Sale of Vodafone Italy and capital return
Investor update March 2024
Investor update ⫶ March 2024
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Highlights
Reshaped Vodafone footprint focused on growing markets, with strong positions and local scale
Value-creating sale of Vodafone Italy for € 8 billion
Dividend rebased to 4.5c 1 + € 4bn buyback programme
Investor update ⫶ March 2024
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1. From FY25. Dividend intended to be maintained at 9c for FY24
Outlined in FY23 results in May 2023 Results, reports & presentations | Vodafone IR
Recap of our new strategic roadmap
Where we’ve been
What we’re changing
Priorities
Consumer dominated organisation Inconsistent consumer experience
Balanced focus on Business + Consumer Consumer back-to-basics to win in the market
CUSTOMERS
SIMPLICITY
Leaner organisation focused on value Portfolio right-sized for growth
Complex structure
✓
Sub-optimal capital allocation
GROWTH
Investor update ⫶ March 2024
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⫶ Right-sized for growth Africa
Investments
Europe
Operations
Infrastructure
Innovation Partner Markets
8 countries 200m mobile customers 76m FinTech users
9 countries 100m mobile customers 17m fixed customers
45 countries
Procurement vodafone
vodafone RoamingServices
vodafone Networks
Technology & operations
Roaming & carrier services
Network services
SharedOperations
_VO IS
Procurement
Investor update ⫶ March 2024
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Reshaped footprint ⫶ Strong positions in growth markets Germany UK Other Europe
Africa
Market size (CY23 telecoms revenue 4 )
€ 57bn
€ 56bn
€ 28bn
€ 18bn
2
Market growth (CY21-23 telecoms revenue CAGR 4 )
3.2%
3.4%
3.1%
6.8%
3
Network operators (# MNOs)
3+1 player
3 player
Mostly 3 player
3-4 player
1
Pro forma Vodafone revenue mix (Proportion of Vodafone total FY23 service revenue)
35%
25%
20% 2
20%
1
Vodafone revenue growth (Vodafone FY24 Q3 YTD service revenue growth)
0.0%
5.5%
3.8%
8.9%
3
Vodafone ROCE
Around WACC
Good 1
Good
Good
Investor update ⫶ March 2024
1.Including Three UK merger impact 2.Including Turkey
3. Excluding Turkey 4. Source: Analysys Mason & Global Data
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Vodafone Business ⫶ Our growth acceleration Increasing market share gains Business service revenue growth (%) Large markets with growing demand
Strengthening capabilities
€ 42bn UK
€ 58bn Germany
€ 20bn Other 1
5.0%
4.5% 4.3%
Connectivity
Cloud & Security
€ 76bn Corporate
€ 33bn SME
€ 11bn SoHo
2.9%
2.4%
€ 16bn IT services
€ 15bn € 19bn € 9bn Mobile Fixed Unified Comms
IoT € 8bn
Cloud & Security
€ 54bn
Q3 FY23
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Communication services
Internet of Things
• € 120+ billion addressable market size • Accessing European business demand for digitalisation • 11% p.a. digital market growth
Digital services 2 revenue growth (%)
• Dedicated investments • New strategic partnerships • Borderless platforms • New organisation (inc. new IoT company)
23.7%
16.9% 14.6%
13.6%
12.9%
Q3 FY23
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Investor update ⫶ March 2024
1. Other includes Other Europe, Africa & Turkey 2. Digital services include IoT, Cloud & Security services, now 18% of Vodafone Business service revenue
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Sale of Vodafone Italy ⫶ € 8 billion enterprise value
c.26x OpFCF / 7.6x Adjusted EBITDAaL ⫶ highest OpFCF multiple of any Vodafone market transaction in the last 10 years € 8bn ⫶ upfront cash proceeds, subject to customary closing adjustments Multi-year service agreements ⫶ c. € 350m in year 1, contracts for up to 5 years + exploring commercial relationship with Swisscom Targeting completion in H1 2025 ⫶ Conditional on regulatory approval from the Italian Competition Authority
Value creation
Upfront cash proceeds
Transaction certainty
Investor update ⫶ March 2024
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Capital allocation ⫶ € 4bn capital return programme Disciplined capital investment
• Current country-level capital intensity broadly maintained
• New leverage policy of 2.25x – 2.75x Net debt to Adjusted EBITDAaL • Targeting to be in bottom half of the range
Maintain robust balance sheet
• FY24 total ordinary dividend maintained at 9c • FY25 total ordinary dividend rebased to 4.5c • Ambition to grow dividend over time
Rebased ordinary dividend
• € 2 billion buybacks upon completion of sale of Spain (FY25) • € 2 billion buybacks upon completion of sale of Italy (FY26) • Subsequent review of potential for further capital return
Capital returns
Investor update ⫶ March 2024
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Highlights
Reshaped Vodafone footprint focused on growing markets, with strong positions and local scale
Value-creating sale of Vodafone Italy for € 8 billion
Dividend rebased to 4.5c 1 + € 4bn buyback programme
Investor update ⫶ March 2024
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1. From FY25. Dividend intended to be maintained at 9c for FY24
Appendix I Vodafone Group Executive Committee
Margherita Della Valle Group Chief Executive • Joined Vodafone Apr’94 • Finance leadership roles, marketing & CVM positions
Luka Mucic Chief Financial Officer • Joined Vodafone Sep’23 • Previously CFO & COO for tech industry leader
Ahmed Essam Executive Chair Germany & CEO European Markets • Joined Vodafone in 1999 • Previously CCO & CEO roles
Aldo Bisio Chief Commercial Officer & CEO Vodafone Italy • Joined Vodafone Jan’14 • CEO roles in various sectors
Shameel Joosub CEO Vodacom
Giorgio Migliarina Interim CEO Vodafone Business • Joined Vodafone in Apr’18 • Experienced in telco & B2B
• Joined Vodafone Mar’94 • Extensive telco experience • Board positions across Group
Serpil Timuray CEO Vodafone Investments • Joined Vodafone Jan’09 • CEO roles in EU & AMAP
Leanne Wood Chief HR Officer • Joined Vodafone Apr’19 • Variety of HR & strategy leadership roles
Scott Petty Chief Technology Officer • Joined Vodafone in 2009 • Previously Business Product & Technology leadership roles
Alberto Ripepi Chief Networks Officer • Joined Vodafone in 2001 • Various technology roles incl. CTO of Europe
Joakim Reiter Chief External & Corporate Affairs Officer • Joined Vodafone Apr’17 • Over 20 yrs’ Govt. experience
Investor update ⫶ March 2024 Maaike de Bie General Counsel & Company Secretary • Joined Vodafone Mar’23 • 25 yrs’ legal experience
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Appendix II Summary financial information Vodafone Italy ⫶ Key indicative financial information
12-month period ending 31 March 2024
( € million)
Consensus Adjusted EBITDAaL
1,325 (176)
Group services charges (reported below EBITDAaL)
Non-cash accounting gain
(97)
Revised consensus Adjusted EBITDAaL (1)
1,052 (747)
Consensus Capex (1)
Revised consensus OpFCF (1) Enterprise value (“EV”) EV/Adjusted EBITDAaL (1)
305
Notes (1) For the 12-month period ending 31 March 2024. Based on company compiled consensus as at February 2024, after adjusting for approximately € 176 million of group services charges which are not included in EBITDAaL for the purposes of Vodafone segmental reporting and € 97 million of non-cash items included in EBITDAaL. OpFCF defined as Adjusted EBITDAaL less capital expenditure.
8,000
7.6x 26x
EV/OpFCF (1)
Investor update ⫶ March 2024
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Appendix III Important notice
This presentation has been prepared by Vodafone Group plc (“Vodafone”) in connection with: (i) Vodafone’s changing shape and footprint; (ii) its agreement for the sale of Vodafone Italia s.p.a. ; (iii) its capital allocation review (together, the “Investor Updates”). The information set out in this presentation is not intended to form the basis of any contract. By attending (whether in person, by telephone or webcast) this presentation or by reading the presentation slides, you agree to the conditions set out below. This presentation (including any oral briefing and any question-and-answer session in connection with it) is for information only. The presentation is not intended to, and does not constitute, represent or form part of any offer, invitation, inducement or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction. It must not be acted on or relied on in connection with any contract or commitment whatsoever. It does not constitute a recommendation regarding any securities. Nothing herein should be construed as financial, legal, tax, accounting, actuarial or other specialist advice. No shares are being offered to the public by means of this presentation. You should conduct your own independent analysis of the Vodafone Group and the Investor Updates, including consulting your own independent advisers in order to make an independent determination of the suitability, merits and consequences of the Investor Updates. The release, presentation, publication or distribution of this presentation in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements. It is your responsibility to satisfy yourself as to the full observance of any relevant laws and regulatory requirements. Any failure to comply with applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. You have been provided access to this presentation on the basis that you are an investment professional for the purposes of Article 19 or a member of the press for the purposes of Article 47 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or a person who is otherwise permitted by law to receive it. No other person should act or rely on the information presented and you agree to be bound by the following conditions. You may not disseminate these slides or any recording of this conference, in whole or in part, without the prior consent of Vodafone. Nothing in this presentation constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. This presentation contains non-GAAP financial information which the Vodafone Group’s management believes is valuable in understanding the performance of the Vodafone Group. This includes Adjusted EBITDal and OpFCF. However, non-GAAP financial information is not uniformly defined by all companies and therefore it may not be comparable with similarly titled measures disclosed by other companies, including those in the Vodafone Group’s industry. Although these measures are important in the assessment and management of the Vodafone Group’s business, they should not be viewed in isolation or as replacements for, but rather as complementary to, the comparable GAAP measures. Information in this presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. No statement in this presentation is intended as a profit forecast or estimate for any period. Statements of potential cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, any cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. This presentation includes certain information from third-party sources. The Vodafone Group has not independently verified the market data or other information (i) contained in third-party sources or (ii) on which such third-party sources are based, nor does the Vodafone Group make any representation or give any warranty as to the accuracy or completeness of such information. The information from third-party sources that is cited here has been reproduced accurately. References to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise stated. The Vodafone trade mark is owned by Vodafone. 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, including, but not limited to, the Vodafone Group’s plans and objectives, including the Vodafone Group’s strategy and consensus forecasts for Vodafone Italy, which are subject to risks and uncertainties because they relate to future events. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions including as to future potential cost savings, synergies, earnings, cash flow, return on average capital employed, production and prospects. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as “believe’’, “could’’, “estimate’’, “expect’’, “intend’’, ‘‘may’’, “plan’’, “objectives’’, “outlook’’, “probably’’, “project’’, “seek’’, “risks’’, “goals’’, “should’’, “will”, “plan”, “pathway”, “target”, “create”, “ambition”, “outcome” or “accelerate” and similar terms and phrases (including in their negative form). 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. Reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Vodafone’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are a number of factors that could affect the future operations of the Vodafone Group and Vodafone Italy and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) currency fluctuations; (b) loss of market share and industry competition; and (c) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward- looking statements. 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 other matters” in Vodafone’s Q3 results for the three months ended 31 December 2023. This can be found at investors.vodafone.com. All subsequent written or oral forward-looking statements attributable to Vodafone, to any member of the Vodafone Group or to any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in or made in connection with this presentation will be realised. Any forward-looking statements are made as of the date of this presentation. Vodafone does not undertake any obligation to release publicly any revisions to any information (including forward looking statements) to reflect events and circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable laws and regulations. None of Vodafone, Vodafone Group, Vodafone Italy or their shareholders, subsidiaries, affiliates, associates, or their respective directors, officers, partners, employees, representatives and advisers(the “Relevant Parties”) makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this presentation, or otherwise made available, nor as to the reasonableness of any assumption contained in such information, and any liability therefor (including in respect of direct, indirect, consequential loss or damage) is expressly disclaimed. No information contained herein or otherwise made available is, or shall be relied upon as, a promise, warranty or representation, whether as to the past or the future and no reliance, in whole or in part, should be placed on the fairness, accuracy, completeness or correctness of such information. None of the Relevant Parties has independently verified the material in this presentation.
Investor update ⫶ March 2024
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Upcoming events
investors.vodafone.com
Vodafone Group Investor Relations
1 Kingdom Street, London, W2 6BY ir@vodafone.co.uk
14 May 2024
FY24 Results
Matt Johnson Director Group IR
matthew.johnson@vodafone.com
Roy Teal Deputy Director Group IR
roy.teal@vodafone.com
25 July 2024
FY25 Q1 Trading Update
David Irish Senior Manager Group IR
david.irish@vodafone.com
30 July 2024
Annual General Meeting
Gertrúd Szabó Senior Manager Group IR
gertrud.szabo@vodafone.com
Lena Mistry Senior Manager Group IR & ESG
lena.mistry@vodafone.com
Investor update ⫶ March 2024
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