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Vodafone Group Plc Half year results

15 November 2016

For the six months ended

30 September 2016

Information in this 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.

This 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 this presentation.

Disclaimer

This presentation also contains non-GAAP financial information

which the Group’s management believes is valuable in

understanding the performance of the Group. 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 Group’s business, they

should not be viewed in isolation or as replacements for, but

rather as complementary to, the comparable GAAP measures.

Vodafone, the Vodafone Portrait the Vodafone Speechmark,

Vodacom, M-Pesa and Vodafone One are trade marks 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 trade marks of their respective

owners.

2

Group Chief Executive Vittorio Colao

Business review

Financial performance

• Q2 Group service revenue +2.4% (Q1 +2.2%); underlying momentum offsets increased roaming drag

• Improvement led by Europe, +1.0%; base growth and more-for-more actions stabilising ARPU, AMAP, +7.1%

• H1 Group EBITDA +4.3% to €7.9bn, supported by strong cost control

• Non-cash impairment in India of €5.0bn, net of tax, reflecting increased competition

• Dividend per share €c4.74, up 1.9%1

All growth rates shown in this document are organic unless otherwise stated

1. Based on 31 March 2016 year-end €: £exchange rate of 1.2647

2. Targeted coverage by end FY 16/17

First half highlights

Continued momentum in growth engines in Q2 • Data: volume +61%; driven by growth in 4G customers to 59m

• Enterprise: continued outperformance, +3.3% service revenue growth

• Fixed: broadband base +327k to 14.0m, of which 6.0m on-net. 31m on-net NGN households reached

4

Strategic progress • Strengthened spectrum position in India: 4G in 17 key circles (91% of service revenues)2

• JV agreements: Ziggo Netherlands regulatory approval received, Sky New Zealand merger approval ongoing

1,444 1,290

1,135

1,425 1,415

230

414 416 348 327

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

21.8 21.2 20.8 21.0 21.4

25.4 24.6 24.0 25.0 25.4

14.6 14.7 14.6 13.7 13.9

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Group Europe AMAP

Continued momentum

5

Stabilising ARPU in Europe Financials

Service revenue growth1 (%)

• Growing revenue despite 0.4pp

roaming regulation drag

• Benefiting from more-for-more offers

1.2 1.4 1.8 2.2 2.4

(1.0) (0.6) (0.3) 0.3 1.0

6.7 6.5 7.4 7.7

7.1

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Group Europe AMAP

Growing customer base

(000s) Customer net adds

• Contract customer growth, supported by

lower churn

• Fixed net adds +42% due to Europe NGN

Consumer contract ARPU (€)

Mobile contract

Fixed broadband

1. Q4 15/16 shows underlying growth (excl leap year impact and accounting changes). Reported organic growth rates are Group +2.5%, Europe +0.5% and AMAP +8.1%

Enhancing customer experience: network

6

Mobile network improvement

69% of European urban sites

with fibre1

90% 4G coverage across Europe (+10pp YoY)

37m on-net NGN coverage

pro-forma for Ziggo

53% NGN coverage in Europe, matching incumbents

Fixed network improvement

82

88

90

1.16

0.99

0.68

Q2 14/15 Q2 15/16 Q2 16/17

User experience (%)

37

66

82

22 27 31

Q2 14/15 Q2 15/16 Q2 16/17

European NGN homes reached (m)

15/20 Best data network in

markets

Largest NGN

footprint in Europe, #2 on-net

European data sessions >3Mbps

AMAP dropped call rate

Total

On-net

1. Big 4 European markets (Germany, Italy, Spain, UK) 4G sites

Enhancing customer experience: CARE

7

Percentage point improvements are YoY

1. My Vodafone App is available in 21 markets, with 13 markets offering real time monitoring

17

Network ‘guarantee’

markets

90% EU data

sessions >3Mbps (+2pp)

13 Real time monitoring

markets1

My Vodafone App penetration

39% (+13pp)

17 Personalised offers

markets

Consumer contract churn

17.0% (-1.2pp)

14 24/7 live help

markets

First contact resolution

66% (N/A)

Enhancing customer experience: Net Promoter Score

8

• Gap to third maintained despite more-for-more actions

(2)

1 2

1

11 12

13 14

Mar 15 Sep 15 Mar 16 Sep 16

(points)

1. Gap to next best based on 21 markets, gap to 3rd based on 20 markets and represents the simple average of the difference in Consumer NPS between Vodafone and the 3rd ranking competitor.

In markets where Vodafone is the 3rd ranking competitor the negative difference between Vodafone and the 2nd ranking competitor is used.

Consumer NPS1 Consumer NPS

Gap to next best

Gap to third

Example CARE actions

Score improving YoY C

ha

lle

ng

er

Le

ad

/C

o-l

ea

d

• Lead/co-lead in 18/21 markets; 78% of revenue

Spain, mobile network

guarantee

Network NPS +6 points Apr - Sep 16

Germany, legacy migration to Red Giga tariffs

to reward loyalty

NPS +16 points May - Aug 16

Score not improving YoY

'4G try me here'

Mobile customers (% of base)

417 455

498

569

670

75

67 64 62

61

20

30

40

50

60

70

80

400

500

600

700

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Growth engines: data take-up

9

Increasing 4G penetration Growing data usage Further growth opportunity

Mobile data traffic

30.1 34.8

46.8 52.5

58.9

24.3 28.1

33.4 36.0

39.3

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

(m) 4G customers

• 4G now 57% of EU data traffic (+19pp YoY)

• Rising smartphone average usage:

– Europe 1.4GB, +48%, AMAP 0.9GB, +37%

• Strong data growth driven by 4G

• 3G/4G capacity utilisation up only +1pp

4

34 32

Europe

122m AMAP

348m

• Smartphone penetration still only ~50%

Group

Europe

Volume (PB)

Growth (%)

4G data users

3G/2G data users

25.8

23.9 24.8

29.8 28.1 28.5

10.1 10.8

11.8

23.4

19.0 20.1

Q2

14/15

Q3

14/15

Q4

14/15

Q1

15/16

Q2

15/16

Q3

15/16

Q4

15/16

Q1

16/17

Q2

16/17

Growth engines: data monetisation

10

… lowering unit data prices ‘More-for-more’ actions...

Examples

H1 13/14 H1 14/15 H1 15/16 H1 16/17

European ARPU per GB

+€2

More value to subscribers

More value to operators

Germany UK

Italy1

Spain

May 2016

April 2016

April 2016

Feb 2015 onwards

+€1-6

+€5

+£1-4

• Unlimited EU roaming

• Extra 1 - 2GB

• 4G max

• Personalised CVM

• 4G, dedicated

customer service

• EU roaming allowance

• EU & US roaming

allowance

• Extra 0.5 - 1GB

• EU roaming allowance

• Up to an extra 5GB

… and stabilising ARPU

Consumer contract (local currency)

40% CAGR decline

over last

two years

1. Consumer prepaid

~30% of Enterprise service revenue

2.5

4.7

1.7

3.3

4.6

2.8

Total Enterprise Fixed Mobile

3.8

14.7

21.3

VGE IoT Cloud & Hosting

Growth engines: enterprise

11

Improving in mobile Growing in strategic areas

Service revenue growth Q2 service revenue growth (%) (%)

• Fixed outperformance; IP-VPN +7.6%

• Mobile improvement; ARPU decline

easing, customers +7.5%

• VGE: lower growth; roaming impact

• IoT: 45m connections, +39%

Q2 16/17

Q1 16/171

Leading network and service

of H1 Group service revenue

NPS leader

out of

Enterprise markets

Largest 4G IoT footprint

countries

IP-VPN global networks in

countries

Platform

in

1. Q1 16/17 service revenue growth has been restated to take into account the reallocation in Germany of certain customers from Enterprise SoHo to consumer

12

Growth engines: fixed and convergence - momentum

230

414 416

348 327

294

374

415 381

354

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Total broadband

NGN

(000s)

Customer momentum

• 51% of broadband customers on NGN (+6pp YoY)

Group fixed broadband net adds

NGN self-build progress

Germany

• Market leading 400 Mbps

launched June

Italy

• +0.2m in Q2. Enel rolling out in 5 cities, 250 longer-term

Spain

• +0.6m HH in Q2

Portugal

• +0.1m in Q2

Greece

• Commenced fibre roll-out

Ireland

• 65k Siro HH to be passed by year end

31m households

passed +4m

YoY

27%

13%

6%

Mobile only Triple Play Quad Play

Driving convergence

13

Growth engines: fixed and convergence - opportunity

NGN on-net penetration

• 85% of Europe NGN base is now on-net

• Only 1.9 RGUs per unique fixed subscriber in Europe

• 9.8m TV customers (+121k QoQ)

On-net

customers (m)

On-net

households (m)

Penetration

(%)

3.2 13.7 23

2.1 9.5 22

0.2 4.1 5

Others 0.4 3.4 12

Europe 5.9 30.7 19 Spain churn

Lowering churn via convergence

-14pp

Further growth opportunity

(%)

% of Fixed broadband customers on converged offers

-7pp

25% Q2 15/16

28% Q2 16/17

1. A converged customer is a customer who has fixed broadband and mobile voice products and has a cross discount or an integrated convergent offer

Roaming caps: €300m revenue

impact in FY 16/17

pre-mitigation

Partial mitigation through worry-free offers:

55% of roamers

Convergence momentum supported by regulatory process

14

Minimum 25 year spectrum licences

Future remedy of choice

is passive duct and pole access

Access deregulated only if: investment is in fibre

and there is sustainable competition via

commercial agreements, co-investment or wholesale access

Further harmonisation

of EU regulation “Double lock” safeguard; BEREC

and EC can over-rule NRAs

No material regulatory

impact on cable networks

€63bn invested in the

last 3 years

European Framework review: key proposals

EC has committed to the idea

that investment and

competition are key...

… supporting Gigabit

investments...

… ensuring competitive

access conditions to very

high capacity networks

245

196

49

8 20

66

105 134

108 92

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

(1.8)

(0.4)

1.6 1.6

3.1

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Germany: improving in all segments

1. Cable service revenue growth was 6.2% in Q2 (Q1 +6.6%) excluding one-off from reclassification of CPE revenue from non-service revenue to service revenue

The German regulator intends to reduce mobile termination rates at the end of November 2016. An assumed 50% reduction would impact service revenue growth by around 1.5pp on a run-rate basis

Customer experience KPIs Financial results

• Mobile +1.3% (Q1 -0.3%); stabilising ARPU;

enterprise improved

• Fixed +6.1%; DSL turnaround, +2.9%

(Q1 -0.9%), cable strong +9.2%1

• H1 EBITDA +3.0%; margin 34.0%, +1.3pp – revenue growth and cost efficiencies

• Growing branded consumer contract base

• Indirect channels competitive

• Mobile prepaid back to growth, +218k

• DSL net adds +20k (LY -32k); stable cable

gross adds

• 4G coverage 89%, +9pp YoY; leading

375 Mbps in 27 cities

• Leading voice network quality

• CXX: migration of customers to new

portfolios

Mobile contract

Fixed

Service revenue growth (%) (000s) Customer net adds

15

(points) Consumer NPS

(3) (4)

7

14

H1 15/16 H1 16/17

Gap to next best

Gap to third

16

Italy: growth driven by ARPU enhancement and stable active base

KPIs Financials

(207) (266) (261)

(318) (289)

24 38 63 46 33

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Mobile

Fixed

(000s) Customer net adds

(2.0)

(0.3)

1.3 1.2

2.2

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Service revenue growth (%)

• Network NPS #1: 4G coverage 96%,

7.3m 4G customers

• Enel fibre deployment accelerating

• CXX: ‘Satisfied or reimbursed’ network

guarantee

• Mobile active prepaid base stable in Q2

• Fixed broadband net adds +79k in H1 to

2.0m; 0.4m on fibre (+300k YoY)

• Mobile: +1.6% (Q1 +1.4%); consumer

prepaid ARPU +9.3%

• Fixed +5.2% (Q1 +0.1%); strong base

growth and higher ARPU

• EBITDA +10.3%, margin 36.7%, +2.6pp;

tight cost control

Customer experience


7

(4)

8

2

H1 15/16 H1 16/17

Gap to next best

Gap to third

Customer experience

P3 network rating

17

UK: mixed performance

KPIs Financials

90 94

1

26

92

5 14

20 28 30

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Mobile contract

Fixed

(000s) Customer net adds Service revenue growth (%)

• Leading network. 96% 4G coverage1,

recovering customer service

• CXX: first to remove line rental in

consumer broadband

• Mobile contract base +2%

• Fixed consumer broadband base

accelerating up to 97k

• Mobile -1.9% (Q1 -3.6%); lapping 08XX

regulation

• Fixed -2.9% (Q1 -1.8%); loss of two large

enterprise customers

• H1 EBITDA -6.5%, margin 18.9%, -2.8pp – enterprise fixed, increased regulation,

customer care costs

(0.5) (0.7) (0.8)

(3.2)

(2.1)

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Reported

Q4 ex. carrier effect

(0.1)

1. Based on Ofcom definition, Vodafone definition 92%

(3)

(35)

(8)

4

13

Sep

15

Dec

15

Sep

16

Touch point NPS

(points)

Co-best nationwide

#1 voice nationwide

#1 in London

(2.0) (3.1) (3.2)

1.3 0.0

1.0 0.7 0.6

4.9 3.5

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

18

Spain: sustained growth and commercial momentum

KPIs Financials

92 83

105

53

91

28

79

64

1

40

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

Mobile contract

Fixed

(000s) Customer net adds Service revenue growth (%)

• 92% 4G coverage. 6.4m 4G customers

• 14.7m NGN homes passed, 9.5m

on-net

• CXX: network performance guarantee

launched in June

• Regained commercial momentum

in Q2 following April tariff change

• Convergence: Vodafone One 2.0m

users

• Stable underlying performance QoQ:

– M4M offers and higher customer base

– Q2 lapping OOB data proposition in PY

• H1 EBITDA +4.9%, margin 27.7%,+1.2pp;

cost savings offset higher content costs

Customer experience

Reported

Ex. handset financing


0

8 9

12

H1 15/16 H1 16/17

Gap to next best

Gap to third

67 67 68 70 70

24 26 28 32 36

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

• Data revenue +16% (Q1 +22%);

data prices -14%

• Voice revenue +2.7%; customer growth

• H1 EBITDA +2.6%; margin 29.6%, -0.1pp;

higher network costs offset by opex

savings

• Total data users flattening; increased

competitive pressure

• Rising 3G/4G adoption:

– smartphone penetration 35% (+6pp YoY)

• Network NPS #1

• Spectrum holding +62% in auction1

– 4G footprint in 17 circles, representing 94%

of data revenue2

Customer experience KPIs Financial results

5.6 2.3

5.3 6.4 5.4

5.3

5.3

4.9 1.3

0.9

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

India: increased competitive pressures

1. Vodafone invested a total of INR 203bn (€2.7bn) in the October 2016 spectrum auction

2. By end FY 16/17

3. Regulatory impacts include MTRs, service tax, roaming price caps and other items

10.2

7.6

10.9

6.3

Underlying growth

7.7

19

Data users

Consumer NPS

(%) (m) (points) Service revenue growth

52% 3G/4G

0

2

1

6

H1 15/16 H1 16/17

Gap to next best

Gap to third

Total

3G/4G

Regulatory impact3

Reported

India: a leading telecom operator in a long-term growth market

20

Strong nationwide position

17

23

Q4

08/09

Q4

09/10

Q4

10/11

Q4

11/12

Q4

12/13

Q4

13/14

Q4

14/15

Q4

15/16

Q1

16/17

Continuing growth opportunity

Large market, fast

GDP growth…

1.3bn population

77

40

Voice SIM Unique user

Prepared for more competition

Revenue market share (%)

#1 Brand

#1 Consumer NPS

#1 Enterprise mobility

… low penetration (%)

#1 retail outlets, leading CVM

Vodafone RED

‘unlimited plans’

Commercial focus:

4G 90 day promo:

10GB for price of 1GB

Flex

One recharge fee

for Calls, SMS and

Data

High-end users

Value seekers

10p

30p

30p

Low cost voice plans

long distance

local off-net

local on-net

254m devices

Smartphones1 4G handsets1

52m devices

39% penetration

8% penetration Investment focus: on 12 leadership and 5

strong challenger circles; ~91% of revenue

1. Estimated market penetration at May 2016

21

Vodacom: network leadership, continued strong growth

KPIs Financials

383 359

86 265

H1 15/16 H1 16/17

Total prepaid Just 4 You

(m) South Africa total prepaid bundle sales Vodacom service revenue growth (%)

• Leading 4G coverage 69%:

– #1 on download speeds and dropped calls

• CXX: “Just 4 You”; launched “Dropped

Call Compensation” with free minutes

• Customers +7.6%; record low contract

churn 4.8%

• Prepaid net adds +920k

• Data users +4%1, data bundles +47%

3.0

7.2 6.5 5.7 5.6

8.3

10.7 10.2

4.4 2.6

Q2 15/16 Q3 15/16 Q4 15/16 Q1 16/17 Q2 16/17

3.9 7.2 6.3 4.4 4.1

Group

South Africa

Internationals

Customer experience

South Africa consumer NPS

1. Active data customers have been restated to exclude customers with free allocated data bundles not used

+33%

• SA: data revenue +21%, contract ARPU

+5.7%

• Intl’: customer registration pressure

easing, return to positive net adds

• Group H1 EBITDA +4.0%; margin 38.6%,

stable underlying as SA offsets Intl’

(points)

17 16

21

16

H1 15/16 H1 16/17

Gap to next best

Gap to third

22

What’s next?

CLOUD

Gigabit Vodafone

4G+/5G

Internet

of Things

Fiberisation

What’s next: key programs towards a Gigabit Vodafone

23

Technology Network leadership

4G+/5G

Fiberisation sites and Fttx

IT transformation

by country /cluster

Transformation

Commercial Best in class service

CXX/CARE

Enterprise divisions – VGE, IoT and Cloud & Hosting

New Consumer IoT and

Data analytics units

Efficiency Top quartile

Fit 4 Growth

Digital

Zero based

budgeting Virtualisation

and cloud

Group Chief Financial Officer Nick Read

Financial review

24

7.6 7.9

H1 15/16 H1 16/17

Organic EBITDA growing faster than revenue

24.2 24.8

H1 15/16 H1 16/17

Organic service revenue (€bn)1 Organic EBITDA (€bn)1 Organic EBIT (€bn)1

2.1 2.22

H1 15/16 H1 16/17

1. Excluding UK ladder settlement and India accounting changes. H1 15/16 restated for H1 16/17 foreign exchange rates

2. Reported organic EBIT includes a benefit from lower depreciation and amortisation charges following the treatment of the Netherlands as an asset held for sale

YoY growth +2.3% +2.0%

+1.0%

+4.3% +3.6%

+1.9%

H1 15/16 H2 15/16 H1 16/17 H1 15/16 H2 15/16 H1 16/17

(3.0)%

(5.8)% (7.5)%

H1 15/16 H2 15/16 H1 16/17

+7.5%2

25

Adjusted operating profit stabilising

26

H1 16/17

(€m)

H1 15/16

(€m)

Reported

growth (%)

Adjusted operating profit1 2,283 2,281 0.1

Adjusted net financing costs (1,013) (764)

Adjusted tax expense (277) (417)

Non controlling interests (134) (172)

Adjusted earnings1 859 928

(Loss)/profit for the period (5,003) (2,344) n/a

Weighted average number of shares2 (m) 27,912 26,529

Adjusted earnings per share1 3.08c 3.50c (12.0)

1. Reported excluding the impact of restructuring costs, significant one-off items and amortisation of acquired intangible customer bases and brand intangible assets

2. Weighted average number of shares includes a dilution of 1,325 million shares following the issue of £2.8 billion of mandatory convertible bonds in February 2016

• Financing costs higher:

– Lower capitalised interest

– FX losses on intragroup funding

– Underlying broadly stable

• Share count: 26,587m excl. dilution

from mandatory convertible bonds

• Net impairment of €5.0bn in India

16.5 15.7 15.1

5.4 4.1

3.6 3.5 3.1 2.6 2.2 2.2

0.5

(2.1) (3.3)

Ghana Turkey Egypt India Vodacom Romania Spain Germany Greece Italy Portugal Ireland UK NL

Q2 15/16 Q3 15/16 Q4 15/162 Q1 16/17 Q2 16/17

Europe (1.0) (0.6) (0.3) 0.3 1.0

AMAP 6.7 6.5 7.4 7.7 7.1

Group 1.2 1.4 1.8 2.2 2.4

• 10 out of 13 European markets are in positive growth; Europe service revenue improved 2.0pp YoY

• Continued good momentum in AMAP, pressures in India

Europe service revenue continues to accelerate

Q2 16/17 organic service revenue (%)

1

1. Excluding impact of handset financing

2. Underlying service revenue excludes leap year benefit and accounting changes 27

All growth engines contributing

(0.1)

2.3

1.8

0.6 0.8

(0.8)

European consumer

mobile

AMAP consumer

mobile

Consumer fixed line Enterprise Carrier, wholesale

and other

H1 16/17

1. Other includes mobile and fixed wholesale, common functions and eliminations

1

H1 16/17 service revenue growth contribution (pp)

• Europe consumer mobile: largest driver of improvement in growth (H1 15/16 -1.0pp)

• AMAP consumer mobile; 0.6pp from Turkey, 0.4pp from South Africa and 0.4pp from India

• Low margin carrier voice headwinds set to reduce

Data

1.1 (excl. roaming)

0.1 (excl. roaming)

28

Cost base stable despite strong commercial momentum

H1 16/17 H1 15/16 Improvement

Mobile contract net adds (000s) 2,840 2,740 +3.6%

EU fixed broadband net adds (000s) 525 395 +33%

EU contract churn (Q2) 15.5% 15.7% 0.2pp

7.6 0.3

0.0

(0.1)

0.1 7.9

Organic H1 15/16

EBITDA

Gross margin Customer costs Technology costs Support costs Organic H1 16/17

EBITDA

(€bn)

29

Fit for growth: H1 cost drivers

Direct costs

€3.7bn +2%

Customer costs

€7.0bn 0%

• European A&R 17.2% of SR, down 0.3pp YoY

• Focus on branded channels

• Increasing online penetration (My Vodafone App 39%)

• Wholesale access fees up due to off-net broadband base, +0.5m YoY

• Content cost up €85m in Spain and Portugal

Technology costs

€3.5bn +3%

• Mobile sites +5% YoY due to Project Spring, +2% YTD

Support costs

€0.7bn -14%

• Common functions: Zero based budgeting

H1 16/17 cost base (excl. interconnect)

Total

€15.1bn Other

€0.2bn

30

Fit for growth: phase two targets identified

OpCo driven

initiatives

Group led

initiatives

Total savings

Phase 1

delivery

Phase 2

focus

ZBB

Shared

services

Sales

& distribution

Networks

& IT

Procurement

Shared services: • Digital solutions

• Insourcing application development

Sales & distribution: • Customer care through digital support

• Optimisation of indirect channels

Network & IT: • Transfer 65% of IT applications to the Cloud

• 40% reduction in data centre costs

ZBB: • Implemented across support functions

globally 2016-17 2018-20

Procurement: • Targeting 80% of global spend

• Tear down model

31

Fit for growth: benchmarking our opex performance

Higher cost saving opportunity

vs. top quartile

Lower cost saving opportunity

vs. top quartile

• Gap closing vs. top quartile

• Southern Europe most efficient

• AMAP improving despite higher

inflation pressures

• Targets set for further

improvement in all markets; focus

on Northern Europe

1. A.T. Kearney Global Competitive Benchmarking for Telecoms 2016, 3 year period

Efficiency improvement vs. mobile peers1

Ga

p v

s. t

op

qu

art

ile

Greece

South Africa

Spain

Turkey

Italy

Portugal

Germany Ireland

UK

32

La

rge

imp

rove

me

nt

Sm

all

imp

rove

me

nt

4.5

2.4 1.7

1.0

(0.9)

Ghana Egypt Turkey SA India

Broad based margin improvement

3.6

2.6

1.3 1.2 1.1

(0.1) (0.7)

(1.5)

Greece Italy Germany Spain Ireland NL UK¹ Portugal

YoY organic change in A&R and opex (%)

Europe AMAP

H1 organic EBITDA margin movement YoY (pp)

33 1. Excludes the benefit of the UK ladder settlement and FX adjustments

0.7

1.1

0.4

H1 14/15 H1 15/16 H1 16/17

Delivering on our EBITDA margin targets

34

Countries growing EBITDA > service revenue

Out of 26 countries

Group

Europe

AMAP

EBITDA margin movement YoY (pp) Multi-year margin targets

10 countries

FY 12-15

15 countries

FY 15/16

19 countries

H1 16/17

H1 15/16 H1 16/17

Capital additions normalising

Mobile

Mix of capital additions

IT

Fixed

Capacity / speed

Coverage

Capacity / speed

Coverage

AMAP

Europe

€4.0bn (14.7% of revenue)

€5.1bn (18.3% of revenue)

Capital intensity outlook (% of revenue): ‘mid-teens’

Europe: • Continue to deploy 4G+; prepare to co-lead in 5G

• >95% urban sites with fibre backhaul

AMAP: • Accelerate 4G expansion

Fixed • Footprint expansion (Southern EU)

• DOCSIS 3.1

IT • Converged modern billing & CRM systems

• Cross channel customer journeys

35

India: circle by circle investment strategy

0.4%

Leadership Challenger

Other

Market position #1 or #2

• RMS: 27%, Q1 gain

+0.8pp QoQ

• Voice: 900/1800 MHz

• Data: 3G/4G with 3-5 carriers,

scope to refarm 900 MHz

Market position #2 or #3

Market position #3 - #5


+0.5pp QoQ

• Multiple data carriers


0.0pp QoQ

• ICR agreements

Spectrum

acquired since

2010

93%

6%

FY 15/16

Capex

80%

4%

FY 15/16

EBITDA

96%

16%

4%

FY 15/16

Revenue

80%

11%

9%

5 circles

5 circles 12

circles

36

Free cash flow reflects final Project Spring payments

H1 16/17

(€m)

H1 15/16

(€m)

EBITDA 7,906 8,039

Capital additions (3,973) (5,149)

Capital creditors (1,476) (809)

Working capital (1,463) (1,676)

Net interest (363) (504)

Taxation (534) (597)

Dividends received1 129 -

Dividends to non-controlling interests (274) (182)

Other2 63 122

Free cash flow 15 (756)

1. Principally relating to Indus Towers

2. Relates to cash movements on share based payments and disposal of capital assets

• Capital creditor unwind, reflecting

timing of Project Spring payments

• Underlying effective tax rate 27.5%,

medium-term rate is mid-20s

37

• H1 net debt excludes £2.8bn mandatory convertible bonds

and $5.0bn Verizon loan notes

• H2 includes:

– India and Egypt spectrum purchases

– First tranche of VZ loan notes ($2.5bn)

– Net cash inflow of c.€0.5bn from the expected Netherlands

JV dividend distribution

Leverage

38

36.9 0.2 2.4

1.2 40.7 c.3.5

1.3 (2.2) (≥4.0)

39-40

Mar 2016 Spectrum Final 15/16

dividend

Other Sep 2016 Spectrum

and other

H1 dividend VZ loan

notes

Guidance

FCF

Mar 20171 2

3

Net debt (€bn)

H1 16/17 H1 15/16

Gross cost of

debt (%) 3.7 3.9

Average life of

bond debt 9.4yrs 7.0yrs

Net debt/EBITDA 2.6x 2.5x

1. Spectrum purchases in Germany

2. Other includes (€15m) free cash flow, €61m acquisitions and disposals, €333m FX and €142m restructuring costs

3. Spectrum includes €2.7bn of Indian spectrum; other includes restructuring and cash inflow from expected Netherlands JV completion

€15.3bn

FY 15/16 EBITDA (rebased) Guidance FY 16/17 EBITDA

at May 2016

Guidance FY 16/17 EBITDA

at Nov 2016

39

• Performance in H1 16/17 ahead of expectations

• Expect revenue and profitability trends to continue at a similar underlying pace in the second half

• Guidance for FY 16/172,3:

– Organic EBITDA growth narrowed to €15.7bn to €16.1bn

– Free cash flow at least €4.0bn

• Interim dividend per share of 4.74 eurocent, up 1.9%4

Guidance range narrowed, consistent dividend growth

€15.7bn - €16.1bn

€15.7bn - €16.2bn

1. Rebased for FY 16/17 FX guidance rates

2. We have based guidance for the financial year ending 31 March 2017 on our current assessment of the global macroeconomic outlook and assume foreign exchange rates of €1:INR 76.4, €1:ZAR 16.5, €1:£0.79, €1:TRY 3.2

and €1:EGP 9.8. Guidance excludes the impact of licence and spectrum payments, material one-off tax-related payments, restructuring costs, and any fundamental structural change to the Eurozone. It also assumes no

material change to the current structure of the Group, and has not been adjusted for the potential de-consolidation of Vodafone Netherlands following the announced intention to create a 50:50 Joint Venture with Ziggo.

3. We have also excluded from guidance an expected one-off impact on EBITDA arising from foreign exchange losses on foreign currency denominated liabilities of Vodafone Egypt following the devaluation of the Egyptian

pound; given ongoing exchange rate volatility, it is not yet possible to quantify this impact, which has no impact on Group free cash flow.

4. Interim dividend for 2015/16 has been restated to eurocents using 31 March 2016 rate of £1 = €1.2647

1

3 - 6% 3 - 6%

FY 16/17 EBITDA guidance

Summary

• Extending differentiation: NPS leadership maintained through

substantial network investments and CARE programme

• Sustained commercial momentum: good performances in Germany,

Italy, Spain and South Africa, well prepared for competition in India,

focused on improving the UK

• H1 modestly ahead of expectations, increasing competition in India

• Driving operating leverage: organic EBITDA growing faster than

revenue

• Returns to shareholders: euro dividend per share +1.9%

40

Q&A

41

Appendix

43

Currency of

payment

Dividend policy under euro reporting

44

Dividend policy

Exchange rate

Denomination

Policy

Average of the five business days

in the week prior to payment

Intend to grow full year dividends

per share in € annually

FY 15/16 interim

= 4.65 cents

3.68 pence

Rebased FY 15/16 interim

£:€ 1.2647 Year end FX

YoY growth 1.9%

FY 16/17 interim = 4.74 cents

Calculation for FY16/17 interim dividend

x

24 November 2016 Ex-dividend date

Key interim dividend dates:

25 November 2016 Record date

3 February 2017 Payment date

14

4

10

2.3

10

6

5 25

0.2

Germany Italy Spain UK Portugal

45

European homes reached with NGN1

Wholesale NGN

Own NGN

60% 35% 67% 87% 50%

Population coverage

1. Excludes several smaller markets (Greece, Ireland, Netherlands)

(millions)

Customer experience and commercial KPIs

46

AMAP Europe Q2

15/16

Q3

15/16

Q4

15/16

Q1

16/17

Q2

16/17

4G customers (m) 24.3 28.1 33.4 36.0 39.3

Contract churn (%) 15.7% 16.7% 16.1% 15.3% 15.5%

4G % outdoor population

coverage 80% 84% 87% 89% 90%

% of data sessions >3Mbps 88% 90% 91% 91% 90%

% of dropped calls 0.60% 0.50% 0.46% 0.47% 0.47%

Call setup success 99.8% 99.8% 99.9% 99.9% 99.9%

Q2

15/16

Q3

15/16

Q4

15/16

Q1

16/17

Q2

16/17

4G customers (m) 5.8 6.7 13.4 16.5 19.6

Contract churn (%) 19.4% 20.9% 20.5% 18.2% 18.0%

3G/4G outdoor coverage

(excluding India) 83% 83% 85% 85% 85%

% of dropped calls 0.99% 0.93% 0.86% 0.70%1 0.68%

Call setup success 99.4% 99.4% 99.3% 99.5% 99.5%

1. Improvement partially reflects calculation methodology change

Other key markets

Market

Organic

Q2 service revenue

growth

(%)

Reported

H1 EBITDA

(€m)

Reported

H1 EBITDA margin

(%)

Mobile customers Fixed broadband

customers

Net adds

(000)

Closing

customers

(000)

Net adds

(000)

Closing

customers

(000)

(3.3%) 316 34.8% (68) 4,963 20 143

2.2% 172 34.8% 43 4,831 27 493

2.6% 130 30.1% 79 5,869 15 586

0.5% N/A1 N/A1 (2) 1,965 10 257

3.6% N/A1 N/A1 195 8,683 3 61

15.7% 335 20.8% 206 22,581 41 465

15.1% 356 44.7% 623 39,666 9 240

47

Egypt

Turkey

Romania

Ireland

Greece

Portugal

Netherlands

1. Number not disclosed

25,601

(1,170) (188)

665

(386)

45

(41)

130 149 24,805

H1 15/16

reported

service

revenue

FX One-off

items

In-bundle Out of

bundle

Incoming MTR Fixed line

and carrier

Other H1 16/17

reported

service

revenue

Service revenue bridge

(€m)

48 1. Excludes UK fixed ladder settlement and a reporting change of certain dealer commissions in India

1

H1 16/17 H1 15/16

€m pp €m pp

Europe

Service revenue (29) (0.2) (36) (0.2)

EBITDA (7) -

AMAP

Service revenue (12) (0.2) (106) (1.4)

EBITDA (5) (29)

Group

Service revenue (41) (0.2) (142) (0.6)

EBITDA (12) (29)

Voice MTR impact

49

Profit

H1 16/17

(€m)

H1 15/16

(€m)

Adjusted operating profit1 2,283 2,281

Net financing costs (685) (964)

Taxation 384 (2,493)

Customer & brand amortisation2 (515) (724)

Restructuring costs (37) (156)

Impairment loss (6,375) -

Other (58) (288)

Profit for the year (5,003) (2,344)


(Loss)/Profit attributable to owners of parent (5,129) (2,503)

1. Reported excluding the impact of restructuring costs, significant one-off items and amortisation of acquired intangible customer bases and brand intangible assets

2. Customer amortisation relate primarily to Italy (H1 16/17 €170m, H1 15/16 €234m), KDG (H1 16/17 €165m, H1 15/16 €242m) and Ono (H1 16/17 €114m, H1 15/16 €150m) 50

Adjusted EPS reconciliation

H1 16/17

(€m)

H1 15/16

(€m)

Reported

growth (%)

(Loss)/Profit attributable to owners of parent (5,129) (2,503)

Impairment 6,375 -

Taxation (661) 2,076

Investment income and financing costs (328) 200

Customer and brand amortisation 515 724


Restructuring costs 37 156

Other 58 288

Adjusted profit for the year 859 928

Weighted average shares (m)1 27,912 26,529

Adjusted EPS (€ cents) 3.08 3.50 (12.0)

1. Weighted average number of shares outstanding includes a dilution of 1,325 million shares (2015: nil) following the issue of £2.9 billion of mandatory convertible bonds in February 2016. 51

Taxation

H1 16/17

(€m)

H1 15/16

(€m)

Income tax 384 (2,493)

Deferred tax assets - India (1,375) -

Deferred tax assets - Luxembourg 588 2,015

Amortisation of deferred tax assets 230 359

Other (104) (298)

Adjusted tax expense (277) (417)

Adjusted effective tax rate1 27.5% 30.5%

52 1. Lower rate in the current period is primarily due to the ongoing impact of the re-organisation of our Indian business which took place during the year ended 31 March 2016

Financing costs

H1 16/17

(€m)

H1 15/16

(€m)

Net financing costs (685) (964)

Mark to market of the Mandatory Convertible Bond (89) 0

FX1 (239) 200

Adjusted net financing costs (1,013) (764)

Other mark to market of derivative positions 84 118

Interest expense arising on settlement of outstanding tax issues 31 21

FX impact on intragroup lending 116 (19)

Capitalised interest2 (1) (142)

Other (59) (4)

Underlying net financing costs (842) (790)

Interest received (228) (182)

Underlying gross financing costs (a) (1,070) (972)

Average gross debt (b) (58,178) (49,344)

Cost of debt3 3.7% 3.9%

1. Comprises foreign exchange rate differences reflected in the income statement in relation to certain intercompany balances

2. Interest capitalised on India spectrum, until brought into use

3. Cost of debt: ((a/b) x 2) x 100 53

Gross and net debt

H1 17

€bn

H1 16

€bn

Average gross debt 58.2 49.3

Average cash and short term investments (19.2) (12.6)

Average net debt 39.0 36.7

Average life of bond debt 9.4 years 7.0 years

54

Currency sensitivity

Currency H1 16/17 closing

net debt (€bn)

EUR 28.7

ZAR 1.8

GBP (0.7)

INR 4.0

Other 6.9

Total 40.7

Currency H1 16/17 closing

EBITDA (€bn)

EUR 4.2

ZAR 0.8

GBP 0.7

INR 0.9

Other 1.3

Total 7.9

A 1% change in Impacts EBITDA by approx. (€m) Impacts FCF by approx. (€m)

INR:€ 20 5

ZAR:€ 15 5

GBP:€ 20 10

TRY:€ 5 2

EGP:€ 5 2

55

Forward-looking statements 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; expectations for the Group’s future performance generally, including growth

and capital expenditure; expectations regarding the Group’s operating environment and market

conditions and trends, including customer usage, competitive position and macroeconomic

pressures, spectrum auctions and awards, 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 the rollout of TV in the United Kingdom;

expectations regarding free cash flow and foreign exchange rate movements and tax rates;

expectations regarding the integration or performance of current and future investments, associates,

joint ventures, non-controlled interests and new acquired businesses; expectations regarding MTR

rates in the jurisdictions in which Vodafone operates; expectations regarding Vodafone India, the

outcome and impact of regulatory and legal proceedings involving Vodafone and of scheduled or

potential legislative and regulatory changes, including approvals, reviews and consultations.

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”, “prepares” or “targets” (including in their negative form or other variations). 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: general economic and political conditions of the

jurisdictions in which the Group operates and changes to the associated legal, regulatory and tax

environments; increased competition; levels of investment in network capacity and the Group’s ability

to deploy 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 expectations; the ability of the Group to integrate new technologies,

products and services with existing networks, technologies, products and services; the Group’s ability

to generate and grow 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 outlands; slower

than expected customer growth, reduced customer retention, reductions or changes in customer

spending and increased pricing pressure; the Group’s ability to expand its spectrum position, win 3G

and 4G allocations and realise expected synergies and benefits associated with 3G and 4G; 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; 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 and divestments 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 or impairment charges on the Group’s assets, or restructuring charges incurred as a

result of an acquisition or disposition; a developments in the Group’s financial condition, earnings and

distributable funds and other factors that the Board takes into account in determining the level of

dividends; the Group’s ability to satisfy working capital requirements; changes in foreign exchange

rates; changes in the regulatory framework in which the Group operates; the impact of legal or other

proceedings against the Group or other 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

the expectations disclosed or implied within forward-looking statements can be found under “Forward-

looking statements” and “Principal risk factors and uncertainties” in the Group’s annual report for the

financial year ended 31 March 2016. 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 or 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.

56

More information

www.vodafone.com/investor

2017 upcoming dates Visit our website for more information

For definitions of terms please see www.vodafone.com/content/index/investors/glossary

[email protected]

+44 (0) 7919 990 230

Contact us

2 February

Prelim results

16 May 3 February

57

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