Vodafone Group Plc Q1 FY22 Trading Update 23 July 2021
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Vodafone Group Plc Q1 FY22 Trading Update 23 July 2021
Our strategy ⫶ Growth in both Europe & Africa underpins our ambition
The new generation connectivity & digital services provider
Vision for Europe & Africa, enabling an inclusive & sustainable digital society
Deep & Best connectivity Leading 24hr Outstanding
trusted
customer products & innovation in digital
relationships services digital services experiences
Strategy
Enabled Simplified & Social Contract
through most efficient Leading gigabit
shaping the
Group scale
operator networks
& expertise digital society
Revenue
Medium-term Adjusted EBITDAaL1 Adjusted FCF2 Leverage ROCE3 > WACC
ambition Growth in both
Europe & Africa
+ Mid-single digit growth + Mid-single digit growth + 2.5-3.0x range Min. dividend 9c p.a.
1Adjusted EBITDAaL is equivalent to prior year definition & calculation of AdjustedEBITDA.
Medium-term ambition based on prevailing Q1 FY22 Trading Update
assessment of global economic outlook in May 2021 23 July 2021
2Adjusted FCF is free cash flow before spectrum payments, restructuring
3Pre-tax controlled ROCE
costs & Vantage Towers growth capex 2Highlights ⫶ Good start to the year with 3.3% service revenue growth
Group Service Revenue growth Commercial momentum
4.0%
3.3%
3.0%
4,000
Europe mobile contract440
1.8% 1.7% c.1.0pt net adds ('000)
1.5% 3,500
390
Av. monthly retail store
2.0%
0.6% Prior year 371 footfall (EU4) 340
1.6% COVID one-offs
3,000
332
1.0%
290
0.8%
2,500
278
0.0%
0.4%
240
2,000
(0.4%)
-1.0%
190
1,500
198
-2.0% (1.3%) 140
Q4 Q1 Q2 Q3 Q4 Q1 1,000
127
FY20 FY21 FY21 FY21 FY21 FY22
90
99
500
40
Group Group (ex. roaming & visitors) - -10
-5
Q3 Q4 Q1 Q2 Q3 Q4 Q1
FY20 FY20 FY21 FY21 FY21 FY21 FY22
• Q-o-Q growth improvement in all segments • European retail store network important for
• Roaming & visitor revenue – lapping prior year drag customer additions
& now contributing to growth • EU4 footfall yet to normalise – still 40% below
• One-off benefits from PY COVID-19 disruption pre-COVID levels, impacting sales volumes
- lower prepaid & Business activity in prior year (c.1pt) • Germany – particularly low footfall in Q1 FY22
Q1 FY22 Trading Update
23 July 2021 3Service revenue ⫶ Growth across all parts of the Group
| Growth in Europe ex. R&V
Service revenue growth1 Y-o-Y reduction in Europe mobile contract
churn (ex. Spain)4
2.0%
0.4%
1.5%
0.1% -0.1%
• Growing in all markets except Italy Q1 Q2 Q3 Q4 Q1
1.0%
0.5%
-0.6% 1.1%
0.0%
FY21 FY21 FY21 FY21 FY22
-0.5%
-0.2pt
• Signs of commercial momentum returning
-1.0%
-1.5%
-2.0%
-2.6% -1.1% -1.1% -0.6pt
-0.7pt
as retail stores reopen -0.8pt
-2.5%
-3.0%
-1.8%
Q1 Q2 Q3 Q4 Q1 -1.2pt
FY21 FY21 FY21 FY21 FY22
| Growth in Business 5.0% ex. R&V
Service revenue growth2 IoT SIM net additions (million)
4.0% 2.6% 3.2%
• Total connectivity growing 3.0%
2.0%
0.1%
1.4%
6.5
1.0%
2.7%
0.0% 5.9
• Strong acceleration in digital services -1.0%
-2.0% -2.9% -0.2%
0.7%
0.0%
4.4
5.0
5.1
following project delays in prior year
-3.0%
-4.0%
Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1
FY21 FY21 FY21 FY21 FY22 FY21 FY21 FY21 FY21 FY22
| Growth in Vodacom Service revenue growth3 Data users & M-Pesa growth
4G customers in SA (m) M-Pesa quarterly transaction value (€bn)
7.9%
10.0%
9.0%
7.3%
61.0 61.0 59.9
• Strong service revenue growth in all markets
8.0%
7.0% 65.0
52.5 20.0
41.9
60.0 19.0
6.0%
3.3%
55.0 18.0
3.2%
5.0%
50.0 17.0
4.0%
45.0
19.3 16.0
1.5% 18.4
• Financial services revenue growth of 34%
40.0 15.0
3.0%
17.4
35.0 14.0
15.8
2.0% 30.0 13.0
14.8
25.0 12.0
1.0%
20.0 11.0
0.0%
15.0 10.0
Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1
FY21 FY21 FY21 FY21 FY22 FY21 FY21 FY21 FY21 FY22
1Europe includes all segments 4Excluding Spain following significant national COVID-19
Q1 FY22 Trading Update
23 July 2021
2Total Vodafone Business growth
3Growth for Vodacom Group
lockdown restrictions in Q1 FY21 4Growth in Europe ⫶ Germany
Service revenue growth
31% Group Service Revenue
Q1 FY22
2.5% 2.5%
Contribution 2.5%
2.4%
Retail
growth to Group 2.0% 2.0%
1.9%
Service revenue growth 1.4% +0.4pt Retail (ex. roaming) 1.5%
1.8% 1.8% 1.8% 1.5%
1.5%
Reported 1.0% 1.4% 1.0%
organic service 1.2%
1.0%
• Lapping roaming drag, but lower variable usage revenue growth 0.5%
0.4%
0.6%
0.5%
• Retail activity still impacted by lockdown
0.0% 0.0%
0.0%
-0.5%
(0.1%) -0.5%
- restrictions eased in June Q1
FY21
Q2
FY21
Q3
FY21
Q4
FY21
Q1
FY22
- customer footfall c.-70% in Q1 vs. pre- Retail store – average customer footfall Net customer additions (‘000)
pandemic 1811 DSL
- activity continuing to recover in July
190
Pre-COVID Cable
Mobile contract
c.-70%
140
99
• Launched new digital-only value brand 90
571
‘SIMon mobile’ 40
74 83 98
46 33
• Business – strong demand in public/health Q1 -10
(44)
(33) (42)
(21) (20) (26)
sector Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun
-60
Q1 Q2 Q3 Q4
(27)
Q1
'19 '19 '19 '19 '19 '20 '20 '20 '20 '20 '20 '21 '21 '21 FY21 FY21 FY21 FY21 FY22
Q1 FY22 Trading Update 1. Includes Unitymedia migrations of 63,000 in Q1 FY21 and 124,000 in Q2 FY21
23 July 2021 5Growth in Europe ⫶ Strong recovery in service revenues
Service revenue
Market commentary Our performance
growth
+2.5% • Retail activity recovering post lockdown, • Mobile contract net adds +65k
(Q4 FY21 -0.6%) all stores open from mid-April
13%
+0.3pt contribution to • Innovative new offers –
Group Service Revenue
• Signed exclusive sales agreement
Group OSR ‘Vodafone EVO’ and ‘Pro broadband’
with Dixons Carphone on improved terms
+4.2%
(Q4 FY21 -0.2%) • Lapping lower prepaid activity & • +97k mobile contract net adds
13%
Group Service Revenue
+0.5pt contribution to roaming drags in prior year • UPC & ABCom integrations on-track
Other Europe Group OSR
-3.6% • PostePay MVNO migration underway,
(Q4 FY21 -7.8%) • Competition remains intense to be completed by end of July
12% -0.4pt contribution to • Fixed and convergence now impacted • Largest EU recovery funding
Group Service Revenue
Group OSR beneficiary with €191 billion
+0.8% • Price increases introduced across market • EU funding to support SME
10% (Q4 FY21 -1.3%)
digitalisation starting in H2
Group Service Revenue • Social contract: improved 5G spectrum
+0.1pt contribution to • #2 in retail service revenue
Group OSR terms & proposal to remove TV tax
market share
Q1 FY22 Trading Update
23 July 2021 6Growth in Business ⫶ Continued outperformance in all markets
FY21 total Q1 FY22 service
service revenue revenue growth Performance highlights
• Lapping roaming drag, however limited international travel
Mobile €5.8bn (0.2%)
• Customer base +4.5% YoY, offset by ARPU pressure
Fixed €3.1bn 3.7% • Good momentum on fixed connectivity and internet access
• Distributed MEC launch with AWS Wavelength making Vodafone
the first operator to launch this service in Europe
Cloud & Security €0.4bn 5.6%
• Cybersecurity: First large UK win; Cyber-as-a-Service (‘CaaS’)
launched in Germany
• Lapping lower Automotive activity in Q1 FY20
IoT €0.8bn 22.3% • +6.5 million IoT connections added in Q1, total base now
130 million
• EU recovery funding distribution to commence in H2 FY22
Total Business €10.1bn 2.7%
• Strong progress in building pan-Europe public sector pipeline
Q1 FY22 Trading Update
23 July 2021 7Growth in Africa & Turkey ⫶ Data traffic & financial services growth
Service revenue
Market commentary Our performance
growth
+5.2% • Increased restrictions as country enters • Lapping strong PY growth supported
9% (Q4 FY21 +8.6%) by lockdown measures
Group Service Revenue third COVID wave
Vodacom ⫶ South Africa
+0.5pt contribution to
• Temporary spectrum licences extended • Financial services growth +19.2%;
Group OSR VodaPay ‘super app’ launching soon
+14.5% • Limited COVID support measures • M-Pesa volumes +44% Y-o-Y
3% (Q4 FY21 +4.8%)
Group Service Revenue
• Lapping P2P M-Pesa zero rating and • Safaricom led consortium - won
Vodacom ⫶ Internationals +0.4pt contribution to
Group OSR Tanzania registration disconnections Ethiopia licence1
+17.6% • International travel resumed • Improved service revenue trend as
4% (Q4 FY21 +10.7%)
Group Service Revenue COVID restrictions eased
• 20MHz of acquired spectrum
Vodafone ⫶ Egypt +0.6pt contribution to
Group OSR available soon • Mobile data usage +47% Y-o-Y
+19.6% • Continue to migrate contract
4% (Q4 FY21 +16.7%) • Gradual easing of COVID restrictions customers to higher plans
Group Service Revenue
+0.7pt contribution to • All operators increasing prepay prices • Launched 100% digital service –
Vodafone ⫶ Turkey Group OSR ‘Vodafone Simple’ in July
1As part of a consortium also including Vodafone, Vodacom, CDC Group Plc, Sumitomo Corp
Q1 FY22 Trading Update
23 July 2021 8Summary
Service revenue growth in both Europe & Africa
Service revenue growth in both Consumer & Business
Commercial momentum returning as retail stores reopen
On-track for FY22 guidance: €15.0-15.4bn EBITDAaL1 & >€5.2bn Adjusted FCF2
1Adjusted EBITDAaL is equivalent to prior year definition & calculation of AdjustedEBITDA.
Q1 FY22 Trading Update
23 July 2021
2Adjusted FCF is free cash flow before spectrum payments, restructuring costs & Vantage Towers growth capex 9Appendices
I Our regional footprint p11
II Definitions p12
III Supporting information p13
New segmental reporting structure
VI p14
& proforma financials
V Important notice p15
Q1 FY22 Trading Update
23 July 2021 102 ⫶ We are the
Appendix I ⫶ Our
leading
regional
connectivity
footprintprovider in Europe & Africa.
Europe ⫶ converged connectivity leader Africa ⫶ leading data & payments provider
42.2m
5.3m
3.3m
17.0m
2.0m 30.9m
0.9m 9.4m
0.3m 11.0m 4.0m
0.6m
39.9m*
15.5m
3.1m 9.6m
0.7m 0.7m 14.8m
18.3m
3.0m 1.4m
0.1m
13.3m
4.6m 8.3m
3.1m
0.8m 24.0m
4.1m 1.2m
1.0m 1.8m
48.3m
#m # mobile connections
#m # mobile connections
#m # fixed connections
* Safaricom as of Q4 FY21
Q1 FY22 Trading Update
23 July 2021 11Appendix II ⫶ Definitions
Term Definition Term Definition
Adds Number of new customers within a defined period IoT Internet of Things. Network of physical objects embedded with
electronics, software, sensors & network connectivity, including
Adjusted Operating profit after depreciation on lease-related right of use built-in mobile SIM cards, that enables collection of data & exchange
EBITDA assets and interest on leases but excluding depreciation, communications with one another or a database
amortisation
MEC Mobile edge computing
Adjusted Renaming of Adjusted EBITDA. Equivalent in definition & Organic An alternative performance measure which presents performance
EBITDAaL calculation of Adjusted EBITDA growth on a comparable basis, in terms of M&A activity, movements in
foreign exchange rates
Adjusted Free Free cash flow before spectrum, restructuring, Vantage Towers OSR Organic Service Revenue
Cash Flow growth capital investment and any one-off material transactions
PY Prior Year
ARPU Average revenue per user, defined as customer revenue Roaming Roaming: allows customers to make calls, send and receive texts
and incoming revenue divided by average customers & Visitor and data on our and other operators’ mobile networks, usually while
(R&V) travelling abroad. Visitors: revenue received from other operators or
markets when their customers roam on one of our markets’
CaaS Cyber-as-a-Service
networks
Churn Total gross customer disconnections in the period divided by the ROCE Return on capital employed
average total customers in the period Service Service revenue comprises all revenue related to the provision of
Converged A customer who receives both fixed and mobile services (also revenue ongoing services including, but not limited to, monthly access
known as unified communications) on a single bill or who charges, airtime usage, roaming, incoming and outgoing network
receives a discount across both bills usage by non-Vodafone customers and interconnect charges for
incoming calls
FCF Free cash flow WACC Weighted average cost of capital
Q1 FY22 Trading Update
23 July 2021 12Appendix III ⫶ 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 data usage
13. Mobile ARPU
14. Average foreign exchange rates
Q1 FY22 Trading Update
23 July 2021 13Appendix IV ⫶ New segmental reporting structure & proforma financials
Adjusted Adjusted Capital Non-current
Proforma FY211 Revenue Service revenue EBITDAaL EBITDAaL margin additions Proforma FY21 assets(1)
€m €m €m % €m €m
H1 21 FY21 H1 21 FY21 H1 21 FY21 H1 21 FY21 H1 21 FY21 FY21
Germany 6,371 12,984 5,723 11,520 2,685 5,323 42.1% 41.0% 1,110 2,504 Germany 43,755
Italy 2,506 5,014 2,249 4,458 800 1,597 31.9% 31.9% 297 773 Italy 10,707
UK 2,983 6,151 2,401 4,848 600 1,288 20.1% 20.9% 284 767 UK 6,529
Spain 2,050 4,166 1,880 3,788 447 968 21.8% 23.2% 289 699 Spain 6,609
Other Europe 2,720 5,549 2,411 4,859 794 1,613 29.2% 29.1% 350 840 Other Europe 8,361
Vodacom 2,423 5,181 1,949 4,083 891 1,873 36.8% 36.2% 333 703 Vodacom 5,839
Other Markets 1,898 3,765 1,679 3,312 601 1,228 31.7% 32.6% 245 513 Other Markets 2,988
Vantage Towers 576 1,165 - - 304 603 52.8% 51.8% 98 229 Vantage Towers 7,859
Common Functions 2,145
Common Functions 656 1,368 219 470 (119) (117) - - 358 828
Eliminations (729) (1,496) (93) (197) - - - - - - Group 94,792
1. Comprises goodwill, other intangible assets and property, plant and equipment in accordance with Note 2 to the consolidated financial statements in our FY21 Annual
Group 21,454 43,847 18,418 37,141 7,003 14,376 32.6% 32.8% 3,364 7,856 Report.
Adjusted Adjusted Capital Notes:
Proforma FY201,2 Revenue Service revenue EBITDAaL EBITDAaL margin additions i. Vodafone owns 81.7% of the ordinary shares in Vantage Towers A.G.
€m €m €m % €m ii. The Groups proforma segment for Vantage Towers reflects the pro-forma information released by Vantage Towers and is
FY20 FY20 FY20 FY20 FY20 available at https://www.vantagetowers.com/investors/results-report-and-presentation, together with the contribution
Germany 12,076 10,696 4,738 39.2% 2,114 from Cornerstone Technologies Infrastructure Limited (‘CTIL’; the Groups 50:50 joint venture with Telefonica in the UK).
Italy 5,529 4,833 2,068 37.4% 697 CTIL is reported as a joint operation in the Groups financial statements, but as a joint venture using the equity method in
the Vantage Towers financial statements.
UK 6,484 5,020 1,426 22.0% 707
iii. The proforma view of our FY20 and FY21 financial results has been prepared for illustrative purposes only and shows a
Spain 4,296 3,904 928 21.6% 745 hypothetical situation and, therefore, does not represent the actual financial position or results of the Group if the new
Other Europe 5,541 4,890 1,584 28.6% 768 segmentation had occurred on 1 April 2019 for purposes of income statement line items and 31 March 2021 for
Vodacom 5,531 4,470 2,088 37.8% 802 purposes of non-current assets. The proforma view of our FY20 and FY21 financial results is based on factually
Other Markets 4,386 3,796 1,400 31.9% 587 supportable proforma adjustments, which we consider reasonable. Future results of operations may differ materially from
Vantage Towers 1,139 - 587 51.5% 172 those presented. The proforma view of our FY20 and FY21 financial results may not give a true picture of our financial
results or non-current assets nor is it indicative of the results that may, or may not, be expected to be achieved in the
Common Functions 1,567 494 1 - 821
future. The proformas have not been prepared in accordance with Regulation S-X under the United States Securities
Eliminations (1,517) (232) - - - Exchange Act of 1934 and the auditing standards generally accepted in the United States, and accordingly should not
Group 45,032 37,871 14,820 32.9% 7,413 be relied upon as if it had been carried out in accordance with those standards or any other standards besides the
1. Revenue, Adjusted EBITDAaL and capital additions for the Group as presented are different to those disclosed in the FY21 annual report as a result of the inclusion of standards mentioned above.
proforma effects for Wind Hellas and Vantage Towers incremental running costs.
2. Only full year figures available
Q1 FY22 Trading Update
23 July 2021 14Appendix V ⫶ Important notice
By accessing this communication, you agree to be bound by the following conditions. You depend on circumstances that may or may not occur in the future. There are a number of
may not disseminate this communication or any copy thereof, in whole or in part, without the factors that could cause actual results and developments to differ materially from those
prior consent of Vodafone Group Plc. Information in this communication relating to the price expressed or implied by these forward-looking statements.
at which relevant investments have been bought or sold in the past or the yield on such Furthermore, a review of the reasons why actual results and developments may differ
investments cannot be relied upon as a guide to the future performance of such investments. materially from the expectations disclosed or implied within forward-looking statements can
This communication does not constitute an offering of securities or otherwise constitute an be found under “Forward-looking statements” and “Risk management” in the Group’s annual
invitation or inducement to any person to underwrite, subscribe for or otherwise acquire or report for the financial year ended 31 March 2021. The annual report can be found on the
dispose of securities in Vodafone Group Plc of any of its subsidiaries, joint ventures or Group’s website (https://investors.vodafone.com/reports-information/latest-annual-results).
investments. All subsequent written or oral forward-looking statements attributable to the Company or any
This report contains “forward-looking statements” within the meaning of the US Private member of the Group or any persons acting on their behalf are expressly qualified in their
Securities Litigation Reform Act of 1995 with respect to the Group’s financial condition, entirety by the factors referred to above. No assurances can be given that the forward-looking
results of operations and businesses and certain of the Group’s plans and objectives. In statements in this document will be realised. Any forward-looking statements are made of the
particular, such forward-looking statements include, but are not limited to, statements with date of this presentation. Subject to compliance with applicable law and regulations,
respect to: expectations regarding the Group’s financial condition or results of operations and Vodafone does not intend to update these forward-looking statements and does not
the guidance for Adjusted EBITDA and adjusted free cash flow for the financial year ending 31 undertake any obligation to do so.
March 2022; the Group’s sustainable business strategy and 2025 targets; expectations for the
This communication also contains non-GAAP financial information which Vodafone Group
Group’s future performance generally; expectations regarding the operating environment and
Plc’s management believes is valuable in understanding the performance of Vodafone Group
market conditions and trends, including customer usage, competitive position and
Plc. However, non-GAAP information is not uniformly defined by all companies and therefore
macroeconomic pressures, price trends, commercial momentum and opportunities in specific
it may not be comparable with similarly titled measures disclosed by other companies,
geographic markets; intentions and expectations regarding the development, launch and
including those in Vodafone Group Plc’s industry. Although these measures are important in
expansion of products, services and technologies, either introduced by Vodafone or by
the assessment and management of Vodafone Group Plc’s business, they should not be
Vodafone in conjunction with third parties or by third parties independently including digital
viewed in isolation or as replacements for, but rather as complementary to, the comparable
and financial services such as VodaPay, sharing infrastructure and its benefits and sharing
GAAP measures. Although we try to accurately reflect speeches delivered, the actual speech
mobile networks in Europe and Africa; expectations regarding the integration or performance
as it was delivered may deviate from the script made available
of current and future investments, associates, joint ventures, non-controlled interests and
newly acquired businesses. Forward-looking statements are sometimes, but not always, References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to
identified by their use of a date in the future or such words as “will”, “anticipates”, “could”, Vodafone Group Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone
“may”, “should”, “expects”, “believes”, “intends”, “plans” or “targets” (including in their Speech Mark Devices, Vodacom and The future is exciting. Ready? are trade marks owned by
negative form or other variations). By their nature, forward-looking statements are inherently Vodafone. The Vantage Towers Logo and the VT Monogram Logo are trade marks owned by
predictive, speculative and involve risk and uncertainty because they relate to events and Vantage Towers GmbH. Other product and company names mentioned herein may be the
depend on circumstances that may or may not occur in the future. There are a number of trade marks of their respective owners.
Q1 FY22 Trading Update
23 July 2021 15Group investors.vodafone.com Upcoming events
Investor Relations
ir@vodafone.co.uk
1 Kingdom Street, London, W2 6BY
27 Annual General Meeting
July
Matthew Johnson
Director matthew.johnson@vodafone.com
Group IR
Daniel Morris
Deputy Director
Group IR
daniel.morris@vodafone.com 29 Digital services & experiences
Sep’ investor briefing
Roy Teal
Deputy Director roy.teal@vodafone.com
Group IR
Victoria Garnham 16 H1 FY22 Results
Access Manager victoria.garnham@vodafone.com
Group IR Nov’You can also read
