Vodafone Group Plc Q1 FY21 Trading Update 24 July 2020 - #StayConnected - Vodafone IR
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Vodafone Group Plc
Q1 FY21 Trading Update
24 July 2020
#StayConnected
Agenda & contents
Highlights Nick Read p3
Chief Executive
Trading Margherita Della Valle p7
performance Chief Financial Officer
Appendices p13 We connect for a better future
A leading technology communications
company building an inclusive, sustainable
digital society
Q1 FY21
2
Trading Update
Highlights ⫶ Trading in-line with expectations, Tower IPO early 2021
Commercial Strategic Social
performance progress contract
• Good commercial • Deepening customer • Supporting society • Europe’s leading tower
performance during engagement – stronger through our essential infrastructure company
lockdown customer loyalty infrastructure
• 68k macro sites across
• Q1 service revenue • Accelerating digital • Donated >€100m in 9 markets
-1.3% (Q4: 1.6%) transformation – digital direct contributions &
sales +50% YoY services in-kind • Facilitating network
• Resilient trading in sharing across Europe
Germany, SR growth flat • Improving asset • Actively looking to
utilisation support the ‘recovery’ • Driving operational
• 1.6ppt roaming & visitor phase synergies through
impact from COVID-19 • Optimising the portfolio enhanced focus
- VHA/TPG merger • Engaging with policy
• Reconfirming FY21 free - Egypt MoU extended makers to accelerate the • On track for Frankfurt
cash flow guidance - Vantage Towers digital agenda IPO in early 2021
Q1 FY21
3
Trading Update
Trading update ⫶ Good commercial performance during lockdown
7th consecutive quarter of improved loyalty1 Broadband net additions stable2
YoY churn Broadband Converged
NGN
reduction
417 421 429
370
(0.6ppt) (0.5ppt) 237 230
(0.8ppt) 205 214
(1.4ppt) (1.1ppt)
(1.6ppt) 142 132 142 141
115 105
54
(3.2ppt)
Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21
Commercial actions Commercial focus
• Competing effectively in high/mid/low tiers • Winning ‘fair share’ across all market segments
• Reducing ATL reliance – digital CRM, in-house marketing • Driving ARPU accretion across our customer base
• Selling ‘one more product’ to customers • Greater demand for u/l mobile & high-speed broadband
• Increasing loyalty programme penetration • Launched customer ‘delight’ initiatives
• Supporting Businesses – developing new propositions • New offers – thermal cameras, smart tracker (Curve)
1. European mobile contract churn – excludes inactive data only SIM losses in Italy during Q3 to Q4 FY20
Q1 FY21 2. European fixed broadband additions - includes acquired Unitymedia and UPC assets from Q2 20 onwards 4
Trading Update
Social contract ⫶ Supporting Governments’ digital agenda…
Governments’ digital Vodafone’s Policy
priorities 5-point response plan objectives
Roll-out of next-generation, Expand & future-proof our Healthy, sustainable market structure
resilient networks network infrastructure
Pro-investment and pro-innovation
Accelerate support to regulatory approach
Governments (eHealth, eEducation)
End of extractive spectrum auctions
Restarting economy & Enhance digital accessibility &
supporting jobs literacy for the most vulnerable
Vendor supply chain diversity
Promote widespread digital
adoption for business
Supportive deployment regulation
Digital access & skills Support exit strategies through
targeted digital adoption Defined framework for network sharing
…promoting a healthier, sustainable industry & enabling a fair return on capital employed
Q1 FY21
5
Trading UpdateVantage Towers ⫶ Europe’s leading tower infrastructure company
Vivek Thomas Sonia
Badrinath Reisten Hernandez
CEO CFO CCO
The brand
The team
Christian Jose Nikolaus
Sommer Rivera Rama
General CTO HR Director
Counsel
68k #1 or #2
Mission & values
macro sites in most markets
Key facts
9 markets 90% revenues
across Europe from anchor tenant
Further information available at investors.vodafone.com
Q1 FY21
6
Trading UpdateTrading performance Margherita Della Valle Chief Financial Officer
Q1 trading ⫶ Performance in-line with expectations
YoY quarterly service revenue growth
• COVID-19 impact largely driving QoQ movement
1.6%
1.1%
Europe Group 1.6%
0.7%
0.6%
0.8%
0.1%
(0.4)%
• Germany performance resilient
-0 .4%
(0.2)%
(1.4)% (1.3)%1
• Rest of Europe
-0 .9%
(1.4)%
-1 .4%
(1.7)%
-1 .9%
-2 .4%
(2.6)%1 - Good underlying commercial momentum
-2 .9%
- Significant roaming & visitor impacts
Q1 Q2 Q3 Q4 Q1
FY20 FY20 FY20 FY20 FY21 - B2B project delays
• Vodacom
Contribution to Q1 SR growth
- South Africa: strong data & voice usage
80 00.0%
20bps
60bps - International: macro-economic pressure
30 00.0%
Flat
-2 000.0%
(20bps)
-7 000.0%
(40bps) FY21 EBITDA outlook: flat to slightly down2
(70bps) (80bps)
FY21 guidance: FCF (pre-spectrum) at least €5bn2
-1 2000 .0 %
Germany UK Other Spain Italy Vodacom Other
Europe markets
1. Includes Unitymedia and UPC assets as of Q1 FY21
Q1 FY21 2. Based on prevailing assessments of global macro-economic outlook 8
Trading UpdateCOVID-19 ⫶ Driving service revenue slowdown
Q4 FY20 to Q1 FY21 service revenue growth movement Roaming & visitors
2.0
COVID-19 impact Non-COVID-19 related - c.70% reduction across Europe
- Non-EU related roaming down c.85%
1.5 – no near-term recovery expected
1.0
1.6% (1.6%)1
Business
0.5
- Deferral in project work
0.0 - Automotive – lower activity
(0.5%)
+ Increased working from home
-0.5
(1.3%)
(0.8%)
-1.0 Other
-1.5 - Prepaid top-up access challenges
- Macro economic pressure & M-Pesa free P2P
-2.0 transfers in Vodacom Internationals
Q4 FY20
SR growth
Roaming
/ visitors
Business Other Q1 FY21
SR growth
- Competitive pressures in Greece & Ireland
+ Partially offset by out-of-bundle traffic elasticity
1. The reduction in roaming and visitor revenue & prepaid SIM sales to tourists and migrant workers
Q1 FY21
9
Trading UpdateGermany ⫶ Resilient performance with good underlying momentum
34% of Group EBITDA1
Service revenue growth Unitymedia in Net customer additions (‘000)
organic SR
190
2.0% 2.0%
from FY21 DSL 19 0
160
1.5% 1.5%
Cable
1.6%
Retail 2 Cable (pro-forma)
14 0
118
1.3%
1.0%
1.2% 1.0%
12
Mobile contract 90
74 573
Reported organic 0.9% 153
35 118
service revenue
0.5% 0.5%
0.4%
40
75 74
growth
0.4% 35
0.0% 0.0%
-10
(11)
0.0% 0.0% (46)
(0.1%) (60) (44)
-0 .5%
(0.2%) -0 .5%
-60
(48)
Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1
FY20 FY20 FY20 FY20 FY21 FY20 FY20 FY20 FY20 FY21
• Roaming & visitor drag (-1ppt) • Good cable growth despite lockdown
- partially offset by increased usage • 1.8m broadband customers on plans 400+Mbps
• Stable fixed SR growth +2.4% • New harmonised TV offer from August
• Integration on track
1. Based on FY20 EBITDA contribution
Q1 FY21 2. Pro-forma for Unitymedia in FY20 10
Trading Update 3. Includes Unitymedia migrations of 63,000Other markets ⫶ Solid commercial performance, impacted by COVID-19
Service revenue
Market Performance
growth (%)
14% of Group • Competition remains challenging • Net neutral on mobile number portability
EBITDA1 -6.5% (Q4: -3.7%) • Lapping price increases in Q2 • +45k broadband customer additions
10% of Group • Inflationary price increases implemented • Mobile contract net adds +61k
EBITDA1 -1.9% (Q4: +1.2%) • Delay in large corporate activity • Record broadband net additions, +74k2
• Mobile and fixed ports back to pre-COVID • Revenue impacted by extensive lockdown
7% of Group levels in June measures
EBITDA1 -6.9% (Q4: -2.7%)
• Increase in price & promotional intensity • Good commercial momentum maintained
• Increased competition in Ireland & • Resilient consumer fixed performance
12% of Group Greece
EBITDA1 -3.1% (Q4: +3.4%) • UPC & AbCom integrations on track
Other Europe
• Prepaid top-up challenges
14% of Group • SA: lockdown driving increased usage • SA: Data volume growth +101%
EBITDA1 +1.5% (Q4: +3.2%) • Internationals: lower economic activity • M-Pesa: zero rating P2P transfers
South Africa: +6.4%
International: -5.2%
Q1 FY21 1. Based on FY20 EBITDA contribution
2. Excludes a customer base restatement of 32k 11
Trading UpdateSummary ⫶ Creating sustainable value for all stakeholders
Deepening Accelerating
customer digital
engagement transformation
Improving Optimising
Strategic priorities ⫶ momentum maintained during lockdown
asset the
utilisation portfolio
Resilient trading ⫶ in-line with our expectations
Vantage Towers ⫶ on track for early 2021 IPO
Social contract ⫶ strong engagement with Governments
Q1 FY21
12
Trading UpdateI Definitions p14
II Supporting information p15
III Importance notice p16
Appendices
Q1 FY21
13
13
Trading UpdateAppendix I ⫶ Definitions
Term Definition Term Definition
Adds Customer additions within a defined period MTM Mark-to-market or fair value accounting refers to accounting for
the value of an asset or liability based on the current market price
AI Artificial intelligence / machine learning of the asset or liability
Churn Total gross customer disconnections in the period divided by NGN Fibre or cable networks typically providing high-speed broadband
the average total customers in the period over 30Mbps
Converged A customer who receives both fixed and mobile services (also On-net Direct connections to Vodafone owned or operated fixed-line
known as unified communications) on a single infrastructure
bill or who receives a discount across both bills
Organic An alternative performance measure which presents performance
EBIT Earnings before interest & tax growth on a comparable basis, in terms of M&A activity, movements in
foreign exchange rates and the impact of the implementation of
EBITDA Earnings before interest, tax, depreciation & amortisation IFRS 16 ‘Leases’
EPS Earnings per share
Roaming Allows customers to make calls, send and receive texts and data
FCF Free cash flow on other operators’ mobile networks, usually
while travelling abroad
Gbps / Mbps Gigabits (billions) / megabits (millions) of bits per second
ROCE Return on capital employed
IoT Network of physical objects embedded with electronics,
software, sensors & network connectivity, including built-in Service Service revenue comprises all revenue related to the provision of
mobile SIM cards, that enables collection of data & exchange revenue ongoing services including, but not limited to, monthly access
communications with one another or a database charges, airtime usage, roaming, incoming and outgoing network
usage by non-Vodafone customers and interconnect charges for
MNP Mobile number portability incoming calls
Q1 FY21
14
Trading UpdateAppendix II ⫶ Supporting information
1. Quarterly revenue The information opposite is available in spreadsheet format
2. Adjusted income statement via investors.Vodafone.com
3. Segmental information
4. Income statement information
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 ARPU
13. Average foreign exchange rates
14. Average FX rates
Q1 FY21
15
Trading UpdateAppendix III ⫶ Important notice
By accessing these slides, you agree to be bound by the following conditions. You may not Forward-looking statements are sometimes, but not always, identified by their use of a date in
disseminate these slides or any related recording, in whole or in part, without the prior the future or such words as “plans”, “targets” “gain”, “grow”, or “accelerate” (including in their
consent of Vodafone. Information in this presentation relating to the price at which relevant negative form). By their nature, forward-looking statements are inherently predictive,
investments have been bought or sold in the past or the yield on such investments cannot be speculative and involve risk and uncertainty because they relate to events and depend on
relied upon as a guide to the future performance of such investments. 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
This presentation does not constitute an offering of securities or otherwise constitute an
implied by these forward-looking statements.
invitation or inducement to any person to underwrite, subscribe for or otherwise acquire or
dispose of securities in any company within the Vodafone Group. 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
This presentation also contains non-GAAP financial information which Vodafone’s
“Forward-looking statements” and “Risk management” in the Vodafone Group Plc Annual
management believes is valuable in understanding the performance of the Vodafone Group.
Report for the year ended 31 March 2020. The Annual Report can be found at
However, non-GAAP information is not uniformly defined by all companies and therefore it
investors.vodafone.com.
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 All subsequent written or oral forward-looking statements attributable to Vodafone, to any
the assessment and management of the Vodafone Group’s business, they should not be member of the Vodafone Group or to any persons acting on their behalf are expressly
viewed in isolation or as replacements for, but rather as complementary to, the comparable qualified in their entirety by the factors referred to above. No assurances can be given that the
GAAP measures. forward-looking statements in or made in connection with this presentation will be realised.
Any forward-looking statements are made as of the date of this presentation. Subject to
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to
compliance with applicable law and regulations, Vodafone does not intend to update these
Vodafone Group Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone
forward-looking statements and does not undertake any obligation to do so.
Speech Mark Devices, Vodacom and The future is exciting. Ready? are trade marks owned by
Vodafone. Vantage Towers is a trademark owned by Vantage Towers. Other product and
company names mentioned herein may be the trade marks of their respective owners.
This 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 1995 with respect to the Vodafone Group’s financial condition, results
of operations and businesses, the Vodafone Group’s FY21 EBITDA outlook and FCF
(pre-spectrum) guidance and certain of the Vodafone Group’s plans and objectives.
Q1 FY21
16
Trading UpdateGroup
Investor
www.vodafone.com/investors Upcoming events
Relations
ir@vodafone.co.uk
1 Kingdom Street, London, W2 6BY
28 Annual General Meeting
July
Matthew Johnson
Director matthew.johnson@vodafone.com
Group IR
Daniel Morris
Deputy Director
Group IR
daniel.morris@vodafone.com 17 H1 FY21 Results
Nov
Roy Teal
Deputy Executive roy.teal@vodafone.com
Group IR
Victoria Garnham 3 Q3 Trading Update
Access Manager victoria.garnham@vodafone.com
Group IR FebYou can also read
