Vodacom Group Limited

Thank you. Good afternoon and good morning to those joining us -- joining the call from the U.S.

I'm joined by our Group CFO, Raisibe Morathi, as well as our Head of Investor Relations, JP Davids. Our purpose-led business shapes our outlook and our strategy as we connect for a better future.

The purpose is evident from our response to COVID-19 with the Vodacom Group in the forefront of helping governments curb the spread of COVID-19 where we operate. Having swiftly responded earlier this year through the strategic partnerships with the likes of Discovery Health and Microsoft in a wide range of initiatives, including free devices and airtime for health workers, accelerating support to governments via donations of handsets, connectivity and medical equipment and making contactless payments more accessible to 0-rated services and expanded M-Pesa ecosystem to address social distancing challenges.

And alongside the Vodafone foundation, we recently announced an ZAR 87 million financial pledge to support access to vaccines, rollout of culture and technology and provide logistics support to ensure the safe delivery of COVID-19 vaccines to vulnerable and hard-to-reach communities in South Africa, DRC, Lesotho, Mozambique, Ghana and Tanzania. We have partnered with the African Union to build digital infrastructure to manage the distribution of COVID-19 vaccines in up to 55 countries, following successful deployments in South Africa and leveraging our mVacciNation platform.

For those of you who are not able to join our webcast this morning, I'll encourage you to download our announcement and slides to get a better sense of our COVID-19 interventions. Also this morning, I'll provide an update on our strategic progress, notably our accelerated evolution from a telco to a techco.

Vodacom has a track record of innovation and evolving its business model to capture growth. As evidence of our progress, we are already positioned to generate a 360-degree view of our customer, enabling an ecosystem approach to product development.

We believe our product suite and strategy gives a sustainable system of advantage. From here, our strategic journey gets more exciting.

In the coming years, we will build on our techco foundations to adopt a lifestyle approach to serving our customers. We have and are introducing more and more offers that are powered by Big Data, supporting new revenue streams as we embed ourselves into lives of our customers and personalize to the segment of One.

After all, technology is nothing without humanity. Our strategy and purpose-led model was clearly evident in our financial and operational performance for the year.

At a high level and considering the magnitude of challenges arising from the pandemic, the data price cuts we effected from 1st of April 2020 in South Africa and the 0 rating of person-to-person M-Pesa transfers across most of our international markets, it is really pleasing that we were able to deliver such a strong group performance. As I move into the review of our performance of the year and, where relevant, I will call out normalized growth, which excludes M&A and the translation effects of foreign currency.

At a group level, we reported strong service revenue growth of 5.8% with revenue up 8.3%. This pleasing top line growth reflects the resilience of our business model, strategic execution and growth in new services, which include fixed, IoT, digital and financial services.

Revenue growth floated down the P&L, and I'm happy to report that our ordinary annual dividend grew 5.1%. We added 8.2 million customers in the group, including Safaricom, to reach 123.7 million.

Data customers represents 50% of the space and amounted to 62.4 million. We now service almost 58 million financial service customers across the group, up 12.9% year-on-year, representing 47% of our customer base.

Digital and financial inclusion are key focus areas for management and including our remuneration scorecard from this financial year. Our commitment to financial inclusion was demonstrated by our intervention in M-Pesa where we provided free person-to-person transactions across most of our international markets to facilitate economic activity during the most disruptive periods of COVID-19.

This intervention impacted our revenue by ZAR 2 billion, including Safaricom, but is clearly the right thing to do for our customers. And our earnings per share was up to 3.7%, subdued by the performance of our International operations and Safaricom and associated intervention from fee from free P2P transactions.

We invested ZAR 13.3 billion in network infrastructure during the year and showing the resilience of our networks to cope with the significant increases in mobile data traffic volumes. Let's now look at it from a product level.

New services, which comprises fixed IoT, digital and Financial Services continue to scale rapidly. In the interest of time, I'll focus on financial services.

Including Safaricom on a 100% basis, our Financial Services portfolio generated ZAR 19.3 billion of revenue in the financial year, contributing 17% of combined service revenue. While our P2P interventions negatively impacted revenue growth, it supported medlife economic platform -- medlife platform economics.

This is evident from the massive growth in transaction value across the platform. We now process a monthly M-Pesa transaction value of $24.5 billion, up 63.5% year on year.

This platform expansion sets up a very exciting growth outlook for M-Pesa, and this is borne out by the growth that we've seen in the fourth quarter with all the entities now generating, again, more than 20% growth year-over-year. Then to enhance our disclosure on financial services, we provide additional color in our presentation of proportionate revenue, profit before tax.

This is especially relevant when comparing fintech valuations to market cap. On a proportionate basis, we generated ZAR 10 billion of service revenue from Financial Services in the year.

This equates to 12% of proportion of service revenue. We expect this contribution to scale materially from the upcoming launch of our lifestyle super app, VodaPay, in South Africa.

From a profitability perspective, the low-cost intensity profile of Financial Services means that it generates a higher profit margin than our core mobile business. In fact, 17% of our group's proportionate profit before tax comes from Financial Services at a PBT margin of around 40%.

This equates to ZAR 4.4 billion or very close to $300 million. If the value of our Financial Service assets is not recognized by the market over time, we will need to look at ways to optimize this portfolio, including partial monetization, to better reflect the underlying value of these assets.

Shifting focus to South Africa. In the contract segment, we gained 133,000 customers since March, supported by our multi-product approach to both consumers and business.

Vodacom business, including wholesale, had a particularly strong year, delivering growth of 11.3% to ZAR 15.9 billion. In addition to mobile and fixed connectivity and wholesale solutions, Vodacom businesses tailored service offers are class leading, a play in a high-growth area -- growth areas like cloud, hosting, managed security, managed services, geospatial fulfillment and IoT.

In the prepaid segment, Voda customer revenue increased by 8.5%, supported by increased usage of connectivity and digital services and the accessibility of airtime by our Airtime Advance product. The usage of these products was supported by a successful summer campaign and our new behavioral loyalty program, VodaBucks.

Since launching in September 2020, our loyalty program has attracted 24 million unique customers in South Africa who earn, bank and spend via the -- spend their VodaBucks via our My Vodacom app. We've already given away a retail value of over ZAR 6.5 billion in lifestyle rewards to our customers.

Personalization remains a key focus area for us, and this is core to our pricing approach. We sold 1.2 billion data bundles this year, up 15.8% year-over-year.

And we're encouraged by this behavior as it means that we are making data more affordable, but also that customers are truly growing into higher data usage. Data traffic increased 55.6% through the year with the number of smart devices in our network, up 9.5% to 23.2 million customers now using data or using smart devices.

Average usage per smart device increased by an impressive 39% to 2.1 gigs per customer. Financial Services in South Africa continues to perform well, with revenue increasing 18.9% to ZAR 2.4 billion for the year.

10.8 million customers have made use of our Airtime Advance platform this year, which has supported accessibility and inclusion. In the fourth quarter, Airtime Advance amounted to 43% of total prepaid recharges.

That means that 43% of the time, people lend airtime from us before buying airtime from us. Our insurance revenue increased 14.2%, while policies up 8.3% to ZAR $2.1 million as we continue to expand our portfolio of products.

EBITDA grew 5.7% while margins contracted 1.7 percentage points to 40%. The EBITDA growth was supported by strong service revenue, but moderated by COVID-19-related bad debt and investment into future growth areas such as our 5G roaming deal with Liquid.

Our International operations reported muted service revenue growth of 1.6% in the year, reflecting disruption to our commercial activities and pressure on consumer spend due to COVID-19. I was reiterating our person-to-person M-Pesa transactions and the impact of service barring in Tanzania due to biometric registration compliance.

Service revenue declined by 1.9% in the year, normalizing for foreign exchange impacts. Consistent with our guidance, we did see a clear improvement in normalized growth through the year and delivered positive 4.3% service revenue growth in the fourth quarter.

EBITDA was up 1.2% as margins recovered in the second half, offsetting the margin decline in the first half. The full year margin, which was flat year-on-year, reflected disciplined cost containment despite inflationary cost pressures.

Data services remains a key area of growth in the segment with data revenue up 11.8% to ZAR 4.1 billion. We added 661,000 new customers to end the period at 20.6 million data customers.

With just over 30% of our customers currently using a smartphone across our international markets, there's still a massive untapped opportunity in the data space. M-Pesa revenue was impacted by the free person-to-person transactions, but still grew at 13% to up to ZAR 4.5 billion.

In the fourth quarter, with the reimplementation of person-to-person fees, normalized M-Pesa revenue grew 21%. We added 1.4 million M-Pesa customers in the period to 16.1 million customers, a growth of 9.6%, only 47% of our customers are using M-Pesa, again highlighting the opportunity for growth.

Wrapping up my financial review, our associate holding in Safaricom contributed ZAR 3.5 billion operating profit, up 2.5% on a normalized basis. The [indiscernible] results reflected a challenging year and were impacted by depressed economic activity and a material impact of free person-to-person M-Pesa transactions related to the COVID-19 pandemic.

Positively free person-to-person transaction support an accelerated platform growth for M-Pesa with customers up 13.6% and the total annual value of replacement transactions up 58% to an equivalent of $202 billion in Kenya. This platform growth and the reintroduction of P2P fees in the 1st of January 2021, resulted in M-Pesa service revenue growth recovering to 21.2% in the fourth quarter.

This represents a clear step change from the M-Pesa revenue decline of 14.5% reported by Safaricom at its interim results for the 6 months ended, 30th of September 2020. Looking ahead, we are very excited about the growth potential of Safaricom and our overall M-Pesa business.

In the medium term, VodaPay super app sets to bar even higher for M-Pesa and in turn replicating this lifestyle app approach across our M-Pesa footprint. This ambition is captured in our 2025 vision for M-Pesa, which is to develop the platform into Africa's clear fintech leader.

On the regulatory front, we are grateful for the extension of the temporary spectrum in South Africa, which has supported network capacity in the period. We are, however, disappointed in the delay to the spectrum IPA, and we are hopeful that the process can resume as soon as possible.

We see the assignment of spectrum being instrumental in the data pricing dynamic of our largest market. Separately, the government of Ethiopia through the Ethiopian Communications Authority issued a final request of proposals on the 5th of March, 2021 for the award of 2 full-service mobile licenses in Ethiopia.

On 26th of April, the group participated in the consortium led by Safaricom plc, winning for mobile license in Ethiopia. Shortly thereafter, the Ethiopian Communications Authority confirmed that our consortium called the global partnership for Ethiopia was 1 of the 2 qualified bidders.

We await feedback from the Ethiopian authorities on the final outcome of the process. Raisibe and I are now ready to answer any questions you may have.

Shameel, to your point about monetizing M-Pesa. Vodafone's Nick Read was asked on the call this morning about that.

And he seems to kind of push the idea back around selling a stake in it despite Airtel doing it and MTN talking about it. But in your comments today, you sort of say the market doesn't reflect it that you might look at it.

Can you give some thoughts in terms of, I guess, what you mean by that? Is there a time horizon?

How long would you think about and what structure it might be in? That would be helpful.

Sure. So look, for us, I think -- let me start out by saying that, look, we being the largest fintech provider and having such a big presence, I think, is a huge asset in our stable.

So I think that's hugely positive in that regard. And so I'd say we probably get some of the benefit of that into the Safaricom share price where -- I wouldn't say all of it, reflecting the true potential of M-Pesa and the multiples that you can get on Financial Service assets.

But of course, a better reflection of that in Safaricom than we see, potentially, I would say, into the Vodacom share price. Now the growth potential of M-Pesa and Financial Services in South Africa is huge.

When you consider the -- where we are today and the $1.3 billion that's being generated by Financial Services and also the growth potential where we see this being able to grow in high teens for the foreseeable future. So what we've decided to do is to give -- so on one side, strategy, we're growing out the platform.

We've created M-Pesa Africa. We're putting the focus on it.

We're basically making sure that all the markets have basically implemented the product road map, which is lending, which is payments, which is merchants and essentially growing that part. We'll be creating some exciting partnerships that we'll announce in due course.

But that allows us to expand the platform even further. So that's on the one side.

We're doing the same in South Africa. But essentially, yes, because we haven't implemented the M-Pesa platform, we have less restrictions.

And therefore, the partnership with the Alipay platform or Alipay to launch the full Alipay platform becomes hugely exciting, but it's a window of what we're going to do at M-Pesa. So as we grow the smartphone penetration, and now that we've basically built and implemented the platform for South Africa, that now gives us the capability to then take elements of that platform and then replicate that, of course, with Alipay into the international markets and leverage off that as we move into a more e-comm world, but also give our merchants the ability to expose their products in the e-comm world and sell beyond their immediate geographical areas.

Remember, in M-Pesa today, you're still selling. You're walking into a store and you're paying for services.

This takes you into an e-comm world. So you're covering -- the beauty of it's going to be that you're going to have both sides of the platform.

You've got the physical world, the offline world and you're covering the online world. And I think that's where it becomes really exciting going forward.

And of course, the sophistication in AI, the machine learning and the investments that we've made into Big Data and so on becomes quite compelling going forward. So that's the strategy.

And so we want to grow the M-Pesa business and so on. What we've also done is created optionality, sometimes because of regulatory and sometimes just opportunistic, where we've actually put all the financial service businesses into separate companies across our footprint.

So they are in separate entities. So example would be in South Africa.

It's a separately managed business with its own CEO and its own basically Board of Directors and its own regulatory requirements and governance and so on and so on. So we set it up properly.

We've done the same in each of our markets. And that becomes -- and then, of course, we've set up M-Pesa Africa as well.

So it gives us optionality, but we would like to see the market, to be honest, give us credit for it and that the value is reflected in our share price. If at a later stage, that's not happening, then we need to consider our options.

But at least we have optionality, I think, is the part. We think it's too early to have that conversation now.

Maybe 2, 3 years down the line, it will be more -- will be a different conversation because we still want to unlock. Because if you do it early, yes, we know we can get multiples of 25x and upwards, and we've had a lot of unsolicited offers coming through in that regard.

But we're not in that space yet. So we want to grow the business more and then decide whether we want to look at these optionality or not.

But hopefully, you guys will give us credit for it, and we won't have to have this conversation.

Yes. That's super helpful.

I mean in terms of the -- I think you've carved out in a separate company now, haven't you? And I have a follow-up.

So the process of doing it shouldn't be too onerous, I guess?

No, it's already done. We've been -- we set it up about 2 years ago and -- in the international market.

So for various reasons, we've basically had to basically create them as separate companies. And then, of course, M-Pesa Africa is a separate entity itself from where we do all the product developments.

And Vodacom Financial Services has various different companies, housing or insurance assets and so on and so on with, as we said, its own Board of Directors and governance and so on as well.

Just first on Voda Pay. Just trying to understand the strategic thrust here.

It seems to be, given the super app status that it's kind of targeted more at the mid and upper tier and smartphone users within the base. And I was just trying to understand whether there's a strategy that deals with the unbanned I suppose, some of the other -- similar to what M-Pesa product goes to Africa and whether that requires opening up mobile wallets in South Africa?

I seem to recall last time around there were FICA regulation issues with opening bank accounts, et cetera. I'm just trying to understand whether those have been resolved or whether it's not particularly important to the strategy?

No. So remember what the platform here is.

So firstly, you always have a sponsor bank. So the deposit taking institution will always be a sponsor bank.

So that's always inherent in the platform, not just in South Africa, but throughout the M-Pesa world as well. And essentially, that's what we will have.

So that will be there. You will have your own store value within the app.

You can do various different things to fill up the wallet. You can link your credit card, you can do an EFT or you can go and put cash down and transfer it by -- in one of the retailers into the wallet itself.

You are right that it is dependent more on a smartphone world. So we'll be targeting the smartphone world.

But remember, we're also growing the number of smartphones and basically penetrating more and more of that base as well. We do have certain other benefits will flow outside of the platform, like things like your Airtime Advances and some of your vouchers and so on.

We will still do outside of the platform itself. But remember, the feature can also work on 3G smartphones, it can work with smart feature phones.

So we'll be penetrating the base. And as I said earlier, we've got 23.2 million smartphone users.

So that's where we will attack first, if you like.

Great. And then just an operating question, from my perspective, on the postpaid revenue strength in fourth quarter looked extremely strong, I think, roughly 10% in South Africa.

I'm just wondering what your thoughts are into this quarter and the first half? How the data price cuts are impacting the growth in that postpaid contract markets and whether the volume growth has been more than enough to offset the price cuts, particularly in light of the tougher base you face now.

Yes. So a lot of the growth in the fourth quarter also came from enterprise.

We had a very strong fourth quarter in contract in enterprise. So I think that was very positive.

And of course, having made a couple of good wins in that respect with corporate clients. The -- in terms of the impact of the data cuts, let's just say, we're comfortable that we will, through elasticity, offset the decline of -- from the 15% price decline that was implemented on 1st of April, we should be able to, of course, offset that with data elasticity.

So you'll have maybe slightly -- there will be a bit of a stepdown on a normalized basis from, of course, the price cuts. But then remember, you've also got the Cell C revenue coming in for the first time, which will help to offset that, yes?

So just a couple of follow-ups from Jonathan's question. So just on that customer service -- sorry, the postpaid revenue, you said a lot came from enterprise.

Is that -- are those as one-off projects or was that sort of ongoing? It just looked like a very big jump up in the first quarter.

So just trying to understand if it becomes a little bit more lumpy as you get more corporate or enterprise revenues or if it's sort of sustainable at this new base level? And then the second question is just on, again, following up on the elasticity question.

My understanding is that data traffic growth was around about 27% in the final quarter. Given the price cuts that happened this time a year ago, much less than 20%.

So it suggests your data revenue -- to preserve it, your data revenues is looking into the low- to mid-single-digit growth. It just seems like the elasticity has been subdued recently, which you can sort of understand.

But going forward, what do you think could drive that growth in terms of [Technical Difficulty]

Okay. Just to be clear, in the contract segment, of course, remember, we -- essentially, you've got a lot of your new services also coming through.

So a lot of the enterprise revenue, one is coming from, of course, wins. But the wins are also coming through from things like cloud, IoT, fixed services.

So the revenue is growing and these are recurring revenue services. So they're not once offs.

Okay. So they do recur in the reoccurring services.

So the strength in enterprise and the revenues in contract will continue. That said, of course, there is the price cuts, which you have to take into account when you look at the contract segment.

But then, of course, we do expect the elasticity of that to come through. Now when you look at the 27% quarter-on-quarter growth, we did have a very high comp last year.

And so that has played -- has factored into the numbers. Going forward, of course, we still think traffic will grow strongly.

We see traffic growth in the 30s and early 40s going forward. So we don't think that the traffic growth steps down.

And why -- if you look at the average usage per customer is up 39% to 2.1 gig. We still think 2.1 gig is still low, given the trends that we're seeing around the world.

So still a lot of growth to come. So for me, 39%, 40% growth per year is what we should be achieving on a per customer basis.

The first one is just a clarification. On Slide 29, your medium-term guidance.

The next year's outlook -- well, currently, I suppose. You say operating growth is impacted by phasing of growth in South Africa, the first half versus the second half.

What do you mean by this? Does it mean the same thing it meant a few slides back where it's sort of back-end-loaded?

Or what does it actually mean? So that's just a clarification.

I've got two questions as well.

Okay. Thanks for that question.

So the same thing, this comes from the day where in 2021, we call out the EBITDA growth of 9.9% in the first half. This was 1.8% in the second half.

And that shape was informed by the OpEx, which is a more skewed towards second half. And that OpEx came as a result of the [indiscernible] campaign for the [indiscernible] business and also some deferral of the spending such as things like conferencing et cetera, anything that lends itself to social gathering, which was in the first half.

So the guidance that, that points to, south Africa is expected to perform in line with the year-end target. However, from the shape perspective, it will be softer in the first half than in the second half.

Whereas in our IT market, the shape is the other [indiscernible] because the first half was more affected by the P2P being 0 rated for portion of the back half, and that 0 rating ended basically on the [indiscernible] the markets.

My first question is just on the competitive dynamics in South Africa, but specifically data recently, we've been seeing Cell C, even back in the game with that aggressive offers. Telkom has always -- got some really good data bundles and some monthly deals.

And recently, MTN came out with some discounted, surprisingly, weekly and daily bundles. So how are you seeing this data environment?

And like some of the previous callers seem to suggest the growth is sort of tapering a little bit perhaps on the revenue side on the data side? Or is this not the case?

What's the competitive dynamic like? Shameel?

So I think, look, realistically, there's always competition. And you always get a little bit of [indiscernible] or you will get aggression from Telkom as it tries to find its space all the time.

There's offers that you respond to and there's offers that you don't. But we offer -- so we will never be at the same price as Telkom.

Let me be straight up about that. But we do believe that we can command a price premium.

And if we -- in the hunt is, I'd like to call it, then, which is 10%, 15% more expensive, we can still gain those customers. So we monitor all offers and we respond definitely to some of them.

And yes, so some of the offers that are out there, we have responded to or we'll be responding to in the coming weeks. We also don't respond to every offer because I think people have to have their day in the sun as well.

But if these offers are more permanent and not promotional, then, of course, we do respond, yes? But we always work from the premise of much more for more.

How can we get more from the customer and give more value to the customer. And I think one of the powerful tools that I'm not sure people fully recognize, I think our Big Data and machine learning capability and the Just 4 You platform is a powerful tool across all markets that our competitors don't really have the full capability.

They have CVM, but we keep evolving it and we keep giving ourselves as an edge. And I think that benefits us across all markets.

Sure. The last question is CapEx and quality of network-related, right?

You spent about ZAR 10 billion in CapEx in South Africa, give or take. And you also have the facility to roam on Rain and Liquid.

But some of the speed tests by various authorities seem to suggest -- I hope I'm not being unfair here, but you're falling a little bit behind the network leader at the moment. Is it something that's affecting -- I mean, how are you dealing with it?

What's the strategy around network speed and quality of service and things like that? And is this becoming a hurdle in terms of recruiting customers on the data side?

Yes. So to be frank with you, I mean, look, you need to separate between what I call the ego world and the real world.

And what do I mean by that is that to win a test, you can always concoct different things to be able to do it and so on. I think what's important is what we measure carefully is actual customer experience, and we use things like Facebook analytics by site by so on and so on to be able to do competitive analysis of how we compare to competition, and by region and so on.

So when you look at it, I mean, in most regions in the country, I think 7 out of 8 now will lead on voice completely. And on data, there is -- it is fair to say that MTN have a slight lead.

But to be frank with you, some of these tests like, honestly, it's -- the customer is not really concerned about who's faster or slower. You're more concerned about does the service work and does it work to my benefit.

So you get into this where you've got bragging rights and that's actually the ego part versus reality. I am cognizant that I taught some of these people how to [indiscernible] -- so I will take responsibility for that.

But that -- but I think that's the important part. So from a network quality perspective, it's not affecting us.

What we're carefully measuring, of course, is quality of service, making sure that we're putting in capacity proactively, that we're deploying the network fast and so on. The issue part at the moment, to be honest with you, is not so much the speed of MTN and so on.

It's the power issues. So that's what we're trying to make sure that we're dealing with.

That's playing a bit of havoc. It's coming out into the numbers.

Raisibe would have talked about -- you're putting in batteries. You're putting ZAR 1 billion into batteries, which are depreciating over 3 years versus 8 years.

That's causing a depreciation and extra depreciation charge on the income statement, then it kind of whittles down your results. So these are the type of pressure points that I think are more important.

And of course, we carefully monitor NPS and so on to make sure that it is fair to say that I think the -- I think we clearly lead on coverage. We clearly lead on voice.

And MTN have a slight advantage on data speed, but not data quality.

2 unrelated questions. First, on the presentation this morning, you did lay out targets for service revenue growth outside of core telcos.

Can you help us unpack '24 and '26 targets. Conceptually, how much of that should we be looking for from South Africa versus the international operations?

And how much of that is kind of broad-based, what you might call basic mobile money services like an M-Pesa versus a higher end product like an Alipay, VodaPay sort of application in South Africa? Second question, on the cost structure.

Can you help us unpack the growth in cost, particularly in SA, as we head into H2? And what do you see as kind of onetime versus kind of perhaps a new cost base as we go forward into '22?

Great. Okay.

So in terms of the first question, the core group changed its shape where in terms of the weight, our initial [indiscernible] IT markets, in the roughly 20% of the service revenue and down, we then say, roughly -- it's around 4%. The IT component growth has jumped to 1%.

Or if you said you're taking the fourth quarter as a proxy, it is growing at roughly 20% -- 21%. Our financial services are up growing at 19%.

We expect both of them to continue to grow at the same pace, which is similar to those levels, of course, the augmentation from the supplier is what is creating a sustainable base at those levels. But the in best terms, in South Africa, service revenue is roughly around ZAR 4 billion.

So it is quite a chunky amount, even though it is blocked by the size of the mobile operators. So it is [indiscernible] 4% and it is still a business that is quite terrible.

Then when we look at the penetration in the different markets, the penetration in South Africa still has a lot of room for -- advance airtime is currently at 43%, given they're still in position of growth. Insurance [indiscernible] 46%, again, a lot of room for growth.

And the lending component is still pretty much a new business. And we see that they continue to grow as well as the super app comes to life and people are able to buy things and so on from an e-commerce platform.

So for the next, I would say that in that split, in the [indiscernible] probably M-Pesa because it comes from different markets will continue to be a faster growth -- relatively faster growth compared to South Africa. But I think both of them are in terms of rand contribution, it is quite like that in converting the rand in the same direction.

So moving to your second question about the cost of Liquid. So for -- this is no different from the [indiscernible] business [indiscernible] Rain in terms of securing the spectrum from a 5G perspective, in particular.

And so the ZAR 400 million is spreading out in the cost because we don't have any revenue that has been booked against it. We do anticipate that with bookings revenue, we [indiscernible] that it should become EBITDA neutral over time as is Rain that has become EBITDA neutral.

So I would say not so much a one-off, but more around the timing for amortizing the contract. Of course, we see that the long-term investment in securing the detailed spectrum -- actually in the context of the delayed spectrum in [SA IT] is now kind of stalled.

So that is something that we think should be helpful, but continue to put more traffic for the customer.

Sorry if I missed it, but what's the time line to breakeven on those revenue streams or cost?

For Liquid?

For -- yes, for any kind of network capacity, Liquid, for Rain agreements?

So Rain is already sitting with the revenue that's kind of -- the cost that is in cash. And from that perspective from an EBITDA perspective, this is kind of similar to the average EBITDA that we report of 40%.

And then Liquid from FY '22 will start booking revenue. So it doesn't have that at the beginning of 2021.

Okay, helpful. Can we segue to the financial targets, yes?

Sorry, John, do you want to comment that again? Did you miss some of the commentary on the financial targets?

Yes, I did. Sorry.

Just high level, is it broad-based? Or is it going to be concentrated in South Africa?

So I think it's more broad-based. I think if you look at -- I think what Raisibe is trying to do, if you look at the slides or is to show the growth profile of the -- where the revenue is going to come from going forward and the makeup of the new services and how that grows exponentially.

So you'll see that the -- from partner to financial services to IoT to things like cloud and fixed services and so on are all growing exponentially in each of the markets with high teens, early 20s growth. So it is broad-based.

And that becomes -- we've given you color in the slides of what that looks like in 2024 and 2025 going forward. So that you'll be able to extrapolate out from there.

So I think you can look at the growth rates that we're achieving. And then, of course, extrapolate that out.

These services should continue to grow strongly, at least high teens, early 20s for the foreseeable future.

A couple of questions mainly on your strategic considerations. You outlined during the presentation your options on fiber.

I was just curious if you could go into a bit more detail as to how you are thinking of the different options, whether there's been any infrastructure funds that you've been in touch with in terms of how you could perhaps structure some of balance sheet vehicles? And then similarly for towers, I believe one of your main peers is more minded towards the sale of these assets.

But I was wondering whether you are seeing any strategic rationale in pulling together resources on towers and having kind of double MSA tower comm similar to the ones we've seen in Italy, for example. I'm just curious because, obviously, Vodafone Group is moving in that direction in Europe, whether it's something you are considering perhaps as an option in your footprint?

So I think it's a very good question. And I think -- so a couple of things.

I think firstly, from a fiber perspective, I think, as you've seen, very strong growth, 145,000 homes passed, 100% growth, all 100% growth. So in the fiber-to-the-home category.

So it's been growing very, very strongly. And I think we're quite pleased with the results.

That said, we do want to increase our fiber presence. And I think strategically, there's 3 options on the table.

And effectively, we're currently in the process of finalizing which one we will pursue this year still. One is, of course, increased investments into the fiber vehicle, that's one.

Two is basically externalizing our assets into a third-party, into a vehicle, bringing on developmental funding into that vehicle. Yes, we have been in touch with entities that are willing to partner with us in that regard.

And then, of course, use that opportunity to grow out more fiber-to-the-home and fiber-to-the-business in that regard. And we've already done the work of, of course, separating our assets and being able to -- we run it already as a separate division so very easily to move into a separate company.

And then, of course, across the internationals, we are looking at partnering with developmental companies to essentially put more focus on fiber-to-the-business going forward. And -- sorry, fiber-to-the-home, fiber-to-the-business going forward.

And we will be looking for partner in that regard to extend fiber-to-the-home, fiber-to-the-business in a -- as the demand for it grows. So it won't be millions of houses, it will be as the demand so that we're there to capture the demand if the demand grows.

And so that will be the intention going forward and some more focus on fiber in the years to come in terms of strategic rationale. In terms of towers, where we are currently is -- our thinking is -- so I mean, we've taken a lot of the learnings from Vodafone, and we're staying quite close to what's happening, advantage and drawing different lessons and so on from within the group.

The first prize, of course, is what we're going to do is to move -- we'll start in South Africa, move the towers into a separate vehicle. We will look at opportunities to partner.

We agree with you that if there is an opportunity to basically put the towers together with another big player, there is opportunity there, and that will increase tenancy. So we do see the strategic rationale for that.

And we will take that into consideration as we pursue it. We're not rapidly going to run out and do some strange things, of course, it would be very considered.

As you know, we're quite conservative. And so basically, what we will do is -- and the first step is to set up the towerco as such, externalize the assets, make sure that we've got the right focus.

We're achieving all the opportunities. And if there's a partnership opportunity, we'll definitely look at that.

But also look at opportunities around maintenance and so on. And the whole purpose is increased tenancies, increased focus on the towers, seeing it as a separate asset and making sure that we can get the full benefits from that.

And that's the same approach we'll then replicate into the other markets. First prize, always, see if you can partner and create a joint towerco with another player in the market.

But we're not in the -- so to be clear, we are not in the mindset of selling off the towers. We're not looking to raise cash as some of our -- let's say, some of our competitors or other players in the continents are doing as they are under cash pressure or debt pressures.

We don't have that issue.

Can you comment a bit about the CapEx trajectory, especially taking into consideration the delay in the spectrum auctions. How should we be thinking about the next -- I mean, this year and the next year?

Yes. So our CapEx intensity is between 13% and 14.5%, still remains.

And as we are growing businesses outside of telcos, we expect that the split will also reflect roughly between 20%, 30% at the split at spend on the digital businesses, which are not telcos. From a telco perspective, we always indicated that our CapEx intensity will remain, whether or not we have the spectrum.

So from that perspective, we'll continue to support the current network and look at other opportunities that are available in the market. And of course, the issue is also to continue the strategy of sharing, in which case, it does give a little bit of maybe optimization from a CapEx perspective.

So 13.5% that we showed you this year. With a consistent CapEx spending, we expect that they will continue to be within that bracket as we come into FY '22 and basically the medium term.

My first question is just on international data revenue. That was up 6.5% for the year while volumes are up about 42%.

I just wanted to understand if that was due to a lot of pricing pressure in these markets or perhaps the elasticities you were expecting didn't come through? And then second question [indiscernible] Liquid.

So can you give a sense of how many sites you go about for Rain and if you think that can be shared?

Okay. So we don't share sites counts for Liquid and Rain.

And remember, at the moment, we're not really using much of the Liquid spectrum as yet. But we are picking up the cost as it's a long term deal.

So that's the one. We don't share the exact sites on Rain, and it's complicated because there's various different ways in which the -- it works.

So yes, we don't provide color on that. In terms of the international data and data revenue and monetization, I think it is fair to say that we did have more pressures in the -- in Tanzania specifically, around data pricing after the customer deletes and so on.

What's positive is that the regulator has now decided to put in and implement a price floor in Tanzania to where the prices in data will go up to a much more reasonable level to ensure that there's a continuous investment cycle. It's quite positive for the industry.

To us, let's just say, what they've now decided they were going to do all at once and then decided that, look, maybe it's not such a good idea to do it all at once. And now we're looking at a phased approach.

But I think what's encouraging is that the rate will go up, and that will allow for better monetization of data. It's quite a significant increase.

So it will allow for better data monetization through the -- in that regard.

No more questions?

In closing, it's been a really pleasing set of results in trying circumstances. Specifically dealing with the effects of COVID-19 crisis, of course, will be a key priority for us.

And we will continue to support our staff, the governments and our customers. Thank you for joining us on today's call.

If there are any questions you may have, please reach out to the Vodacom Investor Relations team. Enjoy the rest of your day.

Thank you.