Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — Investor Presentation (September 2003)
46 slides from Vodafone Group Public's investor presentation, Sep 12, 2003
Slide 1: Vodafone
O vodafone vodafone
Slide 2: Agenda
Agenda Welcome Arun Sarin Chief Executive, Vodafone Group Plc Vodafone Italy Vittorio Colao / Pietro Guindani Q&A Vodafone Italy SEMEA Regional CEO / SEMEA Regional CFO Industry overview Arun Sarin Vodafone’s priorities Financial outlook Q&A
Slide 3: Vodafone achievements and challenges in Italy
Vodafone achievements and challenges in Italy Vittorio Colao, SEMEA Regional CEO Pietro Guindani, SEMEA Regional CFO Milan, 12 September 2003
Slide 4: Presentation directed at relevant persons only
This presentation is being made only to, and is directed at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and (b) persons to whom it may otherwise lawfully b
Slide 5: Contents
Contents “Vodafone’s challenges in Italy”: Market evolution and competitive environment “Vodafone’s achievements in Italy”: Summary of Results “How we delight our customers”: Commercial and Operating Strategy
Slide 6: Italian mobile market overview
Italian mobile market overview Italian Market penetration has reached 98% in June 03 EOP EOP K Market 60,000 Penetration as a % of population 95% 98% Share 91% 50,000 BLU WIND 17% 75% 40,000 54% 30,000 TIM 47% 37% 20,000 10,000 Vodafone 36% 1998 1999 2000 2001 2002 Jun-03 Source: Internal Vodafone d
Slide 7: How we compete: positioning & strategy
How we compete: positioning & strategy Group strategy . . . in Italy We want to be the operator of choice for Grow voice and data revenues through the most valuable customer segments, an increased marketing focus through: Customer driven Innovation: Extend operational leadership of the Innovations t
Slide 8: Competitive positioning
Competitive positioning TIM and Vodafone co-leaders with differentiated market perception At the leading Traditional Italian leader: edge reliable, conveying a feeling of security. INNOVATION The affordable operator that provides low end tariffs. Low Innovative player, strong Standard / High brand a
Slide 9: Key consumer segments
Key consumer segments Segment Definition Value Self-employed (often SOHO). Use the mobile for professional Professional use. H Socialising is top of their agenda. Mobile is for fun, they want to Young be at the leading edge in life and with technology. H Young people; students or not employed Teens
Slide 10: Vodafone stronger on Young, Adults and Professionals
Vodafone stronger on Young, Adults and Professionals Rest of 61% 59% 63% 62% Market 75% Avg VF Vodafone Average Market Share Market Share 36% 36% 39% 41% 37% 38% 25% Professional Young Teens Adult Mature
Slide 11: Successful migration to the Vodafone global brand
Successful migration to the Vodafone global brand Enrichment of original brand equity & values Dependable Empathetic Innovative Can-do Joie de vivre LIVE MMS ROAMING FERRARI I FEEL VODAFONE OMNITEL
Slide 12: Pricing and promotional strategy
Pricing and promotional strategy Stabilise price levels, with use of price only as a promotional lever (e.g. Summer Card) Develop powerful usage stimulation across the board through segmented activities Services that stimulate usage (“Call me”, call-back on busy) Occasion-based marketing initiatives
Slide 13: Distribution channels strategy
Distribution channels strategy From . . . . . . To Focus on customer acquisitions Focus on quality acquisition and customer base value management Compensation based on upfront Compensation based on upfront plus a remuneration variable portion depending on value to Vodafone No monitoring of quality o
Slide 14: Change in distribution structure
Change in distribution structure Creation of Vodafone One “operationally controlled channel” . . . ~800 new Mono-Branded stores (Franchising light contracts) on top of current 20 Vodafone “flagship” stores Vodafone One Shops build and enhance an exclusive relationship between Vodafone and its custom
Slide 15: Channel compensation strategy
Channel compensation strategy Dealer compensation reduction Reduction in up-front fees, while dealer incentives (variable based on results) slightly increase Radical shift in dealer incentives from quantity (new add target) to quality (ARPU generated by new SIMs) Dealer compensation per Gross Add SA
Slide 16: Contents
Contents “Vodafone’s challenges in Italy”: Market evolution and competitive environment “Vodafone’s achievements in Italy”: Summary of Results “How we delight our customers”: Commercial and Operating Strategy
Slide 17: Summary of results
Summary of results Vodafone market performance in Italy Service revenues and ARPU highlights Data revenues and ARPU Redeployment of resources: SRCs versus SACs OPEX and CAPEX trends EBITDA and Net Operating Cash Flow
Slide 18: Vodafone performance on customer focus
Vodafone performance on customer focus Customer Satisfaction Customer Index Satisfaction ( 0 (–0-100) Index 100 ) 100 Vodafone strengths in Italy: VF Vodafone Customer Care COMP.1 COMP.1 Brand COMP.2 Commercial offer always interesting & competitive COMP.2 1 01 1 2 02 2 3 y-0 ul-01 p- v-0 an-0 2 r-0
Slide 19: Vodafone market performance in Italy
Vodafone market performance in Italy Continued growth of EOP customer base . . . EOP (SIMs) 19,590,000 19,412,000 17,426,000 14,919,000 10,418,00 6,190,000 2,460,000 713,000 dec-96 dec-97 dec-98 dec-99 dec-00 dec-01 mar-03 jun-03 Market 11% 21% 30% 34% 35% 34% 36% 36% share
Slide 20: Revenues
Service revenues 15% 14% Vodafone 14.3% 13% 12.1% Service Revenues: YoY Growth Rate 12% 11.3% 11% 30% 10% TIM 26.4% 9% 25% 21.2% 21.6% 8.7% 8.5% 20.3% 8% 8.1% 20% Vodafone 7% 16.9% 6% 14.3% 15% 12.1% dec-02 mar-03 jun-03 11.2% 11.3% TIM 10.8% 10% 10.6% 8.5% 8.2% 9.2% 8.7% 8.1% 8.5% 5% 1.5% 6.4% Soli
Slide 21: ARPU
ARPU Vodafone consistently shows higher than competition ARPU growth . . . (1) ARPU Growth rate (YoY) 4.1% 4.0% 4.1% 6.0% 5.0% 1.0% 1.2% 0.3% 3.9% 3.9% 2.7% 2.5% 0.0% -2.1% TIM -4.8% 0.0% -3.5% -2.8% -3.7% -5.0% -6.5% -8.5% -10.0% Vodafone -13.1% -15.0% mar-01 jun-01 sep-01 dec-01 mar-02 jun-02 sep-
Slide 22: Usage growth: higher quality of new adds
Usage growth: higher quality of new adds . . . thanks to shift towards dealers compensation plans based on new adds long term value . . . positive effect on double SIMs & “fake” activations First year traffic of New Prepaid Adds Inactive SIMs Monthly outgoing minutes per user 3 month Zero traffic (O
Slide 23: Data Revenues
Data Revenues Vodafone data ARPU outperforming competition, enhancing contribution to Service Revenues (1) (2) ARPU DATA Data revenues as a % of Serv. Rev. 4.0 14% 3.6 12.4% 11.9% 3.4 3.5 3.3 12% 11.5% 3.2 10.3% 10.0% 10.4% 3.0 2.8 10% 11.1% 2.8 3.11 9.3% 2.6 3.0 3.0 Vodafone 10.3% 10.6% 8.2% 2.5 Vo
Slide 24: Redeployment of resources: SRCs versus SACs
Redeployment of resources: SRCs versus SACs Mix of commercial costs dramatically re-focused from Acquisition to loyalty management . . . Acquisition Costs (SACs) Retention Costs (SRCs) 300 EurMM Eur/GA 44 EurMM Eur/sub 140 250 240 6 5.4 5.1 37 200 181 37 100 95 91 4 150 35 125 60 2.2 100 30 2 30 50
Slide 25: OPEX & CAPEX
OPEX & CAPEX Opex as % of Serv. Revenues Capex as % of Serv. Revenues 25% 25% 23% 15% 21% 24% 24% 21% 22% 17% 5% 19% 20% FY 00-01 FY 01-02 FY 02-03 FY 00-01 FY 01-02 FY 02-03 Continuously decreasing weight on revenues Decreasing as % of revenues but… with absolute growth below revenue trend …strong
Slide 26: EBITDA & Net Operating Cash Flow
EBITDA & Net Operating Cash Flow (1) (1) EBITDA & EBITDA Margin Cash Flow – Abs Value & % of Rev 4.0 2.5 % of Rev Eur B % of Rev Eur B 2.3 42% 3.4 50% 2.0 3.0 2.8 22% 33.3% 49.6% 41% 1.6 2.3 24% 1.5 32% 26.5% 2.0 24% 46% 1.1 42% 46.2% 1.0 21.6% 22% 1.0 42% 0.5 43.0% 12% FY 00-01 FY 01-02 FY 02-03 FY
Slide 27: Contents
Contents “Vodafone’s challenges in Italy”: Market evolution and competitive environment “Vodafone’s achievements in Italy”: Summary of Results “How we delight our customers”: Commercial and Operating Strategy
Slide 28: Segment Marketing Plan
Segment Marketing Plan Segment Strategy Increase market share by proposing new services that Professional improve productivity Attain overall leadership through occasion based Young marketing and innovative services Increase market share by enabling budget management Teens and facilitating group int
Slide 29: Voice: Continuous innovation to stimulate usage
Voice: Continuous innovation to stimulate usage Professional Bis Innovative proposition allowing customers 2 SIMs with same number: In the car In the PDA As a back-up Young Alter Ego Innovative proposition allowing customer 1 Sim with 2 different numbers: 1 personal number and 1 professional 1 for e
Slide 30: Voice: Continuous innovation to stimulate usage (Teens)
Voice: Continuous innovation to stimulate usage 111 For Me Collect call to the receiver (father, 24.63 mother, etc) both on fixed line and Vodafone Italy numbers 23.68 Teens Only way to call if you have no credit Collect call from abroad Collect call to the receiver (father, mother, etc) from anywhe
Slide 31: Voice: Continuous innovation to stimulate usage (Adult)
Voice: Continuous innovation to stimulate usage YouForMe Permanent reverse charging to the father/ mother, etc to allow children to call without Adult using prepaid credit Summer Card Credit back of all traffic (to Vodafone Italy and fixed line) generated in 1 month with payment of activation fee
Slide 32: Consumer: Overall DATA services portfolio
Consumer: Overall DATA services portfolio Teens Young Professional Adult Mature SMSretention SMS retention and and network network stimulation stimulation SMS CB initiatives + education SMS occasions: voting, interaction TV, charity, …. MMS Messaging Vodafone live! Community and chat SMS Vodafone li
Slide 33: Data: Continuous innovation to promote occasions of use
Data: Continuous innovation to promote occasions of use Professional Vodafone Mobile Connect Card Vodafone leading solution to provide fast and easy-to-use PC access to the internet E-mail Web browsing / access to corporate LAN Young Vodafone live! Communication with more than just words: a world of
Slide 34: Business: Overall services portfolio
Business: Overall services portfolio Business services Consumer services Devices Access Applications Top/ Special Vodafone Connect Connected by Projects Int’l Acc Card Vodafone (OEM) (2.5 G, Wlan, 3G) SMS Vodafone Dashboard Corporate (2.5 G, Wlan, 3G) Mobile MLA Solutions* MMS Vodafone PDA Multi Mes
Slide 35: CRM and campaign management
CRM and campaign management Value based segmentation Value based CRM resource allocation HIGH VALUE 1 CUSTOMERS 2x Average 2 Customer Value 3 CRM costs/ARPU 4 ARPU MEDIUM-LOW 0.4x Average VALUE CUSTOMERS 5 Customer Value 6 Value Band 1 Value Band 2 Value Band 3 Value Band 4 Value Band 5
Slide 36: Campaign management: up-sell/cross-sell
Campaign management : up-sell/cross-sell 1. Gather comprehensive customer information 2. Analyse and segment - Customer centric DataWareHouse customer base - Segment - Score - Propensity 6. Improve 3. Develop targeted marketing campaigns campaigns for - Message/creativity next round - Channel - Rede
Slide 37: Campaign management: Churn risk profiling
Campaign management: Churn risk profiling Churn clusters Probability to churn Main Predictive Variables Handset Green 6% Significant drop in traffic during Low Churn Risk (70% CB) recent months Medium Churn Risk (20%) Yellow 35% Abnormal traffic pattern, High Churn Risk (10%) dropped calls Red 65% L
Slide 38: High value retention focus: Vodafone One loyalty program
High value retention focus: Vodafone One loyalty program Objective is to strengthen customer motivation with a reward based mechanism, with direct link with his/her traffic spending Almost 9 million customers, largest loyalty program in Europe Vodafone One Shops instrumental to reward delivery Loyal
Slide 39: Vodafone One churn impact
Vodafone One churn impact High value Customers Low/Medium value Customers - 50% Churn -18% Churn Base Vodafone One Base Vodafone One Churn Rate Churn Rate Vodafone One: reduction of high value customers’ churn more than double compared with churn reduction of low/medium value customers
Slide 40: In summary . . .
In summary . . . Vodafone objective for Italy is to be the preferred operator to the more profitable segments Vodafone strategy is based on segmentation, excellent service, continuous innovation and active customer base management Customer satisfaction, usage levels and financial results are at worl
Slide 41: Vodafone
O vodafone vodafone
Slide 42: Great opportunity
Great opportunity Telecommunications Mobile Information Infotainment Technology (IT)
Slide 43: Forces on the business
Forces on the business Customers Regulatory Technology Competitors
Slide 44: Our focus
Our focus Delight customers Outstanding customer service at all touch points Deliver superior voice and data propositions by segment Achieve brand preference Leverage global scale & scope Deliver superior 3G based services Achieve leadership position on costs and time to market Expand market boundar
Slide 45: Reiterate expected outlook FY 2004
Reiterate expected outlook FY 2004 Average customer growth >10% Similar growth in revenues* Small EBITDA margin* improvement Better EBITDA* growth than revenue* growth Good adjusted EPS growth Capital additions little up on last year’s £4.8bn Improved capital efficiency (better than 16.3%) Free cash
Slide 46: Vodafone
O vodafone vodafone
Vodafone Group — Investor Presentation (September 2003) on 6ix