REG - Vodafone Group Plc - Vodafone Q3 FY23 Trading Update
01/02/2023 07:00
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RNS Number : 4906O Vodafone Group Plc 01 February 2023
Vodafone Group Plc ⫶ Q3 FY23 trading update
1 February 2023
Europe slowing as expected, resilient performance in Africa
· Group service revenue growth of 1.8%* (Q2: 2.5%*), with the slowdown in
quarterly trend driven by Europe
· In Europe, declines in Germany, Italy and Spain partially offset by
good growth in UK and Other Europe. Quarterly trend impacted by lower roaming
growth and phasing of Business revenue in FY22
· Portfolio progress: Vantage Towers strategic co-control partnership
progressing towards completion, Vodafone Hungary disposal completed, transfer
of Vodafone Egypt to Vodacom completed
Q3 performance summary Q3 FY23 Q3 FY22 Reported Organic
€m €m growth % growth % (1)
Service revenue 9,520 9,647 (1.3) 1.8*
- of which Germany 2,882 2,936 (1.8) (1.8)*
Other revenue 2,118 2,037
Total revenue 11,638 11,684 (0.4) 2.7*
* represents organic growth. See page 2. ǀ 1. Non-GAAP measure. See page
7.
· Service revenue in Turkey increased by 52.9%* (Q2: 43.9%*), driven by
high inflation. Group service revenue growth excluding Turkey was 0.5%* (Q2:
1.4%*)
· Broadening price actions across Europe, with 8 markets now operating
inflation-linked pricing models
· Vodafone Business service revenue growth of 2.4%* (Q2: 3.4%*), driven
by digital services
· Growth in Africa driven by data and financial services. We now have
73.5 million financial services customers in Africa (including Safaricom)
· Continuing to target updated FY23 guidance: Adjusted EBITDAaL €15.0 -
15.2 billion and Adjusted FCF c.€5.1 billion
Margherita Della Valle, Group Chief Executive, commented:
"Although we're continuing to target our financial guidance for the year, the
recent decline in revenue in Europe shows we can do better. We need to do more
for our customers by delivering quality connectivity in an easy way. We've
already taken action, including simplifying our structure to give local
markets full autonomy and accountability to make the best commercial decisions
for their customers. In addition, we now have initiatives underway to generate
around half of our €1 billion cost savings target. There is more to do and
our focus is to provide a better service to our customers, become a simpler
business and deliver growth."
For more information, please contact:
Investor
Relations
Media Relations
Investors.vodafone.com
Vodafone.com/media/contact
ir@vodafone.co.uk
GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14
2FN, England. Registered in England No. 1833679
A webcast Q&A session will be held at 10:00 GMT on 1 February 2023. The
webcast and supporting information can be accessed at investors.vodafone.com
Performance review ⫶ Europe slowing, resilient performance in Africa
· Group service revenue growth of 1.8%* (Q2: 2.5%*), with the slowdown in
quarterly trend driven by Europe
· In Europe, declines in Germany, Italy and Spain partially offset by
good growth in UK and Other Europe. Quarterly trend impacted by lower roaming
growth and phasing of Business revenue in FY22
· Germany service revenue declined by 1.8%* (Q2: -1.1%*), largely
reflecting customer losses since H2 FY22 related to the implementation of new
sector legislation
· Service revenue in Turkey increased by 52.9%* (Q2: 43.9%*), driven by
high inflation. Group service revenue growth excluding Turkey was 0.5%* (Q2:
1.4%*)
Organic growth
All amounts marked with an '*' in this document represent organic growth which
presents performance on a comparable basis, excluding the impact of foreign
exchange rates, mergers and acquisitions, the hyperinflation adjustment in
Turkey and other adjustments to improve the comparability of results between
periods. Organic growth figures are non-GAAP measures. See non-GAAP measures
on page 7 for more information.
Geographic performance summary
Other Other Vantage Common Elimi-
Germany Italy UK Spain Europe Vodacom Markets(1) Towers Functions nations Group
Q3 FY23
Service revenue 2,882 1,071 1,327 858 1,275 1,234 802 - 134 (63) 9,520
Other revenue 465 153 423 113 214 380 136 329 227 (322) 2,118
Total revenue (€m) 3,347 1,224 1,750 971 1,489 1,614 938 329 361 (385) 11,638
Organic service revenue growth (%)(2) (1.8)% (3.3)% 5.3% (8.7)% 2.1% 3.5% 34.1% - 1.8%
Q3 FY22
Service revenue 2,936 1,107 1,292 940 1,257 1,172 867 - 136 (60) 9,647
Other revenue 437 149 445 137 190 354 105 312 213 (305) 2,037
Total revenue (€m) 3,373 1,256 1,737 1,077 1,447 1,526 972 312 349 (365) 11,684
FY22 FY23
Organic service revenue growth %(2) Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1 Q3
Germany 1.4 1.0 1.2 1.1 0.8 1.0 1.1 (0.5) (1.1) (0.8) (1.8)
Italy (3.6) (1.4) (2.5) (1.3) (0.8) (1.0) (1.8) (2.3) (3.4) (2.8) (3.3)
UK 2.5 0.6 1.2 0.9 2.0 1.4 1.3 6.5 6.9 6.7 5.3
Spain 0.8 (1.9) (0.6) (1.6) (5.1) (3.4) (2.0) (3.0) (6.0) (4.5) (8.7)
Other Europe 4.2 2.4 3.3 2.9 2.7 2.8 3.0 2.5 2.9 2.7 2.1
Vodacom 7.9 3.1 5.4 4.4 3.1 3.7 4.6 2.9 4.8 3.9 3.5
Other Markets(1) 18.4 19.7 19.1 19.8 19.8 19.8 19.4 24.7 26.7 25.7 34.1
Vantage Towers - - - - - - - - - - -
Group 3.3 2.4 2.8 2.7 2.0 2.3 2.6 2.5 2.5 2.5 1.8
Downloadable performance information is available at:
https://investors.vodafone.com/reports-information/results-reports-presentations
Notes:
1. Includes Egypt.
2. Organic service revenue growth is a non-GAAP measure. See page 7 for more
information.
Germany ⫶ Continued impact from commercial underperformance
Service revenue declined by 1.8%* (Q2: -1.1%*), primarily due to the impact of
customer losses since H2 FY22 related to the implementation of new sector
legislation. The quarter-on-quarter slowdown was driven by lower growth in
roaming and visitor revenue, and a stronger Business performance in Q3 last
year.
Fixed service revenue declined by 2.0%* (Q2: -1.7%*), primarily due to a lower
broadband customer base as a result of specific operational challenges related
to the implementation of policies to comply with the Telecommunications Act,
which are now largely resolved. In October, we announced an enhanced product
portfolio supporting customer upselling and ARPU growth from new customers.
Consumer and Business customers can now benefit from up to five times higher
upload speeds, flat rate phone calls, and no upfront connection fees, in
return for a higher monthly fee. Our cable broadband customer base declined by
25,000 and we lost 14,000 DSL broadband customers, partly reflecting our
decision to increase retail prices. Our TV customer base declined by 112,000
in the quarter, and our converged customer base remained broadly stable at 2.3
million converged Consumer accounts. Half of our cable broadband customers now
subscribe to speeds of at least 250Mbps and Gigabit speeds are available to
24.1 million households across our network.
Mobile service revenue declined by 1.7%* (Q2: -0.4%*), driven by a lower
customer base, a continued reduction in MVNO revenue, lower ARPU reflecting
mobile termination rate cuts, and a change in sales channel mix towards
indirect customer acquisition and service providers. The quarter-on-quarter
slowdown was primarily driven by lower growth in roaming and visitor revenue.
We added 8,000 contract customers during the quarter and reduced mobile
promotions which supported ARPU from new Vodafone customers. Mobile contract
churn increased by 1.0 percentage point year-on-year to 13.3%, driven by
higher service provider churn and the termination of two public sector
contracts.
Italy, UK, Spain and Other Europe ⫶ Continued growth in the UK and Other
Europe
Italy
Service revenue declined by 3.3%* (Q2: -3.4%*) as a result of continued price
pressure in the mobile value segment and a lower contribution to growth from
MVNO revenue. These factors were partly offset by strong Business demand
for connectivity and digital services, and targeted pricing actions which
are supporting mobile ARPU.
In mobile, our second brand 'ho.' continued to grow, with 52,000 net
additions, and now has 3.0 million customers. Our fixed line broadband
customer base decreased by 15,000 customers, however, Business demand for both
connectivity and digital services was strong, with encouraging customer take
up of the Business voucher programme, a local initiative related to the EU
Recovery and Resilience Facility that subsidises high-speed broadband
connectivity. Our Consumer converged customer base remained stable at 1.3
million, with 55% of our broadband customers now converged.
In October, we launched our new 5G fixed-wireless service and now cover around
3.2 million households. This complements our 4G fixed-wireless access
products, which cover 2.2 million households. We added 8,000 fixed-wireless
access customers, which are included in our mobile customer base.
UK
Service revenue increased by 5.3%* (Q2: 6.9%*), driven by good customer growth
and price increases. The change in quarterly trends primarily reflects lower
roaming and visitor revenue growth, and ARPU dilution from retail price
competition.
In mobile, we added 94,000 contract customers during the quarter, supported by
a strong commercial execution during the iPhone and Black Friday trading
periods. Contract churn increased by 0.9 percentage points year-on-year to
13.4%, primarily driven by a public sector Business customer cancelling
low-usage SIMs. Our digital sales mix also continued to improve, increasing by
3 percentage points year-on-year to 36% of total sales in the period.
In fixed, our broadband base increased by 47,000 in the quarter and we now
have 1.2 million broadband customers, more than half of which are converged.
Through our partnerships with CityFibre and Openreach we are able to reach
over 10.5 million households with full fibre broadband, more than any other
provider in the UK. We also announced the extension of our exclusive retail
partnership with Currys, covering almost 300 stores as well as digital
channels, with a renewed focus to growing beyond mobile with home broadband
and connected devices for around the home.
Spain
Service revenue declined by 8.7%* (Q2: -6.0%*) due to continued price
competition in the value segment, a lower customer base, and a reduction in
mobile termination rates. The deterioration in quarterly trends was driven by
lower roaming and visitor revenue growth, strong Business demand in the prior
year period, and the phasing of price increases which were implemented in Q2
in the prior year, compared to Q4 this year.
Mobile contract churn improved by 3.0 percentage points year-on-year to 18.6%
in the quarter, supported by simplified and more transparent plans, as well as
operational improvement measures. In September 2022, we announced that tariffs
will be increased in line with CPI for Consumer, SME and SOHO customers with
Vodafone branded contracts, effective as of mid-January, and on an annual
basis thereafter. Our mobile contract customer base declined by 19,000,
reflecting the initial impact of the announced price increases. Our broadband
customer base also declined by 27,000, reflecting the communication of price
increases and the ongoing DSL shutdown. Our converged customer base declined
by 6,000 and is 2.2 million.
On 12 January 2023, we announced that Spain will become part of the 'Europe
Cluster', managed by Serpil Timuray, CEO Europe Cluster. Colman Deegan, CEO of
Vodafone Spain, has decided to step down as CEO effective 31 March 2023 and
his successor will be appointed in due course.
Other Europe
Service revenue increased by 2.1%* (Q2: 2.9%*), with growth in all markets
other than Romania, which was impacted by a reduction in mobile termination
rates. The slowdown in quarterly trends was driven by lower growth in roaming
and visitor revenue.
In Portugal, we maintained our good commercial momentum and added 49,000
mobile contract customers and 14,000 fixed broadband customers during the
quarter. In Greece we added 57,000 mobile contract customers and 27,000
prepaid customers.
In Ireland, service revenue increased due to continued customer base growth.
We added 15,000 mobile contract customers during the quarter and our mobile
contract loyalty remained strong, with churn at 9.0%. In December, Vodafone
Ireland acquired 160Mhz of spectrum across four bands with a 20-year licence
through to 2042 for €48 million. The spectrum will enable us to
significantly expand network capacity to meet growing demand for reliable,
high-quality voice and data services.
In September 2022, we announced that we had entered into an agreement to buy
Portugal's fourth largest converged operator, Nowo Communications, from Llorca
JVCO Limited, the owner of Masmovil Ibercom S.A.. The transaction is
conditional on regulatory approval, and we continue to expect completion in
the first half of this calendar year.
On 9 January 2023, we announced that 4iG Public Limited Company and Corvinus
Zrt (a Hungarian state holding company) completed due diligence and entered
into binding terms in relation to the sale of 100% of Vodafone Hungary. The
transaction completed on 31 January 2023 and Vodafone Group has received a
total consideration of HUF 660 billion (€1.7 billion).
Vodacom ⫶ Strong demand for financial services and continued growth in data
usage
Vodacom's service revenue grew by 3.5%* (Q2: 4.8%*), due to strong demand for
mobile data and continued growth in both financial services and our customer
base. The slowdown in quarterly trends was driven by a lower rate of growth in
Vodacom's international markets, primarily a result of a natural disaster and
fuel supply challenges in the Democratic Republic of Congo.
In South Africa, service revenue growth was driven by mobile contract price
increases, a good commercial performance in the Consumer segment and higher
data usage, partially offset by lower wholesale revenue. We added 132,000
mobile contract customers during the quarter, benefitting from a successful
summer campaign and best-in-class network resilience and availability as we
successfully managed challenges with nationwide electricity supply. Across the
overall active mobile customer base, 74.9% of our customers are now using data
services. Financial services revenue in South Africa grew by 12.5%* to €45
million, benefitting from continued demand for our insurance services and
'Airtime advance', a product that allows prepaid customers to receive airtime
or data in advance of topping up. Our 'super-app' VodaPay has already reached
2.7 million registered users and celebrated its one-year launch anniversary in
the quarter.
In Vodacom's international markets, service revenue growth was supported by
data usage and higher M-Pesa transaction volumes, notably in Tanzania,
following reductions in levies on mobile money transactions introduced in the
prior year. The slowdown in quarterly trends was driven by slower growth in
the Democratic Republic of Congo due to severe flooding and fuel supply
challenges in the country, which impacted network availability. Our mobile
customer base in Vodacom's international markets is 48.1 million with 60.5% of
our active customer base using data services. M-Pesa revenue as a share of
service revenue improved by 2.8 percentage points year-on-year to 25.7%.
M-Pesa transaction volume increased by 14.0% during the quarter.
Other Markets ⫶ Turkey, Egypt and Ghana
Service revenue grew 34.1%* (Q2: 26.7%) reflecting a higher contribution from
Turkey, impacted by accelerating inflation, as well as the continued growth of
our customer base and higher ARPU.
Service revenue growth in Turkey was driven by ongoing repricing actions to
reflect high inflation, continued customer base growth, and higher roaming and
visitor revenue. We maintained our good commercial momentum, adding 439,000
mobile contract customers during the quarter, including migrations from
prepaid customers.
Service revenue in Egypt continued to grow strongly, reflecting another
quarter of good customer base growth and increased mobile data usage.
On 13 December 2022, Vodafone completed the transfer of its 55% shareholding
in Vodafone Egypt to Vodacom. This transfer simplifies the management of our
African assets. Vodafone Egypt will benefit from closer co-operation with
Vodacom, enabling it to accelerate growth in financial services and IoT.
Vodafone received cash proceeds of €577 million and 242 million shares in
Vodacom in exchange for Vodafone's shareholding in Vodafone Egypt. Following
completion, Vodafone's shareholding in Vodacom has increased from 60.5% to
65.1%. Vodafone Egypt will be included within the Vodacom reporting segment
from 1 April 2023.
Hyperinflationary accounting in Turkey
Turkey was designated as a hyperinflationary economy on 1 April 2022 in line
with IAS 29 'Financial Reporting in Hyperinflationary Economies'. During the
quarter, service revenue in Turkey increased by 52.9%* (Q2: 43.9%*) due to
ongoing repricing actions to reflect inflation. Organic growth metrics exclude
the impact of the hyperinflation adjustment in Turkey in the quarter. Group
service revenue growth excluding Turkey was 0.5%* (Q2: 1.4%*).
Vantage Towers ⫶ Voluntary takeover offer completed
Total revenue increased to €329 million during the quarter, with 440 new
tenancies added during the period, keeping the tenancy ratio stable at 1.45x.
Vantage Towers reached a number of new partnership agreements with customers
during the quarter. Vantage Towers reported its results on 31 January 2023.
On 9 November 2022, we announced that we had entered into a strategic
co-control partnership with GIP and KKR for Vantage Towers. Following
completion of the voluntary takeover offer for the outstanding Vantage Towers
shares, the new joint venture, Oak Holdings GmbH, is expected to hold a 89.3%
stake in Vantage Towers. As stated on 9 November 2022, Oak Holdings and
Vantage Towers AG will now work towards the implementation of a Domination and
Profit and Loss Transfer Agreement. The transaction is expected to close in
the first half of calendar 2023 following the receipt of all regulatory
clearances. Further detail on the transaction is available here:
investors.vodafone.com/reports-information/results-reports-presentations and
here: angebot.wpueg.de/oak/ (https://angebot.wpueg.de/oak/) .
Additional resources
Topic Link
Digital services & outstanding experience investors.vodafone.com/digital-services
(https://www.investors.vodafone.com/digital-services)
Leading gigabit networks investors.vodafone.com/vtbriefing (https://investors.vodafone.com/vtbriefing)
Vodafone Business investors.vodafone.com/vbbriefing (https://investors.vodafone.com/vbbriefing)
Vantage Towers vantagetowers.com (https://www.vantagetowers.com/)
Vodacom vodacom.com (https://www.vodacom.com/)
ESG Reporting Suite
Board conversations investors.vodafone.com/videos
(https://investors.vodafone.com/video-tags?id=246)
ESG Addendum investors.vodafone.com/ (https://investors.vodafone.com/esgaddendum)
esgaddendum (https://investors.vodafone.com/esgaddendum)
ESG A-Z investors.vodafone.com/ (https://investors.vodafone.com/esga-z) esga
(https://investors.vodafone.com/esga-z) -z
(https://investors.vodafone.com/esga-z)
TCFD investors.vodafone (https://investors.vodafone.com/tcfd) .com/
(https://investors.vodafone.com/tcfd) tcfd
(https://investors.vodafone.com/tcfd)
SASB investors (https://investors.vodafone.com/sasb) .vodafone.com/
(https://investors.vodafone.com/sasb) sasb
(https://investors.vodafone.com/sasb)
Non-GAAP measures
In the discussion of the Group's reported operating results, non-GAAP measures
are presented to provide readers with additional financial information that is
regularly reviewed by management. This additional information presented is not
uniformly defined by all companies including those in the Group's industry.
Accordingly, it may not be comparable with similarly-titled measures and
disclosures by other companies. Additionally, certain information presented is
derived from amounts calculated in accordance with IFRS but is not itself a
measure defined under GAAP. Such measures should not be viewed in isolation or
as an alternative to the equivalent GAAP measure.
The non-GAAP measures discussed in this document are listed below.
Non-GAAP measure Defined on page Closest equivalent GAAP measure Reconciled on page
Performance metrics
Organic revenue growth Page 7 Revenue Page 8
Organic service revenue growth Page 7 Service revenue Page 8
Organic mobile service revenue growth Page 7 Service revenue Page 8
Organic fixed service revenue growth Page 7 Service revenue Page 8
Organic Group service revenue growth excluding Turkey Page 7 Service revenue Page 8
Organic Vodafone Business service revenue growth Page 7 Service revenue Page 8
Organic financial services revenue growth in South Africa Page 7 Service revenue Page 8
Definition and use of organic growth measures
All amounts marked with an '*' in this document represent organic growth which
presents performance on a comparable basis, excluding the impact of foreign
exchange rates, mergers and acquisitions, the hyperinflation adjustment in
Turkey and other adjustments to improve the comparability of results between
periods.
Organic growth is calculated for revenue metrics, as follows:
- Revenue
- Service revenue;
- Mobile service revenue;
- Fixed service revenue;
- Group service revenue excluding Turkey;
- Vodafone Business service revenue; and
- Financial services revenue in South Africa.
Whilst organic growth is not intended to be a substitute for reported growth,
nor is it superior to reported growth, we believe that the measure provides
useful and necessary information to investors and other interested parties for
the following reasons:
- It provides additional information on underlying growth of the
business without the effect of certain factors unrelated to its operating
performance;
- It is used for internal performance analysis; and
- It facilitates comparability of underlying growth with other
companies (although the term "organic" is not a defined term under GAAP and
may not, therefore, be comparable with similarly titled measures reported by
other companies).
We have not provided a comparative in respect of organic growth rates as the
current rates describe the change between the beginning and end of the current
period, with such changes being explained by the commentary in this document.
If comparatives were provided, significant sections of the commentary for
prior periods would also need to be included, reducing the usefulness and
transparency of this document.
Quarter ended 31 December 2022 Reported growth M&A and Other Foreign exchange Organic growth*
Q3 FY23 Q3 FY22
€m €m % pps pps %
Service revenue
Germany 2,882 2,936 (1.8) - - (1.8)
Mobile service revenue 1,279 1,301 (1.7) - - (1.7)
Fixed service revenue 1,603 1,635 (2.0) - - (2.0)
Italy 1,071 1,107 (3.3) - - (3.3)
Mobile service revenue 750 794 (5.5) (0.2) - (5.7)
Fixed service revenue 321 313 2.6 0.1 - 2.7
UK 1,327 1,292 2.7 - 2.6 5.3
Mobile service revenue 977 928 5.3 - 2.8 8.1
Fixed service revenue 350 364 (3.8) - 2.2 (1.6)
Spain 858 940 (8.7) - - (8.7)
Other Europe 1,275 1,257 1.4 - 0.7 2.1
Vodacom 1,234 1,172 5.3 - (1.8) 3.5
Other Markets(1) 802 867 (7.5) 4.0 37.6 34.1
Vantage Towers - - - - - -
Common Functions 134 136
Eliminations (63) (60)
Total service revenue 9,520 9,647 (1.3) 0.3 2.8 1.8
Other revenue 2,118 2,037
Revenue 11,638 11,684 (0.4) 0.3 2.8 2.7
Other growth metrics
Group service revenue excluding Turkey 9,193 9,299 (1.1) - 1.6 0.5
Vodafone Turkey - Service revenue 334 355 (5.9) 10.6 48.2 52.9
Vodafone Business - Service revenue 2,602 2,604 (0.1) 0.5 2.0 2.4
South Africa - Financial services revenue 45 39 15.4 (3.3) 0.4 12.5
Quarter ended 30 September 2022 Reported growth M&A and Other Foreign exchange Organic growth*
Q2 FY23 Q2 FY22
€m €m % pps pps %
Service revenue
Germany 2,873 2,905 (1.1) - - (1.1)
Mobile service revenue 1,282 1,287 (0.4) - - (0.4)
Fixed service revenue 1,591 1,618 (1.7) - - (1.7)
Italy 1,073 1,111 (3.4) - - (3.4)
Mobile service revenue 762 807 (5.6) - - (5.6)
Fixed service revenue 311 304 2.3 0.3 - 2.6
UK 1,352 1,265 6.9 - - 6.9
Mobile service revenue 1,000 902 10.9 - (0.1) 10.8
Fixed service revenue 352 363 (3.0) - 0.1 (2.9)
Spain 884 941 (6.1) 0.1 - (6.0)
Other Europe 1,298 1,274 1.9 - 1.0 2.9
Vodacom 1,258 1,145 9.9 - (5.1) 4.8
Other Markets(1) 907 923 (1.7) (2.2) 30.6 26.7
Vantage Towers - - - - - -
Common Functions 140 127
Eliminations (92) (71)
Total service revenue 9,693 9,620 0.8 (0.1) 1.8 2.5
Other revenue 1,959 1,768
Revenue 11,652 11,388 2.3 (0.2) 2.0 4.1
Other growth metrics
Group service revenue excluding Turkey 9,344 9,201 1.6 - (0.2) 1.4
Vodafone Turkey - Service revenue 360 430 (16.3) (6.5) 66.7 43.9
Vodafone Business - Service revenue 2,591 2,544 1.8 0.5 1.1 3.4
South Africa - Financial services revenue 42 33 27.3 - (15.7) 11.6
Note:
1. Includes Egypt.
Definitions
Key terms are defined below. See page 7 for the location of definitions for
non-GAAP measures.
Term Definition
Adjusted EBITDAaL Adjusted EBITDAaL is operating profit after depreciation on lease-related
right of use assets and interest on leases but excluding depreciation,
amortisation and gains/losses on disposal of owned assets and excluding share
of results of equity accounted associates and joint ventures, impairment
losses, restructuring costs arising from discrete restructuring plans, other
income and expense and significant items that are not considered by management
to be reflective of the underlying performance of the Group.
Adjusted free cash flow ('Adjusted FCF') Adjusted free cash flow is Free cash flow before licences and spectrum,
restructuring costs arising from discrete restructuring plans, integration
capital additions and working capital related items, M&A and Vantage
Towers growth capital expenditure.
Africa Comprises the Vodacom Group and businesses in Egypt and Ghana.
ARPU Average revenue per user, defined as customer revenue and incoming revenue
divided by average customers.
Churn Total gross customer disconnections in the period divided by the average total
customers in the period.
Common Functions Comprises central teams and business functions.
Converged customer A customer who receives fixed and mobile services (also known as unified
communications) on a single bill or who receives a discount across both bills.
Eliminations Refers to the removal of intercompany transactions to derive the consolidated
financial statements.
Europe Comprises the Group's European businesses and the UK.
Financial services revenue Financial services revenue includes fees generated from the provision of
advanced airtime, overdraft, financing and lending facilities, as well as
merchant payments and the sale of insurance products (e.g. device insurance,
life insurance and funeral cover).
Fixed service revenue Service revenue (see below) relating to the provision of fixed line and
carrier services.
GAAP Generally Accepted Accounting Principles.
IFRS International Financial Reporting Standards.
Internet of Things ('IoT') The network of physical objects embedded with electronics, software, sensors,
and network connectivity, including built-in mobile SIM cards, that enables
these objects to collect data and exchange communications with one another or
a database.
Mobile service revenue Service revenue (see below) relating to the provision of mobile services.
MVNO Mobile Virtual Network Operator: companies that provide mobile phone services
under wholesale contracts with a mobile network operator, but do not have
their own licence or spectrum or the infrastructure required to operate a
network.
Other Europe Other Europe markets include Portugal, Ireland, Greece, Romania, Czech
Republic, Hungary and Albania.
Other Markets Other Markets comprise Turkey, Egypt and Ghana.
Other revenue Other revenue principally includes equipment revenue, interest income, income
from partner market arrangements and lease revenue, including in respect of
the lease out of passive tower infrastructure.
Reported growth Reported growth is based on amounts reported in euros and determined under
IFRS.
Revenue The total of Service revenue (defined below) and Other revenue (defined
above).
Roaming and Visitor Roaming: allows customers to make calls, send and receive texts and data on
our and other operators' mobile networks, usually while travelling abroad.
Visitor: revenue received from other operators or markets when their customers
roam on one of our markets' networks.
Service revenue Service revenue is all revenue related to the provision of ongoing services to
the Group's Consumer and Business customers, together with roaming revenue,
revenue from incoming and outgoing network usage by non-Vodafone customers and
interconnect charges for incoming calls.
Vodafone Business Vodafone Business is part of the Group and partners with businesses of every
size to provide a range of business-related services.
Notes
1. References to Vodafone are to Vodafone Group Plc and references to
Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise
stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and Together we
can are trade marks owned by Vodafone. Vantage Towers is a trade mark owned by
Vantage Towers A.G. Other product and company names mentioned herein may be
the trade marks of their respective owners.
2. All growth rates reflect a comparison to the quarter ended 31 December
2021 unless otherwise stated.
3. References to "Q1", "Q2", "Q3" and "Q4" are to the three months ended 30
June, 30 September, 31 December and 31 March, respectively. References to "H1"
and "H2" are to the six month periods ended 30 September and 31 March,
respectively. References to the "last year", "last financial year" or "FY22"
are to the financial year ended 31 March 2022. References to "FY23" are to the
financial year ending 31 March 2023.
4. Vodacom refers to the Group's interest in Vodacom Group Limited
('Vodacom') as well as its operations, including subsidiaries in South Africa,
DRC, Tanzania, Mozambique and Lesotho. On 13 December 2022, Vodafone completed
the transfer of its 55% shareholding in Vodafone Egypt to Vodacom. Vodafone
Egypt will be included within the Vodacom reporting segment from 1 April 2023.
5. Quarterly historical information is provided in a spreadsheet available
at
https://investors.vodafone.com/reports-information/results-reports-presentations
6. This document contains references to our and our affiliates' websites.
Information on any website is not incorporated into this update and should not
be considered part of this update.
Forward-looking statements and other matters
This report 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 and the guidance for Adjusted EBITDAaL and
Adjusted free cash flow for the financial year ending 31 March 2023; the
Group's cost savings target; the sale of Vodafone Egypt; the Vantage Towers
strategic co-control partnership; the spectrum acquisition by Vodafone
Ireland; the acquisition of Nowo Communications; expectations for the Group's
future performance generally; expectations regarding the operating environment
and market conditions and trends, including customer usage, competitive
position 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; expectations regarding the integration or
performance of current and future investments, associates, joint ventures,
non-controlled interests and newly acquired businesses.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words as "will", "anticipates", "could",
"may", "should", "expects", "believes", "intends", "plans" 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: external cyber-attacks,
insider threats or supplier breaches; general economic and political
conditions including as a consequence of the ongoing war in Ukraine as well as
in jurisdictions in which the Group operates, and changes to the associated
legal, regulatory and tax environments; inflation; increased competition;
increased disintermediation; levels of investment in network capacity and the
Group's ability to deploy new technologies, products and services;
infrastructure competitiveness; 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 outlays; slower than expected customer growth, reduced customer
retention, reductions or changes in customer spending and increased pricing
pressure; the Group's ability to extend and expand its spectrum position to
support ongoing growth in customer demand for mobile data services; 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 my 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 or portfolio transformation; acquisitions and
divestment 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; 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 2022 and under "Risk factors" in the Group's
H1 FY23 results for the six month period ended 30 September 2022. The Annual
Report can be found on the Group's website
(https://investors.vodafone.com/reports-information). All subsequent written
or oral forward-looking statements attributable to the Company or any member
of the Group or 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 this document will be realised. Any
forward-looking statements are made as of the date of this presentation.
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.
Copyright © Vodafone Group
2023
-End-
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