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  • Vodacom Group Limited IR presentation | 5 September 2016

    Vodacom Group

    Limited

    September 2016

  • Vodacom Group Limited IR presentation | 5 September 2016

    Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be

    communicated (relevant persons). Any person who is not a relevant person should not act or rely on this presentation or any of its

    contents.

    Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield

    on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute

    an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire

    securities in any company within the Group.

    Promotional material used in this presentation that is based on pricing or service offering may no longer be applicable.

    This presentation contains certain non-GAAP financial information which has not been reviewed or reported on by the Groups auditors. The

    Groups management believes these measures provide valuable additional information in understanding the performance of the Group or

    the Groups businesses because they provide measures used by the Group to assess performance. However, this additional information

    presented is not uniformly defined by all companies, including those in the Groups industry. Accordingly, it may not be comparable with

    similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of

    the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to, the

    comparable GAAP measures.

    This presentation also contains forward-looking statements which are subject to risks and uncertainties because they relate to future events.

    These forward-looking statements include, without limitation, statements in relation to the Groups projected financial results. Some of the

    factors which may cause actual results to differ from these forward-looking statements are discussed on slide 23 of this presentation.

    Vodafone, the Vodafone logo, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone WebBook, Vodafone Smart tab, Vodafone 858

    Smartphone, Vodafone Passport, Vodafone live!, Power to You, Vodacom, Vodacom M-Pesa, Vodacom Millionaires, Vodacom 4 Less and

    Vodacom Change the World are trademarks of Vodafone Group Plc (or have applications pending). Other product and company names

    mentioned herein may be trademarks of their respective owners.

    2

  • Vodacom Group Limited IR presentation | 5 September 2016

    Vodacom DRC

    Licenced 2002 Population 71 million Vodacom Tanzania

    Licenced 1999 Population 55 million

    Vodacom Mozambique

    Licenced 2003 Population 29 million

    Vodacom Lesotho Licenced 1995 Population 2 million

    Vodacom South Africa Licenced 1993 Population 55 million

    All information in presentation is as at 31 March 2016, unless otherwise stated. #Market capitalisation value as at 5 September 2016.

    A leading African mobile communication company providing

    a wide range of communication services including mobile

    voice, messaging, data and converged services to over

    61 million customers.

    Vodacom is majority owned by Vodafone Plc (65%) and we

    are listed on the JSE Limited.

    Market capitalisation of R231.3 billion#.

    Group revenue of R80.1 billion.

    Head office in Midrand, South Africa

    History consistent track record of innovation

    2012 2011 2009 2008 2004 1996

    First to launch

    prepaid services

    in the world on IN

    platforms

    Vodacom

    launches a 3G

    HSDPA network

    in South Africa

    Vodacom

    Business

    launches

    Vodacom listed

    on the JSE

    (18 May)

    Vodacom

    rebrands from

    Green and Blue

    to Vodafone

    RED

    LTE-Advanced

    launched First to launch

    4G in

    South Africa

    2016

    3

  • Vodacom Group Limited IR presentation | 5 September 2016

    Share information

    As at 5 September 2016

    JSE Ticker symbol VOD

    ADR code VDMCY

    Stock exchange JSE Limited

    Shares in issue 1 487 954 000

    Freefloat 35%

    52 week low and high R132 R172

    Market capitalisation R231.3 billion

    Debt rating Long term scaling zaAAA (S&P)

    Transfer agent ComputerShare

    Indices

    FTSE/JSE Top 40 Index

    JSE Socially Responsible Index

    Nedbank BGreen Exchange Traded Fund

    66%

    19%

    7% 4% 4%

    South Africa

    United States

    United Kingdom

    Rest of Europe

    Rest of world

    Institutional shareholding

    4

    PIC = 49.9%

  • Vodacom Group Limited IR presentation | 5 September 2016 5

    Five reasons to own Vodacom shares

    2

    3

    Focus areas of growth potential

    Market leadership

    1

    Scale benefits driving efficiencies

    Experienced, diverse management team

    5 Track record of delivering shareholder returns

    4

    5

  • Vodacom Group Limited IR presentation | 5 September 2016

    #1 mobile operator in all markets

    All information is as at 31 March 2016

    #1 | Market leadership

    61.3 million customers in

    5 countries in Sub-Saharan Africa

    R14 billion enterprise revenue from

    30 countries in Africa

    R13 billion investment per annum to maintain our leading network quality

    > 18 000 base stations, > 80% 3G 1st to launch 4G in South Africa, Lesotho and Tanzania

    6

  • Vodacom Group Limited IR presentation | 5 September 2016

    Enterprise (21% of Group service revenue)

    Enterprise contributes 21% to Group service revenue

    SA fixed and managed services revenue +27%

    o Pan African MPLS network

    o Fibre to the business/home

    7

    #2 | Focus areas of growth potential

    Data (32% of Group service revenue)

    Group: 29 million active data customers; 57% of total base

    SA: 14 million active smart devices; 37% of active

    customers

    SA: 572MB per smart device growing 23%

    International (27% of Group service revenue)

    27% of Group service revenue

    Data revenue growth +32%

    Active customers 27 million

    o Active customers now 44% of Group active customers

    FY14: +37%

    FY15: +13%

    FY16: +19%

    FY14: +24%

    FY15: +10%

    FY16: +17%

    New services (SA) (4.2% of Group service revenue)

    Insurance revenue +19%

    o Expanding portfolio: life, funeral, device, cover

    Capture Internet of Things opportunity

    Fibre to home +25 000 homes and businesses passed

    7

    .

    FY14: +33%

    FY15: +25%

    FY16: +29%

  • Vodacom Group Limited IR presentation | 5 September 2016 8

    Focussed savings programmes Fit 4 Growth

    Reduced transmission rentals through self-provisioning

    Cost optimisation through sharing, outsourcing and supply

    chain management

    Improved return on investment in customer acquisition

    spend

    Reduced support costs offsetting inflationary pressures

    Benefits from being part of the Vodafone Group

    Global technology and product roadmap

    Better pricing through Vodafone Procurement Company

    Benefits from best practice sharing and benchmarking

    Talent and skills sharing

    #3 | Scale benefits driving efficiencies

    8

  • Vodacom Group Limited IR presentation | 5 September 2016

    4

    Executive Committee (12 members)

    Male

    83%

    Female

    17%

    CEO: Shameel Aziz Joosub (45)

    20 years industry experience

    Previously CEO of Vodafone Spain

    IT Person of the year 2015

    CFO: Till Streichert (41)

    15 years industry experience

    Previously CFO of Vodafone Romania

    European and emerging market experience

    #4 | Experienced, diverse management team

    Black

    58%

    White

    42% South African

    75%

    Intern-ational

    25%

    9

  • Vodacom Group Limited IR presentation | 5 September 2016

    395 375 395

    430 400 400

    FY14 FY15 FY16

    Interim dividend Final dividend

    Dividend per share Cents per share

    825 775

    795

    #5 | Consistently delivering shareholder returns

    Relative share price performance1

    TSR ZAR YTD (for 12 months ending 5 September 2016)

    -31.5%

    -18.1%

    -7.1%

    3.8%

    13.0%

    -35.0% -25.0% -15.0% -5.0% 5.0% 15.0%

    MTN

    Millicom

    Bharti

    Telkom

    Vodacom

    10

    1. As at 5 September 2016.

  • Vodacom Group Limited IR presentation | 5 September 2016 11

    Service revenue growth

    Low to mid single-digit

    Mid to high single-digit

    EBITDA growth

    12% to 14%

    Capex intensity

    Targets | Group three-year targets

    Vodacom Group Limited IR presentation | 5 September 2016 11

  • Vodacom Group Limited IR presentation | 5 September 2016

    Continuing to deliver returns

    12

    Best network

    ---------------------

    Best value

    ---------------------

    Best service

    Diversify

    revenue to

    deliver growth

    Deliver cost

    and process

    efficiency

    Best talent

    ---------------------

    Best practice

    Transform

    society and

    build

    stakeholder

    trust

  • Vodacom Group Limited IR presentation | 5 September 2016

    Network customer satisfaction #1 in all

    markets but one

    4G coverage in SA at 58%

    International sites +17%

    SA dropped call rate @ 0.41%

    1st in SA with commercial mobile LTE-A

    Personalised pricing and offers

    Driving pricing transformation

    Reducing communication costs

    Stimulating bundle adoption

    Connectivity

    Always in control

    Rewarding loyalty

    Easy access

    Best network Best value Best service

    13

    Customer | Best network, Best value, Best service

    23 18 17 10

    Vodacom SA Operator A Operator B Operator C

    Source: MyBroadband (March 2016) (Mbps)

    Average download speeds in SA

    Million

    Total prepaid bundle sales in SA

    314 387 383 369

    86 189

    1H15 2H15 1H16 2H16

    Total prepaid bundle sales Just 4 You

    FY15 FY16

    Vodacom Competitor A Competitor B

    %

    SA Consumer NPS points differentiation

    +15 ppts +6 ppts

  • Vodacom Group Limited IR presentation | 5 September 2016 14

    Growth | Diversifying revenue to deliver growth

    14

    Data contribution International contribution

    Enterprise contribution

    Growth +17%

    EBITDA contribution

    17.7% (FY14: 15.6%)

    M-Pesa revenue +19%

    Enterprise service

    revenue +20%

    R3.2bn fixed-line & BMS

    revenue

    26.6% 24.6%

    Growth +28.5%

    Average usage per smart

    device - 572MB

    2G to 3G; 3G to 4G

    ARPU uplift +20%

    FY16

    FY14

    Contribution to Group service revenue

    20.5%

    15.1%

    FY16

    FY14

    Contribution to Group service revenue

    31.9% 21.4%

    FY16

    FY14

    Contribution to Group service revenue

    New services contribution (SA)

    4.2%

    3.5%

    FY16

    FY14

    Contribution to SA service revenue

    Device insurance

    policies +25%

    IoT connections +28%

    Wholesale partnership

    agreements for fibre

    GDSP platform delivery

  • Vodacom Group Limited IR presentation | 5 September 2016

    Direct expenses1

    15

    Operations | Fit for growth SA

    Channel efficiencies

    Sophisticated IBRO

    management

    Credit management

    30.5% of SR (FY15: 31.6%)

    Staff expenses2

    Hire in key growth areas

    Attract and retain talent

    6.6% of SR (FY15: 6.7%)

    Publicity expenses

    Consolidated agency spend

    Improved production cost

    efficiency

    Increased digital/social

    platform spend

    Increased share of voice

    2.5% of SR (FY15: 2.7%)

    Other operating expenses3

    Reduced network cost per site

    Improved digitisation and App

    penetration

    Leverage scale through

    sharing and outsourcing

    14.4% of SR (FY15: 14.1%)

    15

    Actively managing costs

    Sharing and outsourcing to realise scale

    Incentives volume vs revenue

    Digitisation self care and empowering customers

    Cost consciousness at an individual level

    Number of sites

    +9%

    Inflation

    +6%

    Wage inflation

    +6%

    Energy inflation

    +13%

    Innovate

    1. Excluding equipment expenses.

    2. Excluding BEE charge.

    3. Excluding trading foreign exchange.

  • Vodacom Group Limited IR presentation | 5 September 2016

    People | Attracting and retaining the best talent

    Enhancing diversity Developing skills Growing talent

    Driving people transformation through

    73% black and 39% female

    staff

    55% of EXCO black

    Vodacom Women in Red

    Awards

    123 graduates in 2015

    Graduate programme

    International Graduate

    programme in all our

    markets

    International assignee

    programme

    R103 million spent on skills

    development

    Capability build and

    succession programmes

    16

  • Vodacom Group Limited IR presentation | 5 September 2016

    Reputation | Mobile for good

    17

    spent by

    Vodacom

    Foundation on

    CSI projects

    TZN

    subscribers:

    Healthy

    pregnancy

    Healthy baby

    free education

    portal 105k

    registered

    learners

    volunteers for

    annual Change

    the World

    programme

    call center for

    victims of

    gender-based

    violence

    schools

    connected -

    Universal

    Service

    obligations

    +600k

    R106m eSchool

    Vodacom

    20 24 hour 3 087

    17

  • Vodacom Group Limited IR presentation | 5 September 2016

    Reputation | BEE Level 2 contributor

    18

    weighted spend

    on BEE-status

    suppliers

    to >51% black-

    owned

    suppliers

    to >30% black

    women-owned

    suppliers

    spent on

    developing

    SMME ICT

    businesses

    spent on skills

    development spent on

    uplifting

    communities

    R7.2bn R26bn R5bn

    R841m R218m R112m

    18

    98.25 Most empowered

    telco in

    South Africa

    Vodacom Group Limited IR presentation | 5 September 2016

  • Vodacom Group Limited IR presentation | 5 September 2016

    Additional

    information

  • Vodacom Group Limited IR presentation | 5 September 2016 20

    Country data

    South Africa Tanzania DRC Mozambique Lesotho

    Population (million) 55 55 71 29 2

    GDP per capita (USD) 4 770 855 495 456 887

    GDP growth estimate 2016 (%) 0.7 6.5 5.0 4.8 2.0

    Ownership (%) 93.75# 82.2 51 85 80

    License expiry period 2029 2031 2028/2032 2018/2026 2036

    Active customers (thousand) 35 112 12 060 8 486 4 817 1 359

    ARPU (rand per month) 109 40 58 56 62

    ARPU (local currency per month) 109 5 876 3.9 207 62

    Minutes of use per month 134 158 50 109 79

    Key indicators for the quarter ended 30 June 2016.

    The Economist Intelligence Unit. # 6.25% held indirectly through special purpose entities which are consolidated in terms of SIC 12: Consolidation Special Purpose Entities as part of the broad-based black economic empowerment transaction. 2028/2018 relates to the 2G license and 2032/2026 relates to the 3G licence.

    20

  • Vodacom Group Limited IR presentation | 5 September 2016

    Latest results | Q1 results for the quarter ended 30 June 2016

    R million Jun 2016 Jun 2015 YoY %

    Group

    Service revenue 16 806 15 660 7.3

    Revenue 19 902 18 806 5.8

    Data revenue 5 786 4 846 19.4

    Customers (m) 61 834 63 502 (3.3)

    South Africa

    Service revenue 12 426 11 762 5.6

    Revenue 15 443 14 845 4.0

    Data revenue 4 691 3 975 18.0

    Customers (m) 35 112 33 309 5.4

    International

    Service revenue 4 479 3 945 13.5

    Revenue 4 620 4 095 12.8

    Data revenue 1 095 871 25.7

    Customers (m) 26 722 30 193 (11.5)

    Sustained robust service revenue growth

    Group service revenue up 7.3% (4.6%*)

    SA service revenue growth of 5.6% to R12 426 million

    SA added just under 1 million customers in the quarter

    Strong demand for data services

    Group data revenue up 19.4%, 34.4% of service revenue

    SA active data customers up 6.1% to 18.8 million

    3.1 million LTE/4G customers in South Africa

    International impacted by customer registration

    Service revenue up 13.5% (2.8%*); contributed 26.7% to

    Group service revenue

    M-Pesa revenue +47.5%; 10.6 million active customers

    * Normalised growth adjusted at a constant currency using current year as the base.

    21

  • Vodacom Group Limited IR presentation | 5 September 2016

    Annual results for the year ending 31 March 2016

    R million Mar 2016 Mar 2015 YoY %

    Service revenue 66 763 62 167 7.4

    Revenue 80 077 74 500 7.5

    EBITDA 30 345 26 905 12.8

    Operating profit 21 059 19 516 9.5

    Operating free cash flow 17 054 14 003 21.8

    Free cash flow 9 807 7 763 26.3

    Capital expenditure 12 875 13 305 (3.2)

    Net debt 21 287 16 760 27.0

    Headline earnings per share

    (cents) 883 860 2.7

    Dividend per share (cents) 795 775 2.6

    EBITDA margin (%) 37.9 .36.1 1.8 ppts

    Effective tax rate (%) 31.5 29.9 1.6 ppts

    Net debt/EBITDA (times) 0.7 0.6 0.1 times

    Capex intensity (%) 16.1 17.9 (1.8 ppts)

    Improved revenue growth and margins

    Group service revenue up 7.4% (5.8%*)

    Group EBITDA up 12.8% (10.2%*)

    Headline earnings per share up 2.7%

    400 cents final dividend per share

    Strong demand for data services

    Group data revenue up 28.5%. 31.9% of service

    revenue

    Group active data customers up 8.6% to 28.8 million

    14 million active smart devices in South Africa

    Excellent International performance

    Service revenue up 16.2% (9.6%*), contributed 26.6% to

    Group service revenue

    M-Pesa revenue +19.3%; 9.2 million active customers

    * Normalised growth adjusted for trading foreign exchange gains/losses and at a constant currency using current year as base (collectively foreign exchange).

    22

  • Vodacom Group Limited IR presentation | 5 September 2016

    Five-year financials for the year ended 31 March

    R million 2016 2015 2014 2013 2012 16/15 % 5-year CAGR

    Service revenue 66 763 62 617 62 047 59 261 58 125 7.4 3.8

    Revenue 80 077 74 500 73 219 67 781 65 700 7.5 5.1

    EBITDA 30 345 26 905 27 314 25 253 22 763 12.8 7.5

    Operating profit 21 059 19 235 20 394 18 897 16 617 9.5 6.1

    Operating free cash flow 17 054 14 003 19 410 18 158 16 934 21.8 0.2

    Free cash flow 9 807 7 763 13 185 12 136 10 921 26.3 (2.7)

    Capital expenditure 12 875 13 305 10 779 9 456 8 662 (3.2) 10.4

    Net debt 21 287 16 760 8 052 8 007 7 667 27.0 15.4

    Headline earnings per share (cents) 883 860 896 872 709 2.7 7.0

    Dividend per share (cents) 795 775 825 785 710 2.6 13.9

    EBITDA margin (%) 37.9 36.1 37.3 37.3 34.6

    Effective tax rate (%) 31.5 29.9 30.2 28.3 36.0

    Net debt/EBITDA (times) 0.7 0.6 0.3 0.3 0.3

    Capex intensity (%) 16.1 17.9 14.7 14.0 13.2

    Return on capital employed (%) 48.2 50.1 62.1 62.8 63.2

    23

  • Vodacom Group Limited IR presentation | 5 September 2016

    Dividend policy and payment history

    Dividend number Ex-dividend date Payment date Cents per share Policy payout (%) Actual payout (%)

    Interim dividend number 1 30 Nov 2009 7 Dec 2009 110 40 50

    Final dividend number 2 28 Jun 2010 5 Jul 2010 175 40 60

    Interim dividend number 3 29 Nov 2010 6 Dec 2010 180 60 60

    Final dividend number 4 27 Jun 2011 4 Jul 2011 280 70 79

    Interim dividend number 5 28 Nov 2011 5 Dec 2011 260 70 80

    Final dividend number 6 18 Jun 2012 25 Jun 2012 450 90 117

    Interim dividend number 7 26 Nov 2012 3 Dec 2012 355 90 90

    Final dividend number 8 24 Jun 2013 1 Jul 2013 430 90 90

    Interim dividend number 9 25 Nov 2013 2 Dec 2013 395 90 90

    Final dividend number 10 23 Jun 2014 30 Jun 2014 430 90 94

    Interim dividend number 11 24 Nov 2014 1 Dec 2014 375 90 90

    Final dividend number 12 22 Jun 2015 29 Jun 2015 400 90 90

    Interim dividend number 13 30 Nov 2015 7 Dec 2015 395 90 90

    Final dividend number 14 20 Jun 2016 27 Jun 2016 400 90 90

    The Company intends to pay out as much of its after tax profits as will be available after retaining such sums and repaying such

    borrowings owing to third parties as shall be necessary to meet the requirements reflected in the budget and business plan, t aking into

    account monies required for investment opportunities. There is no fixed date on which entitlement to dividends, arises and th e date of

    payment will be determined by the Board or shareholders at the time of declaration, subject to the JSE Listings Requirements.

    Current dividend payout is 90% of headline earnings per share

    24

  • Vodacom Group Limited IR presentation | 5 September 2016

    Reporting dates Roadshows/conferences

    Date Event Location

    14 November H1 2017 results released Vodacom/

    Website

    Date Event Location

    26-27 September RMB Big 5 conference Cape Town

    10 October UBS TMT conference Johannesburg

    Mid-November Interims 2017 roadshow JHB/CT/UK/USA

    Investor relations | 2016 Calendar

    25

  • Vodacom Group Limited IR presentation | 5 September 2016

    Thank you

  • Vodacom Group Limited IR presentation | 5 September 2016

    Definitions

    27

    Active customers Active customers are based on the total number of mobile customers using any service during the last three months. This includes

    customers paying a monthly fee that entitles them to use the service even if they do not actually use the service and those customers who

    are active whilst roaming.

    Active data customers Number of unique users generating billable data traffic during the month. Also included are users on integrated tariff plans, or who have

    access to corporate APNs, and users who have been allocated a revenue generating data bundle during the month. A user is defined as

    being active if they are paying a contractual monthly fee for this service or have used the service during the reported month.

    ARPU Total ARPU is calculated by dividing the average monthly service revenue by the average monthly active customers during the period.

    Contribution margin Revenue less direct expenses as a percentage of revenue.

    EBITDA Earnings before interest, taxation, depreciation and amortisation, impairment losses, profit/loss on disposal of investments, property, plant

    and equipment, and intangible assets, profit/loss from associate and joint venture, restructuring cost and BEE income/charge.

    Free cash flow Cash generated from operations less additions to property, plant and equipment and intangible assets, proceeds on disposal of property,

    plant and equipment and intangible assets, tax paid, net finance charges paid and net dividends received/paid to minority shareholders.

    HEPS Headline earnings per share.

    International International comprises the segment information relating to the non-South African-based cellular networks in Tanzania, the Democratic

    Republic of Congo, Mozambique and Lesotho as well as the operations of Vodacom International Limited and Vodacom Business Africa

    Group (Pty) Limited and its subsidiaries.

    MOU Minutes of use per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly active

    customers during the period.

    Normalised growth (*) Adjusted for trading foreign exchange gains/losses and at a constant currency (using current year as base) (collectively foreign exchange).

    Operating free cash flow Cash generated from operations less additions to property, plant and equipment and intangible assets other than licence and spectrum

    payments and purchases of customer bases, net of proceeds on disposal of property, plant and equipment and intangible assets, other than

    license and spectrum payments and disposals of customer bases.

    South Africa Vodacom (Pty) Limited, a private limited liability company duly incorporated in accordance with the laws of South Africa and its subsidiaries,

    joint ventures and SPVs.

    Traffic Traffic comprises total traffic registered on Vodacoms mobile network, including bundled minutes, promotional minutes and outgoing

    international roaming calls, but excluding national roaming calls, incoming international roaming calls and calls to free services.

  • Vodacom Group Limited IR presentation | 5 September 2016

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    http://www.vodacom.com/about-us/investors/investors-home

    [email protected]

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