4m
• Enterprise revenue +2.6%1; continued growth in VGE and M2M
• Project Spring: 92% through mobile build; 4G coverage now 84% in Europe, AMAP build
targets achieved. Customer experience targets met
• Continued data growth: volume +68%, 34.8m 4G customers (+4.7m)
• Marketing high speed broadband to 69m homes across Europe; 29m on own infrastructure
Q3 15/16 highlights
5
5.6ppt
7.6ppt
2.0ppt
(4.2)
(1.5) (0.4)
0.1 0.8 1.2 1.4
(8.2)
(5.4)
(3.5) (2.6)
(1.5) (1.0) (0.6)
4.5
6.7 5.7 5.8 6.1
6.7 6.5
Q1 14/15 Q2 14/15 Q3 14/15 Q4 14/15 Q1 15/16 Q2 15/16 Q3 15/16
Group Europe AMAP
Delivering growth: 6th quarter of service revenue improvement Service revenue growth %
Continued customer and data growth in AMAP
8 out of 13 European markets back to growth
10 16 19 24 28
42 45
54 62
68
Q3 14/15 Q4 14/15 Q1 15/16 Q2 15/16 Q3 15/16
Europe 4G Emerging markets 3G
6
Delivering growth: engines of growth
1. Adjusting for inter-quarter timing differences
Mobile contract base Millions NGN fixed customers Millions
Europe 4G & Emerging markets 3G customers Millions Enterprise service revenue growth %
87 88
90 91
92
Q3 14/15 Q4 14/15 Q1 15/16 Q2 15/16 Q3 15/16
4.7 5.1 5.3 5.6
6.0
Q3 14/15 Q4 14/15 Q1 15/16 Q2 15/16 Q3 15/16
(1.1)
1.4 2.11 2.41 2.61
Q3 14/15 Q4 14/15 Q1 15/16 Q2 15/16 Q3 15/16
+5m YoY +1.3m YoY
+3.7ppt YoY +26m YoY
+18m YoY
7
Project Spring: delivering leading network positions & data growth
Italy: P3 test, Nov 2015 Points Spain: P3 test, Oct 2015 Points
India: sites, Dec 20152 Germany: Connect tests, Nov 2015 UK, London: P3 test, Oct 2015 Points
Download
speeds (Mbps)
319 265 223 268
509 433
352 398
Vodafone Operator 2 Operator 3 Operator 4
Voice Data
338 317 316 218
503 500 480
393
Vodafone Operator 2 Operator 3 Operator 4
Voice Data
177 175 115 135
219 258
184 154
Vodafone Operator 2 Operator 3 Operator 4
Voice Data
219 164 220 199
317 363 215 304
Vodafone Operator 2 Operator 3 Operator 4
Voice Data
134 151 123 76 50 47
47 77
48 12
15 12
Vodafone Op 2 Op 3 Op 4 Op 5 Op 6
2G 3G
14.5
6.7 5.6 4.5
Vodacom Operator 2 Operator 3 Operator 4
Points 000s
1. Internal mobile drive trials
South Africa:
Atio test, Dec 20151
Smartphone data usage: Europe >1GB, AMAP 0.7GB3
3. Monthly average 2. Estimated data for operators 5 and 6
11.8 12.0
12.3 12.5
13.0
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
40 41
62 66 69
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
• 46% household coverage in Europe
• Of which 41% reached with own
infrastructure
Project Spring: supporting fixed / convergence growth
8
• Record fixed broadband net adds
• 6.0m NGN customers (+0.4m)
• Europe fixed revenue +3.7%; 26% of
EU service revenue from fixed
Vodafone Red One, Nov 2015
• 2.8m customers take converged
services
• 9.5m TV customers (PY: 9.1m)
• TV offers in UK and Italy in 2016
39% 42% 43% 45% 46%
% NGN customers
Expanding services Achieving scale Increasing reach
Fixed/converged: recent launches Fixed broadband customers European homes marketed
with high speed broadband
Millions
Vodafone broadband, Oct 2015
Vodafone TV, Jan 2016
Millions
Vodafone One, Oct 2015
Expanding fixed services: enhancing consumer offers
9
Vodafone One TV
Champions League
and La Liga
Launched Aug 2015
1.0m TV users
12 markets with
mobile content offers
Vodafone TV
>100 TV & Radio
channels
Launched Jan 2016
1Gbps fibre
service to support TV
7 markets now offer TV
Instant 7 day catch up
and wireless multi-room
300k football subscribers
10
Project Spring: supporting Enterprise growth
Continued growth Enabling Total Communications
Organic service revenue growth IP-VPN reach: 65 countries and 259 PoPs3 %
(1.1)
1.4
2.11 2.41 2.61
Q3 14/15 Q4 14/15 Q1 15/16 Q2 15/16 Q3 15/16
Key wins Q3 15/16
VGE
Q3 revenue +5.8%1
M2M Cloud & Hosting
Q3 revenue +27.3%,
connections 35.5m2
Q3 revenue +22.6%
1. Adjusting for inter-quarter timing differences
2. Restated to include all M2M connections activated and under customer ownership (Q2: 32.6m)
3. Points of Presence
Fixed
28% of Enterprise revenue
Fixed / Converged
55% of total pipeline
3.9m Vodafone One Net users in 12 markets
Security
Secure Internet now available in 180 countries
28% of Group
service revenue
Operational review
Group Chief Financial Officer Nick Read
• Mobile revenue -1.7% (Q2: -2.8%)
• Fixed revenue +1.7% (Q2: +0.0%)
• Enterprise revenue -3.2% (Q2: -3.9%);
continued price competition
Germany: improved commercial execution
12
1. December 2015
2. Excluding migrations
• Leading voice quality in Connect test,
dropped call rate -26% YoY to 0.46%1
• Channel mix improved YoY
• Consumer contract ARPU -3.9%
(Q2: -4.8%); back book re-pricing easing
• KDG growth remains strong +7.0%
(Q2 +7.0%); base +96k
• DSL net adds now positive +9k
(Q2: -32k)2
(1.8)
(3.5)
(1.2)
Incl. KDG (1.8)
Incl. KDG
(0.4)
Incl. KDG
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
235
137
104
245
196
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
101 93
70 66
105
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Fixed broadband net adds Mobile contract net adds Service revenue growth % 000s 000s
• Mobile revenue +0.1% (Q2: -3.0%)
• Consumer prepaid ARPU +12.7%;
strong adoption of Vodafone Exclusive
• Fixed revenue -2.5% (Q2: +3.5%);
increased competitive pressures
Italy: continued recovery in trends, mobile back to growth
13
• Market leading voice and data
network, 4G coverage 94%
• Strong data usage, +56%
• Aggressive promotional acquisition
market
• Fibre build: 14k cabinets installed,
3.0m homes passed
• Fibre customer base 211k (+64k QoQ)
(8.0)
(4.1)
(2.0) (2.0)
(0.3)
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
1.2
2.8 2.7
4.0
5.0
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
38
46 43
24
38
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Fixed broadband net adds 4G customer adoption Service revenue growth % Millions 000s
UK: improving in fixed
14
• Enhanced mobile network; 4G
coverage 86%1, 99.5% in London
• Continued strong retail gross
adds +8%
• 6.3m 4G customers, +1.0m QoQ
• Fixed Enterprise revenue +1.0%
(Q2: -0.7%); improved delivery on key
contracts
• Consumer broadband: 23m premises
covered, 99% of BT’s fibre footprint
(0.5) (0.6)
0.2
(0.5)
(0.7)
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/1698
49
83 90 94
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
(8.0)
(5.7)
(1.3) (0.4)
0.2
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Fixed service revenue growth Mobile contract net adds Service revenue growth % 000s %
• Mobile service revenue -1.0%
(Q2: -0.5%) – more customer control of OOB spend
– 08XX number regulation
• Fixed revenue +0.2% (Q2 -0.4%)
1. Ofcom basis 86%, Vodafone basis 79%
Spain: strong execution on mobile, fixed and TV
15
• ‘Best in test’ mobile network1, 4G
coverage 86%
• Strong 4G adoption: 4.8m customers
• Mobile OOB revenue decline
following introduction of a data cap
• Vodafone One: 1.1m users (Q2: 0.8m)
• 1.0m TV customers; strong platform
and content
• 8.2m HH passed with own fibre and
cable
(9.3)
Ex. Ono
(7.8)
Ex. Ono
(5.5)
(2.0) (3.1) (3.3)
1.0 0.7
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Reported Ex. Handset financing
78
14
54
92 83
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
2,776
2,810
2,851 2,879
2,958
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Fixed broadband customers Mobile contract net adds Service revenue growth % 000s 000s
• Greater impact from handset
financing
• Improving pricing environment
1. Latest independent mobile test conducted by P3
India: more promotional pricing in the quarter
16
• Customer growth due to promotions,
lower prices and seasonal effects
• Prepay ARPU -9% (Q2 -6%); total
outgoing voice prices -10%, MoU -0.3%
• Total outgoing minutes +8%
• Total data revenue +38% (Q2 +48%),
3G +69%2
• 3G data usage/user +23% (Q2: +23%)
• 3G coverage 94%3, 4G launched in
2 circles and 5 by end of FY
Data users and price changes Total customers and voice prices Service revenue growth %
• Intense competitive promotional
activity
• Service revenue +7.6% excl. all
regulatory impacts (Q2: +10.9%)1
1. MTRs, service tax and roaming price caps
2. Browsing revenue
3. Targeted urban areas
16.6 19.4
22.1 23.8 25.9
(8) (9) (8) (12)
(16)
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
3G data users (m) Total data prices (%)
14.7
11.7
6.9 5.6
2.3
14.7 13.2
10.6 9.2
5.7
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Reported Ex MTRs
4.8 5.1
1.6 2.8
5.4
1 (1)
(4) (5)
(10)
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Net adds (m) Voice prices (%)
Vodacom: strong momentum continuing
17
• Contract ARPU +6.0% (Q2: +1.1%),
driven by price and data growth
• Prepaid ARPU stabilising
• Pricing transformation: 83% of
contract customers on new plans
• Data revenue +27%, now 35% of
service revenue, data bundles +85%
• Significant data leadership: 19m
customers, +14%
• 3G coverage 98%, 4G 54% – clear NPS leadership maintained
(3.9)
(0.2)
4.5 3.9
7.2
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
386
374
381
393
409
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
South Africa 4G customers South Africa contract ARPU Vodacom service revenue growth % ZAR Millions
• SA service revenue accelerated to
7.2% (Q2: +3.0%) despite 20% MTR
cut
• International service revenue +10.7%
(Q2: +8.3%)
All figures relate to South Africa unless otherwise stated
1.5
1.8 1.9 2.0
2.5
Q3
14/15
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
Summary
18
• Sixth consecutive quarter of service revenue improvement
• Strong performance in South Africa, improving trends in Germany and Italy
• Project Spring on track and near completion
• Delivering a differentiated network experience
• Strong progress on unified communications; record broadband adds
Outlook
• Ongoing commercial momentum
• Continued focus on efficiency and margin
• Full year 15/16 guidance confirmed
Q&A
19
21
Appendix
21.3 18.1
7.3 7.2 5.1
3.4 2.3 0.6 0.2
(0.3) (0.4) (0.7) (1.3) (3.1)
Turkey Ghana Egypt Vodacom Romania Ireland India Portugal NL Italy Germany UK Greece Spain
Group +1.4%
Service revenue growth by market
22
Europe -0.6%
AMAP +6.5%
Change QoQ (ppt)
+1.1 -3.4 +3.3 +4.3 +1.4 -0.2 +0.8 +1.1 -0.9 +1.7 +1.4 -1.0 -1.1 -3.3
Q3 15/16 service revenue growth %
Service revenue bridge
• M&A and one off items relate primarily to £21 million of service revenue mainly from HOL
23
9,789
(727) (18)
255
(199)
12
(59)
47 69 9,169
Q3 14/15
reported
service
revenue
FX M&A & one-off
items
In-bundle Out-of-bundle Incoming MTR Fixed line and
carrier
Other Q3 15/16
reported
service
revenue
£ Millions
Project Spring KPIs
24
UK Germany
Commercial impact
4G customers (m) 5.0 5.5 6.5 6.9
Contract churn (%) 14.2% 13.8% 15.5% 16.2%
Contract mobile ARPU (EUR) 26.0 25.9 25.7 25.4
Average smartphone data usage
(MB) 620 593 632 685
Deployment and experience
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
4G % outdoor population coverage 63% 68% 75% 79%
% of data sessions >3Mbps 84% 86% 87% 89%
% of dropped calls 0.78% 0.75% 0.77% 0.70%
% homes reached by owned NGN - - - -
% of targeted stores refitted 40% 55% 70% 81%
Commercial impact
4G customers (m) 2.5 4.0 5.3 6.3
Contract churn (%) 17.7% 15.8% 15.6% 16.9%
Contract mobile ARPU (GBP) 26.7 26.6 26.4 26.1
Average smartphone data usage
(MB) 790 1,014 1,183 1,363
Deployment and experience
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
4G % outdoor population coverage 77% 78% 81% 84%
% of data sessions >3Mbps 82% 82% 82% 84%
% of dropped calls 0.57% 0.54% 0.58% 0.48%
% homes reached by owned NGN 35% 35% 35% 35%
% of targeted stores refitted 18% 28% 39% 49%
Project Spring KPIs
25
Spain Italy
Deployment and experience
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
4G % outdoor population coverage 84% 88% 91% 94%
% of data sessions >3Mbps 92% 94% 92% 94%
% of dropped calls 0.59% 0.60% 0.62% 0.53%
% homes reached by owned NGN 4% 5% 7% 10%
% of targeted stores refitted 90% 94% 96% 97%
Commercial impact
4G customers (m) 2.8 2.7 4.0 5.0
Prepaid churn (%) 37.5% 32.4% 32.1% 32.2%
Prepaid mobile ARPU (EUR) 10.8 11.4 12.2 12.7
Average smartphone data usage (MB) 1,000 981 1,254 1,313
Deployment and experience
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
4G % outdoor population coverage 75% 78% 80% 86%
% of data sessions >3Mbps 83% 83% 81% 86%
% of dropped calls 0.60% 0.58% 0.60% 0.50%
% homes reached by owned NGN 45% 46% 46% 47%
% of targeted stores refitted 26% 30% 34% 40%
Commercial impact
4G customers (m) 2.9 3.3 4.3 4.8
Contract churn (%) 21.6% 18.1% 20.1% 19.6%
Contract mobile ARPU (EUR) 20.9 20.1 20.5 19.6
Average smartphone data usage (MB) 977 1,097 1,063 1,254
Project Spring KPIs
26
Vodacom (South Africa) India
Deployment and experience
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
3G % outdoor population coverage
(targeted urban areas) 90% 91% 94% 94%
% of data sessions (>400kbps) 73% 74% 75% 79%
% of dropped calls 1.06% 1.02% 1.08% 1.03%
% of targeted stores refitted 38% 45% 55% 64%
Commercial impact
3G customers (m) 19.4 22.1 23.8 25.9
Prepaid mobile ARPU (INR) 150 149 144 141
Average data usage (MB) 331 357 393 438
Deployment and experience
Q4
14/15
Q1
15/16
Q2
15/16
Q3
15/16
4G % outdoor population coverage 35% 41% 47% 54%
% of data sessions >3Mbps 85% 85% 86% 86%
% of dropped calls 0.78% 0.67% 0.49% 0.40%
% of targeted stores refitted 70% 76% 80% 83%
Commercial impact
4G customers (m) 1.8 1.9 2.0 2.5
Contract mobile ARPU (ZAR) 374 381 393 409
Average smartphone data usage (MB) 410 501 541 569
Forward-looking statements
27
This presentation, along with any oral statements made in connection therewith, contains or may
contain “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 2016 financial year; expectations for the Group’s future
performance generally, including revenue, EBITDA , free cash flow and capital expenditure statements
relating to the Group’s Project Spring investment programme; expectations regarding the operating
environment and market conditions and trends, including customer usage, competitive and
macroeconomic pressures, price trends and opportunities in specific geographic markets; intentions
and expectations 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 parties independently, including Vodafone Red, Smartpass, M-Pesa, and the launch of a number
of additional features; growth in customers and usage; expectations regarding spectrum licence
acquisitions, including anticipated new 3G and 4G availability and the customer uptake associated
therewith; and expectations regarding, EBITDA, free cash flow, capital expenditure, and foreign
exchange rate movements.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the
future or such words as “will”, “anticipates”, “aims”, “could”, “may”, “should”, “expects”, “believes”,
“intends”, “plans” or “targets” (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 economic or political conditions in markets served by operations of the Group
that would adversely affect the level of demand for its mobile services; greater than anticipated
competitive activity, from both existing competitors and new market entrants, which could require
changes to the Group’s pricing models, lead to customer churn, affect the relative appeal of the
Group’s products and services as compared to those of its competitors or make it more difficult for the
Group to acquire new customers; the impact of investment in network capacity and the deployment
of new technologies, or the rapid obsolescence of existing technology; higher than expected costs or
capital expenditures; slower than expected customer growth and reduced customer retention;
changes in the spending patterns of new and existing customers and the possibility that new products
and services offered by the Group will not be commercially accepted or do not perform according to
expectations; the Group’s ability to expand its spectrum position or renew or obtain necessary licences,
including for spectrum; the Group’s ability to achieve cost savings; the Group’s ability to execute its
strategy in fibre deployment, network expansion, new product and service roll-outs, mobile data,
enterprise and broadband and in emerging markets; changes in foreign exchange rates, including, in
particular, changes in the exchange rate of pounds sterling, the currency in which the Group prepares
its financial statements, to the euro, the US dollar and other currencies in which the Group generates
its revenue, as well as changes in interest rates; the Group’s ability to realise benefits from entering into
partnerships or joint ventures and entering into service franchising and brand licensing; unfavourable
consequences to the Group of making and integrating acquisitions or disposals; changes to the
regulatory framework in which the Group operates, including possible action by regulators in markets
in which the Group operates or by the EU to regulate rates the Group is permitted to charge; the impact
of legal or other proceedings against the Group or other companies in the mobile telecommunications
industry; loss of suppliers; or disruption of supply chains or unfavourable developments in the
availability or prices of commodities and raw materials; 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
through access to bank facilities, funding in the capital markets and its operations; changes in
statutory tax rates or profit mix which might impact the Group’s weighted average tax rate; and/or
changes in tax legislation or final resolution of open tax issues which might impact the Group’s tax
payments or effective tax rate.
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 “Risk Factors” and “Other Information – Forward-looking statements” in our half year
financial report for the six months ended 30 September 2015 which 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
www.vodafone.com/investor
2016 upcoming dates Visit our website for more information
For definitions of terms please see www.vodafone.com/content/index/investors/glossary 28
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