Vodacom Group Limited

Welcome to our results presentation for the financial year ending March 2022. The past year is best described as being a transformational year for Vodacom.

We made significant size in our transition towards becoming a Pan-African technology company. In November last year, we announced 2 significant strategic acquisitions.

Additionally, we are planning a commercial launch in Ethiopia in 2022. Our digital ecosystem was enhanced with the launch of our super apps.

Collectively, these milestones provide scope for Vodacom to accelerate growth and returns over the medium term. My presentation is framed in 3 sections.

Firstly, and most importantly, I will give you an update on our purpose-led business model, which drives our strategy. Some highlights for this year include our progress on the pillar of digital inclusion where we now service 61 million financial service customers across the group.

In our Inclusion For All Pillar, we will increase our female representation of the Board to 42% after our AGM. We are making good progress in our Planet pillar with our greenhouse gas emissions per terabyte of data, which is down 16%.

This was supported by our broad-ranging energy initiatives. Secondly, I will give you an update on how we're accelerating our multiproduct strategy called the System of Advantage.

Highlights this year include strengthening our footprint with a controlling 55% stake in Vodafone Egypt, one of Africa's premier telcos. This transaction is awaiting final regulatory approvals.

The combination of our existing footprint with Egypt and Ethiopia means we will now reach a population of more than €0.5 billion people. And with connectivity at the core of Vodacom, we announced the acquisition of a strategic stake in CIVH in South Africa, the leading fiber operator.

This transaction will assist in narrowing the digital divide by enabling affordable high-speed access to connectivity. Further, the recent acquisition of 110 megahertz of high demand spectrum in South Africa provides critical certainty.

Our €5.4 billion investment into spectrum will support network performance and contribute to the long-term sustainability of the industry in our largest market. Our digital ecosystem is integral to our system of advantage and is powered by big data with capabilities across financial and digital services and IoT platforms.

In financial services and building on our foundation as Africa's leading fintech operator, we launched our VodaPay and M-Pesa super app. The super apps are critical to building out our 2-sided ecosystem which brings together consumers and merchants.

I'm very excited by the high uptake rates in the short term since we launched supper apps. Separately, our IoT business is combining our global and local capabilities to build world-class products in medicine, agriculture and smart infrastructure.

Finally, I'm very pleased to announce a strong set of financial results today. Some of the highlights, which Raisibe and I will unpack, include a 4.5% increase in revenue to €103 billion, the 4.6% growth in free cash flow generation of €15.7 billion.

Our final dividend is up 4.9% to $0.0430 per share. This brings the full year dividend to €0.0850 per share, an attractive 6% yield.

With a focus on future growth and to support our evolution for telecommunications to a technology company, we invested €14.6 billion of CapEx in the year. As we accelerate growth, we remain exceptionally focused on our returns profile.

Pleasingly, return on capital employed increased by 1.4 percentage points to 23.4%, underlying our strong execution. The context in which we operate informs our purpose as a company.

We are uniquely positioned to reach and empower millions of African consumers with our connectivity, digital and financial solutions. This is captured in our purpose-led model, which is to connect for a better future.

This premise on the 3 pillars of Digital Society, Inclusion For All and Planet. Again, this year, we stepped up our efforts in the delivery of our social contract.

We assisted governments and communities in Africa through the deployment of a wide range of Tech For Good solutions. These efforts helped mitigate the effects of the pandemic and bridge the digital divide, as we recognize our ongoing duty to step up and make a societal difference.

Together with Vodafone, we are honored to be part of the monumental initiative with the UN and the ITU to increase smartphone access to improve the lives of millions of people in Africa. As Vodacom works to connect the next 100 million African people through our africa.connect campaign, we look forward to supporting this ambition to ensure that no one is excluded from the global digital economy.

In the KwaZulu-Natal region of South Africa, which has recently been ravaged by both social unrest and devastating flooding, Vodacom extended efforts to assist small-medium enterprises impacted by the economic fallout. We donated €10 million to help towards relief efforts.

In Mozambique, we contributed to Mozambique's #HopeflPalma campaign by providing food, shelter and personal hygiene items. We reached close to 5,000 families displaced by conflict in the Cabodel-Gado province.

In the DRC, we launched a fund together with the Vodafone Foundation to support communities in the DRC devastated by the volcanic eruptions. In keeping with our continued efforts to combat COVID-19, the Vodafone Foundation and Vodacom donated €87 million to purchase vaccines and support vaccine rollouts to vulnerable people in hard-to-reach communities across our markets.

This includes funding the delivery of cold chain units to the DRC, Mozambique, South Africa and Tanzania. Connected Farmer is a digital platform that improves productivity, revenue and resilience for small-scale farmers by connecting them to information, inputs, credit and buyers at scale.

More than 250,000 farmers use connected farmers across our markets. These are just some of the initiatives we supported this year, but there are many more.

We strongly believe that connectivity and financial services act as enablers of inclusion and economic growth, which is aligned with our purpose. Vodacom has a clear and powerful strategy that sets us apart from competition and will deliver superior returns to you, our shareholders.

We call our multiproduct strategy The System of Advantage and it has 10 drivers of success. The first 2 drivers relate to our core connectivity offering.

Following the announced Egypt transaction, our footprint is further strengthened. In South Africa, our fiber deal enhances our connectivity offering in the market in a high-margin segment.

Delivering connectivity to homes and businesses is core to our business model and it's something that we are passionate about. Leading market share positions in connectivity provide us with the platform to scale for our digital ecosystem.

This ecosystem spans across financial and digital services, IoT and Big Data. Our AI capabilities and behavioral loyalty programs enhance activities for customers.

Strategically, this allows us to create a ring around the customer with the customer proposition so much more than just a decision based on price. A great example of this is in the enterprise space, where we are partnering with business to accelerate their growth.

We are transforming the operations through digital technology in high-growth areas like cloud, hosting, managed security, managed services and IoT. In the financial services space, we have built a formidable business across our existing markets with products that cut across consumers and merchants.

Vodacom's success in this segment is a function of strategic focus. This focus has seen us continuously scale the breadth and value of our financial service products as we leverage big data, machine learning and world-class tech such as Alipay.

The recent launch of VodaPay South Africa was a particularly exciting milestone for our financial service business. We are able to improve our offerings to customers through the big data insights we have from our world-class customer value management platforms.

Today, we know about 3,200 attributes about each customer, up fivefold in a year. These insights are used to enhance offers supported by our behavioral loyalty, which cuts across our products.

As we implement our system of advantage, we put an equal focus on strategic considerations to improve our overall customer proposition, return on capital employed and value creation. A key part of this is optimizing returns.

Our fiber deal in South Africa is a great example of this, where we are using the power of scale and shared costs to drive down the cost to communicate. Of all the elements on this slide, the most important for me is #10.

Our purpose-led model shapes our outlook and our business strategy as we connect for a better future. We have made major strides in accelerating our System of Advantage this financial year.

Earlier, I mentioned the Vodafone Egypt and South African fiber deals and upcoming commercial launch of operations in Ethiopia. To give you a snapshot, post the acquisition of Vodafone Egypt, we will have over 64 million financial service customers and over 39,000 network sites.

This will make us one of Africa's largest tower owners. The group's smartphone penetration will be at 53%, highlighting the structural opportunity we have to grow in data.

Our market-leading positions and scale provide us with the platform to deploy our digital ecosystems, expand our addressable market and create product diversification. Speaking of digital ecosystems, we were very proud and excited to launch our highly anticipated VodaPay and a base super apps this past year.

The apps built on our success in financial services to open up the ecosystem from a few partners to thousands of service providers. The Super App removes the barrier of physical limitations from both consumers and merchants which help them to expand well beyond their geographical boundaries.

And to put it simply, as a transactions compound, we will take our cut, a bit like an iOS or Google Play store. Our IoT platforms are scaling quickly.

At our February Investor Day, we showcased how we are providing solutions for smart medicine, agriculture and buildings, also power saving products for infrastructure assets such as base stations. IoT in our markets is an attractive addressable market of €30 billion.

Our platforms enhance our Vodacom Business System of Advantage and positively impact on our purpose pillars. Our focus on value creation was evident in the improvement in return on capital employed in the year.

We see further scope to optimize our capital, including our infrastructure assets. We are progressing well with the separation of our towers in South Africa to support this journey.

Sharing infrastructure in our markets is a key driver in our future-ready techco ambition, and we are focused on our fiber deployment and open access ambitions. Putting these major strategic developments together, we believe we will enhance our growth and returns potential as a group.

Vodacom seldom does major M&A as we have a very high benchmark for the assets we target. The Vodafone Egypt and CIBH deals offer unique opportunities to advance our strategic connectivity and financial service ambitions.

Vodafone Egypt is a clear market leader with an attractive asset portfolio of towers and spectrum. Their financial results this year were excellent with a 17.3% growth in revenue to an equivalent of €31.2 billion.

EBITDA growth was up 22.3%. Vodafone Egypt's growth outlook is supported by leadership across both the consumer and enterprise segments, a clear network in spectrum advantage versus peers and a brand synonymous with technology leadership.

In addition to being an attractive asset on a stand-alone basis, we see a massive addressable market for financial services in Egypt. We intend to leverage our financial services product road map, including our super app approach to unlock this opportunity.

We also see upside from cross-pollination between Egypt software factory and our big data capabilities close to cooperation between both companies by scanning Pan-African enterprise and IoT solutions and also talent sharing. As we evolve from telco to techco, access to skills talent is critical.

Egypt is seen across the Vodafone Group as a talented IT skills powerhouse. We look forward to closing the transaction in the near term, although this is subject to a regulatory sign off.

Separately, also on the 10th of November, the group announced a major step forward in scaling our fiber offering in South Africa. Through an investment into Vumatel and Dark Fiber Africa, Vodacom will gain exposure to a highly attractive and fast-growing businesses and South Africa's largest open access fiber players.

With our initial cash and asset injection, we expect to acquire Co-Controller Vumatel in DFA and a stake of up to 40%. On the connectivity front, we always target scale.

Vumatel passes 1.3 million households in South Africa and has around 40% market share. When combined with our fiber-to-the-home assets and our cash injection, we will accelerate the scale of this business into something that can really benefit South Africa.

The open access business model is a key part of this, and as Vumatel rolls out into secondary towns in lower income groups, we will help close the digital divide. Scale in a shared cost model combined particularly well for our DFA investment.

As we move into a 5G world, the fiber rollout of DFA and Vumatel will help us optimize our cost as we benefit from sharing, especially in areas like fiber to the base station. This asset as optimization is great news for reducing the cost of producing data.

Turning to the group's financial results. Group revenue grew 5.8% and service revenue grew 4.6% on a normalized basis.

The growth was supported by a resilient performance in South Africa and our new services such as IoT and financial services. The group's operating profit grew by 5.4% on a normalized basis to €28.2 billion.

We added six million customers this year across the portfolio to serve a combined 130 million customers across the group. Our financial services business is integral to our purpose-led model, and is the largest component of our new services and a clear strategic priority.

Financial service customers reached 61 million in the year, up 5%. This customer growth rate was achieved despite 1.3 million M-Pesa customers in Tanzania relinquishing services immediately following the introduction of new mobile money levies in July 2021.

In building resilience of our networks to cope with significant increases in mobile data traffic volumes, we invested €14.6 billion into capital expenditure across the Vodacom Group markets. This represents 14.3% of revenue and is in line with guidance.

Headline earnings per share increased 3.4%, supported by the group's operating profit growth. The Board resolved to declare a final dividend of ZAR 0.430 per share, up 4.9% from last year, bringing the full year dividend to ZAR 0.850 per share.

Vodacom's geographic and revenue diversification continues to pay dividends. Pleasingly, we delivered growth across each of our segments.

On the service revenue bar chart, normalized group service revenue was up 4.6%, with South Africa growing 3.8%. Our International operations delivered normalized service revenue growth of 5.6% despite the impact of levies in Tanzania.

Safaricom had an excellent year with service revenue growth of 2.3%. From an operating profit perspective, our International operations grew 11.8% on a normalized basis, an excellent result.

Our associates and joint ventures grew at 17.5%, supported by another great year for Safaricom's business in Kenya. When looking at our customers, 65% of our 130 million customers are outside South Africa.

This split will increase further as we add Egypt's more than 40 million customers into the portfolio. Shifting to our product lines.

This slide sets out the contribution of our high-growth new services to each of our geographic segments. Our new services comprise IoT, fixed financial and digital services.

These services follow a similar product life cycle. This starts with innovation, which is driven by dedicated innovation hubs and is data driven.

Services are then integrated into our product ecosystem and system of advantage and scale to support our growth ambitions. Our optimization phase for assets can take different forms.

It could include structural separation and potentially partial monetization to better reflect the underlying value of these assets. In South Africa, 14.4% of service revenue is now attributable to new services.

We intend to scale each of these new revenue streams into formidable businesses. Across our International portfolio, the contribution of new services is closer to 28%.

And while Safaricom sets the benchmark at 42.5%. Earlier, I mentioned that we have built a formidable financial service business.

This slide sets out the metrics that highlight our scale. Revenue for our consolidated operations exceeded €7.6 billion in the year, up 14.4% on a normalized basis.

Adjusting for the mobile money levies in Tanzania, the normalized growth was an even more impressive 23.4%. Safaricom generated revenue of €14.5 billion on a 100% basis.

Growth was up 30.3% as it implements our two-sided financial services ecosystem. More on this later.

Our M-Pesa platform, including Safaricom process is staggering €324.6 billion of transaction value during the year, up 29.2%, representing clear leadership in the African fintech space. We've also provided some color on a proportionate basis, which accounts for minorities and associate holdings.

This is especially relevant when comparing fintech valuations to market cap. On a proportionate basis, we generated €11.2 billion of revenue in the year.

This equates to 13% of proportionate service revenue. The low capital intensity profile of financial services means that it generates a higher profit margin than our core mobile business.

17% of our group's proportionate profit before tax comes from financial services at a margin of around 40%. This equates to €4.4 billion or $300 million for the year.

To capture more share of the addressable fintech market, we need to lead in the digitization of financial services in Africa. We are doing just this and have developed a comprehensive suite of financial products, which provides a compelling proposition to both consumers and merchants.

We see the merchant play as a critical part of the fintech value chain. Our enterprise resource planning tool called VodaTrade facilitates transactions between merchants and FMCG operators.

On the payment side, we have launched our own Android-powered physical point-of-sale device in South Africa, complementing our already scaled M-Pesa service. This payment ecosystem provides insurance and lending opportunities such as invoice financing and SME lending.

Pulling our merchant and consumer capabilities together and launching them into the next [indiscernible] is our super app approach. Our South African lifestyle super app VodaPay is supported by the world-class technology of Alipay.

It offers services ranging from loans, seamless QR codes, and person-to-person payments to entertainment and personalized shopping experiences with many more services such as savings and investments on the product road map. This functionality will be replicated across our M-Pesa footprint, supported by mini-app capabilities on the Alipay platform.

Digging a little deeper into the ecosystem of both financial services in South Africa and in M-Pesa Africa, this slide shows some of the highlights from the past year. On the merchant side, we have 550,000 active M-Pesa merchants.

We have processed $14 billion worth of transactions across the platform last year. In South Africa, our VodaTrade product processed €270 billion of transactional value during the year.

Looking at the super apps, our M-Pesa app has 28 mini apps on the platform with 2.8 million active users. I'm particularly excited about VodaPay's high adoption rate since its launch in South Africa in October last year.

This super app has attracted 2.2 million downloads and 1.6 million registered users in a very short time. The app is zero-rated and hosts a number of South Africa's leading retailers in the 85 mini apps that are currently registered on the platform.

I'm proud to say that value-added financial services have been launched across our entire footprint. When I refer to value-added services in this context, it includes products like insurance, savings and lending.

So growth areas over and above our core payments. A fantastic example of the adoption of M-Pesa is in Tanzania, where 20% of our M-Pesa customers are already using a value-added finical service.

In South Africa, our insurance business is growing nicely with insurance policies now at €2.4 million, up 15%. From a growth perspective, one of the big drivers for M-Pesa international money transfer where around $4 billion of value was processed this year, up 57%.

On the VodaPay side, cash in and cash out is planned for this year and will accelerate the transactional use case for the platform. The addressable market opportunities across our footprint are very exciting.

These are set out on the right-hand side of the slide. Looking ahead, we see strong growth potential for customer adoption across our existing footprint, and we are targeting 75 million financial services customers by FY '25.

To enhance alignment between our purpose and strategic execution, financial inclusion forms part of management's long-term incentives. Over and above this, Egypt and Ethiopia each with populations of over 100 million people, respectively, provide transformational opportunities for financial services.

In South Africa, revenue reached €80.8 billion in the financial year, up 5.3%, supported by strong equipment sales. Service revenue grew 3.8% to €58.5 billion, driven by continued demand for connectivity, incremental wholesale revenue and growth in our new services.

Data traffic was up 19.2% in the year and accelerated to 24.3% in the fourth quarter. We added 1.8 million data customers reaching 23.5 million customers, up 8.2%.

Smart devices were up 13.1% to €26.2 million. While strong growth was evident across all our segments, Vodacom business is worthy of a special mention with service revenue up 11.6% to €17.7 billion.

This was driven by our wholesale business, continued demand for innovative Work from Home Solutions, and sustained growth in fixed line services. Financial Services delivered another strong year of growth with revenue up 12.4% to €2.7 billion.

The growth was underpinned by our Airtime Advance product, where we advanced €13 billion in airtime during the year. EBITDA grew 3.3% and was impacted by a few factors that Raisibe will unpack in more detail.

Notably, we accelerated spend on technology OpEx during the year to support improved resilience of the network. This investment into the network was very deliberate and supported a leading network NPS score at the end of the year.

Looking ahead, our €5.4 billion investment in the spectrum will support network performance and coverage. In addition to accelerating our rural coverage program and fast-tracking the rollout of our 5G network, access to high-demand spectrum will result in even faster data connectivity.

This will ultimately assist in delivering greater value for customers. We've already benefited from a 43% drop in headline data prices since 2020 and our €50 billion investment into infrastructure over the past 5 years.

Service revenue for our International business increased 0.3% to €22.2 billion, subdued by a strong rand and the impact of new levies on mobile money in Tanzania. The levy's diluted revenue by €708 million in the year.

On a normalized basis, service revenue grew 5.6% and adjusted for the Mobile Money levy impact grew by 9%. The strong underlying growth reflects our purpose-led focus on digital and financial inclusion with normalized data of 16.4% and a beta revenue growth of 15.5%.

Data revenue at €4.6 billion contributed 20.7% of international service revenue. We added 531,000 customers to end the year at €21.2 million, subdued by the barring of customers in Tanzania.

Data traffic growth of 31.4% was supported by smartphone penetration increasing 1.4 percentage points to 33.7%. We continue to drive the adoption of smartphones, leveraging our strategic partnerships and implementing innovative financing options to provide affordable devices to our customers.

M-Pesa revenue of €5 billion contributed 22.3% of service revenue. Growth was supported by strong performances in the DRC, Mozambique and [indiscernible].

Adjusting for the impact of the Mobile Money levies in Tanzania, M-Pesa revenue for our international markets was up an excellent 29.5%. The underlying momentum of M-Pesa reflects our ongoing product enhancements supported by our innovation hub M-Pesa Africa.

International EBITDA was €8.5 billion and declined 3.2% on a reported basis, negatively impacted by a once-off lease accounting impact in the DRC and the Mobile Money levies in Tanzania. Adjusted for the lease and levy impact, International EBITDA was up 11.3% and reflected accelerated cost containment initiatives, particularly in Tanzania.

Operating profit was more reflective of the underlying profitability performance across International. Reported operating profit for the segment was up 13.5% to €4.4 billion.

Safaricom delivered another strong set of results, supported by excellent growth in the fixed business and growth in M-Pesa. In local currency, service revenue grew 12.3%, supported by data revenue growth at 8.1% and M-Pesa revenue growth of an excellent 30.3%.

M-Pesa's revenue growth was supported by strong product adoption and greater value through updated peer-to-peer pricing from 1st of January 2021. M-Pesa customers grew 7.8% to EUR30.5 million.

Fixed service revenue grew 18.3%, supported by fiber-to-the-home customers which grew 20.8%, while enterprise fixed customers grew 24.1%. The strong revenue performance supported 14.9% EBITDA growth in Kenya with margins expanding to 51.7%.

Reported EBITDA, including Ethiopia start-up losses, was up 11.1%. Safaricom Ethiopia is proceeding with its plans for operational readiness, and we expect commercial launch in calendar year 2022.

This will unlock a long-term growth factor for Safaricom. Our approach to ESG is an integral part of our purpose and strategy.

This year, the outcomes of our purpose-led model and strong governance were recognized by leading environmental, social and governance rating agencies including MSCI and Sustainalytics. In November last year, MSCI rated Vodacom as AAA, its highest ESG rating.

MSCI highlighted Vodacom scores in governance, labor management and cybersecurity policies as the key drivers of the ESG rating given. Separately, in October last year, Sustainalytics ranked Vodacom first out of more than 200 companies in this telecommunication service industry grouping.

Our approach to ESG is premised on the core pillars reflected on the slide, with our purpose of connecting for a better future being the first pillar. Our social contract is the guiding ethos to our purpose initiatives.

Underpinning responsible practices, which is the third pillar, involves our steadfast commitment to operating at the highest standards of integrity and ethics. Included in this pillar is our commitment to protecting our customers' privacy, our people's health and safety, and human rights.

The fourth and final pillar is premised on the transparency in which we conduct our business and the measurement thereof. Measurable ESG data is increasingly relevant to all our stakeholders, including lenders and ESG rating agencies.

In this video, I will unpack our results for the year ended 31st March 2022. We are pleased to have delivered good results for the year and note that they are consistent with our medium-term targets while continue to deal with the tail impact of the COVID-19 pandemic.

From a shareholder perspective, we have declared a final dividend of ZAR 0.430 per share, representing growth of 4.9%. This is a testament to our ongoing operational execution and the financial position, both of which are a good context to navigate us through the ongoing uncertainties of the macroeconomic environment.

Moving to our financial performance for the year ended 31st March, our income statement sets out reported and normalized growth. I will primarily draw attention to the normalized growth numbers, which provide better insights adjusted for ForEx fluctuations, M&A activity, as well as major one-offs.

Pleasingly, reaching €100 billion for the first time, our revenue increased by 4.5% or 5.8% on a normalized basis, supported by service revenue growth, which was up 3% on a reported basis and 4.6% on a normalized basis. EBITDA grew 2.1% on a normalized basis at a margin of 38.8%.

The EBITDA performance was supported by the South African business while the International business was impacted by foreign exchange headwinds and a handful of one-offs, which I will unpack later. The reported change on the net profit from associate and joint ventures of €3.1 billion was impacted by foreign exchange and start-up losses in our new operations in Ethiopia.

On a normalized basis, Safaricom's contribution to our operating profit increased 17.5%, reflecting a strong performance in M-PESA following a period of zero rating P2P transactions. Headline earnings per share increased 3.4% to ZAR 0.1013 and was achieved despite foreign exchange headwinds, start-up costs for the investment in Ethiopia and the impact of mobile money levies in Tanzania.

As set out on the previous slide, normalized service revenue growth for the group was 4.6% for this financial year. On a quarterly basis, group growth has eased modestly from 4.4% in the third quarter to 3.2% in the fourth quarter.

South Africa delivered a good quarter-on-quarter growth, but we did let a particularly strong fourth quarter in the comparative period. The base included the impact of lockdown restrictions and a new wholesale deal.

Encouragingly, the absolute service revenue in the fourth quarter marked the highest in the year. Shifting forecast to the International business, the impact of foreign exchange volatilities is evident, reflecting an opposite swing between the first and the second half.

On average, the rand was 15% stronger than a basket of currencies in our international markets in the first half compared with the 4%, weaker in the second half. The normalized growth trend reflects the reinstatement of P2P mobile money fees across our markets since January 2021.

Further, the introduction of mobile money levies in Tanzania in July 2021 had a material negative impact on service revenue growth in the International business. The levies impacted Tanzanian service revenue by around ZAR 708 million.

Adjusted for this impact, our International business would have grown service revenue by 9% for the year. Moving to EBITDA.

Group EBITDA grew by 2.1% on a normalized basis. South Africa posted EBITDA growth of 3.3% with margin contraction of 0.8 percentage points.

Growth was impacted by a normalization of certain operating expenditures such as publicity as well as the accelerated spend on technology operating expenditure to support improved resilience of our network. Pleasingly, this intervention supported a market-leading network NPS position, which we achieved by year-end.

Finally, for South Africa, the EBITDA margin was impacted by strong growth in low-margin equipment revenue. International business EBITDA decreased 0.6% on a normalized basis with the margin contracting 1.4 percentage points.

This performance was materially impacted by the mobile money levy in Tanzania and a one-off lease contract separation in DRC, which I will unpack in the next slide. In this slide, we unpack the effect of 2 material factors that diluted our EBITDA growth.

On the left side, and starting with group EBITDA, normalized growth of 2.1% was negatively impacted by the one-off lease contract separation that increased operating expenses and reduced the right-of-use depreciation and interest. The lease contract separation did not have a material impact on group net profit, however, diluted group EBITDA growth by 1.6 percentage points.

Additionally, the introduction of levies on mobile money transactions in Tanzania negatively impacted group EBITDA growth by 1 percentage point. Adjusted for the one-off lease contract separation and the mobile money levy impact, normalized group EBITDA was up 4.7%.

On the right-hand side of the slide, we provide the same analysis, but for international EBITDA growth. Adjusting for the lease contract operation and mobile money in Tanzania, International business growth was 11.3%.

This rate of growth represents margin expansion and was supported by accelerated cost containment, particularly in Tanzania. Shifting forecast to cash flow.

Operating free cash flow increased 1.6% in this year. We made a strategic decision to accelerate investment into network performance, taking advantage of the strong rand's purchasing power, particularly in the first half of 2022.

This trend continued in quarter 4 in an attempt to mitigate some of the potential supply chain challenges that may emerge as a result of the Russia-Ukraine conflict. Our CapEx of €14.6 billion increased 10% as a result.

Lease liability payments, which is also captured in operating free cash flow, amounted to €4.2 billion. From operating free cash flow, we paid cash taxes and finance costs, but these were partly offset by the dividend received from Safaricom.

On this basis, we generate free cash flow of €15.7 billion, up 4.6%, broadly consistent with our net profit growth. HEPS increased 3.4% to ZAR 0.1013 per share.

As discussed earlier, this result was impacted by a few notable headwinds. The most significant of this related to the startup losses in Ethiopia.

These losses comprised both operating expenses and finance costs that we incurred and impacted headline earnings per share by ZAR 0.22 per share. The Mobile Money Tanzania levy had a ZAR 225 million impact on the bottom line and it equates to ZAR 0.30 per share.

From an operational perspective, this means that underlying growth in HEPS was around ZAR 0.69 per share. The adjusted growth, excluding the one-offs is 7%, and we are pleased with this growth given the foreign exchange headwinds in the year.

Vodacom's current dividend policy is to pay at least 90% of adjusted headline earnings, excluding Safaricom, and then pass through the Safaricom dividend. On this basis, the Board has declared a total dividend of ZAR 0.850 per share and a final dividend of ZAR 0.430, which is up 4.9%.

The final dividend of ZAR 0.430 per share comprises ZAR 0.365 from the controlled operations and ZAR 0.65 from Safaricom. The Safaricom contribution declined because foreign exchange rate movements and the free P2P transactions in the prior year had an impact on this number.

The contribution from the controlled operations was up 9%, and this is despite the impact of the Tanzanian levies, and this was reassuring. Our balance sheet remains one of the key strengths and it positions us to accelerate our system of advantage.

Our near-term debt increased due to upcoming maturities of debt with Vodafone Luxembourg. We do not foresee any refinancing risk related to these borrowings, some of which is already in progress.

More than 90% of our debt, excluding leases, is rand based, limiting our exposure to foreign exchange movements. From an interest rate perspective, our debt structure is split 52% fixed and 48% floating rates.

And if we exclude leases and forecast on financial debt, the fixed component is 35%, while floating rate debt is 65%. We intend to optimize this mix of debt as we undertake future funding obligations such as the Vodafone Egypt, CIVH, as well as the Spectrum acquisitions.

Pleasingly, we have maintained our net debt-to-EBITDA ratio at 0.9x year-on-year despite our accelerated network investment. And now on our medium-term targets.

We aim to grow service revenue in mid-single digits and EBITDA at mid- to high single digits. Our group capital intensity ratio remains in a range of 13% to 14.5% of revenue.

With this guidance, we have updated our profitability target metric from group operating profit growth to group EBITDA growth. This reflects the anticipated Vodafone Egypt transaction, which is expected to meaningfully diversify the group's geographic profile.

As a result of the transaction, we anticipate an increased contribution from the controlled operations to group profitability. Notably, this guidance excludes Egypt and it is based on the prevailing economic climate.

Clearly, both the COVID-19 situation and the war in Ukraine pose material risks to the outlook for inflation and growth across our markets. While we are optimistic that our strategy and business model are resilient, we are also realistic that the cost of living is a challenge and that we need to overcome this with our customers.

Finally, we expect the Vodafone Egypt and the CIVH fiber asset acquisitions will enhance our system of advantage and provide scope to diversify and accelerate our group growth profile. Once we close the Vodafone Egypt transaction, we intend to provide an update on guidance at our next reporting event.

In my concluding slide, I would like to reconcile our medium-term target with the shape of our business in years to come, and in particular, our ambitions around new services. These new services encompass digital and financial services, fixed and IoT, and are key to us diversifying our revenue portfolio and improving our customer proposition.

On a consolidated basis, with South Africa and International business in scope, we see our new service revenue contribution increasing from 18% to around 25% to 30% in the medium term. On that exciting note, I will conclude, and thank you for your attention.

To conclude our presentation today, I would like to set out how we plan to create value for our shareholders. Firstly, we will continue to execute on our multiproduct approach, our System of Advantage, by completing our M&A transactions announced last year.

We are hopeful that the Egypt transaction will be completed by the first quarter of this financial year, but we are subject to the timing of regulatory approvals. The CIVH deal will accelerate fiber reach in South Africa, fostering economic development.

The regulatory approval process is proceeding, and we expect the transaction to close this financial year. Our commercial launch in Ethiopia is another priority.

The opportunity for growth in fintech in South Africa and M-Pesa significant and remains a key priority for us, and we are very excited for the scaling of our super apps. Transforming to a techco will include the optimizing of our assets.

And to this end, we aim to unlock benefits from separating our towers in South Africa this year. We will continue to adopt a disciplined capital structure and allocation of capital resources.

As such, we will utilize that capacity to a maximum of 1.5x EBITDA. We have simplified and updated our dividend policy, still offering one of the highest payouts on the JSE.

In terms of capital expenditure, we will invest within the framework of our capital intensity guidance. Accelerating and diversifying returns to our investors remains a key priority, and we will continue to accelerate the group's growth potential with earnings and free cash flow, whilst at the same time, improving our return on capital employed.

Finally, we will always prioritize our contribution to the societies in which we operate and our purpose-led ambitions. We will focus on increasing our female representation at management levels.

reducing our greenhouse gas emissions across the footprint and driving financial inclusion. These targets are included in management's long-term incentives.

We look forward to engaging with you over the coming weeks on our investor road shows. This concludes my presentation.

Thank you for your attention.

Okay. Great.

We're into the live Q&A session. I've got a little tablet here.

If you are online and would like to send through a question, please do that through that facility. Also, we have microphones in the audience, which I've been assured will be sterilized three times before you get them.

So if you do have a question for Shameel or Raisibe, please just put up your hand, and we'll come over to you. A couple of questions in the front here.

And if you don't mind just introducing yourself and where you're from to sort of help us guide our Q&A. Thank you.

And then Maddie will come to you after that.

Hi. Good morning, everybody.

I am [indiscernible] from Broadband. My questions are around the CIVH deal and load sharing in particular.

Shameel, you've noted that Vumatel plans expansion into lower cost areas and smaller towns. I just want to know, will this rollout include areas in which there is already some fiber operators or fiber presence?

And if so, how will Vumatel compete in those areas? We've seen a pricing war in the home fiber market.

And I just want to know what does Vodacom's take on this as it set out the space and really aggressively push with fiber. And then also will Vodacom confirm that it will keep the new fiber network open access?

It's a big concern for some ISPs and won't make it difficult for other ISPs to offer competitive Vuma packages? And then just on load shedding.

I know it's briefly mentioned in the annual results, the impact of backup -- not having backup power and how this tend to degrade network quality. Could you break down how much CapEx was spent on backup power and security at existing sites?

And how much on new capacity? And then also just with the new evening load shedding routine, which seems to be becoming the norm, do Vodacom TEL batteries have enough time to charge up just?

Okay. Quite a few questions there.

We'll try to remember all of them. But if you guys you can keep it to 2, we're -- we don't have things to scribble on.

But go for it, Shameel.

Yes. I think, look, on the DFA Vuma investment, I think the big part is that what we see is an excellent vehicle to build more fiber coverage in the country.

And I think one of the big issues in South Africa is that we need a lot more fiber to the home, fiber to the business coverage today. We think it's an excellent vehicle to invest into, which can then drive it.

I think what you will also find is that DFA and Vuma have been built as open access networks. So their capabilities and abilities in that regard and the teams and the people that they have behind it is very different to what Vodacom is today.

So actually, if I was in ISP, I'd be overjoyed with it, because the Vodacom infrastructure becomes open access overnight when the -- when it goes into DFA and Vuma. The principle of it, and that will be, again, confirmed at the Competition Commission, it's an open access vehicle.

And I think, very importantly, we wanted to be open access as well because a shared fiber infrastructure, especially fiber to the base station is extremely important to be able to get that shared cost. The country is a big country that needs to be covered.

So the cost involved is very, very costly. And in a 5G world, you need -- you desperately need more fiber to the base station.

So that's a big part, I would say, of the play. So Open Access is definitely part of it.

And I think it will be beneficial. In terms of where Vuma rolls out, they have their strategy.

And we'll be contributing in that strategy with assets and cash. And of course, there's lots of places to cover.

And are they going to compete with other operators? I'm sure there will always be -- and I think competition generally is healthy.

So -- and -- but they -- I mean, it's not going to be -- of course, you're going to have places where people are going to overbuild them, they're going to overbuild. I think that's part of life.

I think what's encouraging for us is the models that they've created to take fiber to the townships and rural areas and so on. I think that's very encouraging.

I mean, if you're looking at -- we have 17 million homes today in South Africa with numbers of about 2.2 million currently passed. So there's a long way to go.

And so I think by investing into the vehicle, it will allow them to grow even faster. When it comes to power outages, we're spending over €1 billion a year in batteries and creating resiliency.

It's the single biggest issue that we have today in terms of South Africa's network performance inside. So that's a big issue for us.

In terms of what does it mean, we're trying to make sure that all 15,000 sites have enough battery backup power, especially hub sites. So hub sites become really, really important because if they don't have enough -- if it doesn't have enough batteries or generators and so on, and the hub goes down, it has more dramatic implications.

But we're constantly having to improve the standby time. First, it was 4 hours, then it goes to 6 hours, then 8 hours.

So depending on what happens with the outages, you'll have to put more money into batteries. Because, look, our customers, honestly, they don't want the network out.

And I think, often, they don't also appreciate that the network runs on power. So they want service.

And so we try and provide that as best as we can given the constraints of where we find ourselves in South Africa.

And maybe just a quick word on pricing in the fiber space. I think that was one of the questions, and then we'll shift.

I've already answered that.

Okay. Then I think we're going to go up to Madi, if that's okay.

Madi, just put up your hand. I think I'm the only one who knows you.

Yes, there you go.

Just a couple of them, because I've been asked to limit it to 2. So the first question is on the tower high-worth plans.

I just want to understand what is the objective here? Is there a plan to monetize that?

And would you rather take minority shareholders in that? Or would you actually go for listing?

So what are the options there? And the timeline as well?

And then second question is on the outlook for wholesale business in South Africa especially, I think, given there's some other transactions, which have happened -- rather deals which have happened. So I just want to understand, does that impact your wholesale business outlook for 2023?

So happy to take the first one. In terms of the TowerCo, we are leaving ourselves with a number of options, but the first thing is to identify and separate and create a separate entity for the telco with its own management, just like we've done with financial services.

And as we indicated, this year, financial year '22, was the year that we wanted to have that complete. So we are now in the final stages of basically doing the pro formas and so on and with the management team also being put in place.

So there's new CEO who will join in July, and there's already a CFO running that operation with the telco. In terms of IPO and so on, there's a lot of options.

And at this stage, we haven't narrowed ourselves into any particular direction. It will leave us various options.

But we don't have any need to monetize. We don't -- we're not looking to do this to raise capital.

Yes. I think maybe just to add, we see a lot of opportunity on the towers itself.

We will have the largest TowerCo in South Africa. And effectively, if you run it like a business, there's lots of opportunity.

Just to give you an idea, one of the things that we'll be looking at is how can we make rooftops more shareable. Today, we don't really share any rooftops as an example.

So we'll be looking at increased tenancies, we'll be looking at increased synergies between different operators, power resiliency. So there's a number of synergies that we think will come out and also capital investment into, let's say, maximizing the opportunity and the revenues around the tower.

So we see it as a business. But to Raisibe's point, there's also other options to partner and so on, which we will consider.

What we're clear on is that we will not be selling the towers or losing control of them. Yes.

So on wholesale revenues, I'm not sure exactly what you're referring to. But the -- from the wholesale perspective, we have a strong -- of course, we've got the roaming revenues from telecom in then we've got revenues from APNs and so on, which we always trying to stay competitive.

There's also going to be new advent of MVNOs and so on. Then we'll be looking at the MVNO market as well.

And essentially, signing on, let's say, ones that we feel have the chance to be successful.

Referring to the telecom signing up with MTN as well again, so that part of the...

So Telkom there's a closing agreement which allows Telkom to vary about 20% of the traffic and the rest is contractual.

Other questions in the audience before I move online. Just to the top there, to Niel, please.

Niel Venter from [ph] Global Markets. Just a broader question on your guidance, please.

You say that your medium-term guidance on EBITDA is mid- to high single digits. Previous guidance was mid- to high single digits on EBIT.

Now the concern is that, given higher depreciation, lower income from associates and joint ventures as Safaricom, Vodacom is sort of shifting the goal post and that you're likely not to hit that sort of mid- to high single-digit target on the EBIT level. If you can just comment on that, please.

So as we indicated, the guidance will carry in it the early losses from Ethiopia. So the contribution coming from Safaricom will come with it.

The big losses, early losses will basically be in this financial year '23, obviously, because we will account for part of the period for 2022. But obviously, going forward, they will start generating some revenue.

So indeed, we expect a bit of that come into Safaricom, and I'm sure you can look at Safaricom's own guidance with that respect. But in terms of changing the guidance to EBITDA, it is on the basis that Safaricom's contribution to the group is expected to be lower than what it was before Egypt comes through.

And for that reason, it is not as significant anymore to have that as a metric. And noting that prior to acquisition from our guidance was always on EBITDA, which is in line with the market.

So however, you also have visibility of what the operating profit level is as a result of the guidance from Safaricom.

And just following up on the theme of Ethiopia. We've got a question online from RMB.

Just asking on the expected time lines to break even in the Ethiopian operations. Let me just start there and say that Safaricom has provided guidance on Ethiopia and has provided a medium-term framework around EBITDA breakeven for Ethiopia.

So I'm not going to go into that again. But perhaps maybe just 30 seconds from you, Shameel, on the -- I guess what Ethiopia brings to the group and more specifically, what it brings to Safaricom?

Yes. I think it really -- it changes the dynamic of Safaricom going forward in terms of exposure to a high-growth market and so you will take a negative hit this year.

But then, of course, it starts to -- you start getting the revenue coming through and so on and so on. So within the next few years, you'll, of course, break even.

And then it becomes hugely accretive to the group. I think also financial services, and there's a clear guidance now from government that we will get a mobile money license in Ethiopia.

So I think that's very encouraging. And so I think in the coming weeks and months, that will also come to pass and hopefully will be there before launch.

And I think that becomes hugely encouraging. It does -- it transforms the group Safaricom specifically in a number of ways because you've got a 100 million population that you can now target both with the strength of financial services, but also the rollout of the network and so on.

So I think it's going to be usually positive for Safaricom and its growth profile as a listed company going forward.

So the breakeven is 4 years, starting from 2022. Okay.

I'm going to proceed with the online questions. If there's a question in the room, just pop up your hand.

A question from Nadim at SBG Securities, and this is probably one for you, Raisibe. He's just asking about the customer momentum in Tanzania.

There were some quarter-on-quarter declines there. Just checking, was this possibly a result of the biometric registration in the market and just an update there.

Yes. So it is less about the biometric registrations, but more about the introduction of the levy on P2P transactions, which started in July last year.

And although the initial reaction of the customers was a little bit hard, like the revenue was initially down 40%, but we saw some recovery towards the end of the year. So -- and as a result, the discussions with the government to find a pragmatic solution to how the levy was introduced is quite important because obviously, it's an important part of the financial inclusion.

But yes, so the main reason is as a result of P2P.

Yes. And it depends what you're looking at.

If you're looking at the mobile money part, then Raisibe's given you more color on that one. If you're looking at the movement from the third quarter into the fourth quarter, our total customer numbers, then it's the biometric registration where we deleted those to 1 million customers.

Yes. And that would be the remaining tranche there.

Yes. Okay.

Then moving to a question from Myuran from Metal Industries. Looking specifically at prepaid data growth, note that was up 3% in the year.

Just if you can provide a bit of context around the fourth quarter, what did that look like from a year-on-year perspective and sort of any feedback on the quarter performance for prepaid in South Africa?

Yes. I think the fourth quarter was always going to be weak.

Remember, last year, we had an 8.6% growth in the fourth quarter. So you're always going to have a strong comp against which you were betting.

So it was minus 2%. Remember, last year, we had the lockdowns.

I think what's encouraging is that the ARPUs, if you look at -- are now -- basically, when you compare it to pre-COVID levels, is still higher in total than what it was pre-COVID.

Okay. Then we have a question from [indiscernible].

He just wants to come back to the Tanzanian Mobile Money levies. I guess I'll take the first bit, which is just to help in terms of the exact numbers that impacted there.

But then he really want to understand and maybe this is, Shameel or Raisibe, where you can jump in. What's the expected return of improvement that we can expect going forward?

Has that been lost permanently or is there scope for recovery for Tanzania into the new year? So just on the numbers for this financial year '22.

There was a ZAR 708 million impact to service revenue from the levies. At an EBITDA level, that was ZAR 401 million.

So you get some offset or some savings from lower direct costs related to M-Pesa. And then at the EPS level or the bottom line, it's just over ZAR 200 million.

And that reflects both the tax impact and the minority impact coming out of that EBITDA number of ZAR 400 million. So certainly a big number in the year for us, but I wonder if you can talk about the looking ahead.

Yes. I think the underlying performance of M-Pesa remains strong.

I think the year was basically -- it was going really, really well until -- in Tanzania until the Mobile Money levies came into play and then volumes reduced quite dramatically. What we've been seeing is a slow growth of that coming back.

The way we capture it internally is it took us back 2 to 3 years. So we're back to like 2019 revenues and have to start growing again.

I think there's an acknowledgment from government that the impacts have been quite dramatic and industry has been working with government to -- on the repair or the reduction of the levies going forward. So that's one.

I think the second thing that's been very helpful in Tanzania is the launch of -- or introduction of a price floor on data. And so that will help to basically ensure that more of the growth in revenue will come through into growth in ARPU.

And that, again, will allow for reinvestment into the network and growing the network as well. So I think it's a very healthy step for the Tanzanian market, where effectively the rate per gig was too low by global standards.

Okay. Then we have a question from [indiscernible] and the question there is, last year, you obviously launched the super app VodaPay.

Can you take us through any financial performance aspects of the app, contribution to revenue, profitability? Just trying to reconcile that with the downloads and the registered users.

And then how many apps -- sorry, how many users do you think the app would need to reach breakeven?

Yes, I think it's -- to be frank with you, it's too early. You've got 2.2 million downloads at the end of March, 1.6 million registered customers.

The whole concept now is not profitability. The concept, it's a platform play.

It's about how many users can you get repeatable transactions and so on and so on. So what we're doing essentially is the other financial service products, while in South Africa will continue to accelerate the growth in the financial services portfolio.

And the app is really about getting more users on board, more merchants on board, more transactable users and so on. And I think for the next year or 2, you want to be able to make sure that you're growing your number of transactions.

And once you've done that, then effectively and you've got enough transactions going through the app, then you start to look at the profitability. So it will run at a loss for the next couple of years.

A loss not from the app itself, but more from the amount of people and advertising that you put behind it initially. And then -- but it's covered by the rest of the financial services part, which will continue to grow.

And then once you've done that, it will become a lot bigger. A big next step is the launch of cash in, cash out, which I think then brings it closer to what we do in M-Pesa and creates more daily active users.

I think just to round off on that, at the February Investor Day we did, we did a presentation on South Africa specifically and did set out some medium-term targets there to help sort of frame the outlook for that entire business over the next few years. Okay.

We've got one last one from [indiscernible]. She's just asking any specific call out on the financial impact of the lootings in July 2021.

If so, can you talk through that? And I guess, maybe added to that, the recent flooding, if there's anything to call out?

Yes, I think we've had multiple different impacts. I mean if we start off with the sites, we had almost 400 sites down at one point during the flooding, quickly work to recover it.

And within two weeks, I think all the sites were back up again. So but it does have an impact, and you have to move quickly to repair roads and so on.

There will be insurance claims on some of the assets and so on. We're not putting out specific numbers at this point.

And then also with the looting. The looting, basically, we had some damage to one of our warehouses, and we couldn't access some of the sites and so on.

But I mean, compared to most corporates, I think we were actually rather -- we weren't as badly impacted because we essentially had to recover the sites and so on. And we only have one big network warehouse, but also it's such a big equipment that it wasn't severely impacted.

Okay. So yes, Madi, maybe you can round us off and then we can thank everyone.

So the CIVH transaction and the Vodafone Egypt transaction, the funding from that, I understand, you'll basically be taking some debt for that. So wondering what is the -- where are you raising the debt, whether it's going to be in local markets or international?

What currencies are we looking at? So if you could talk about that?

And the second question is on Spectrum. So wondering where are you in terms of actual allocation of Spectrum and how soon can you start using it and whether that helps your CapEx plan in any ways in terms of amount savings and so on.

Okay. So in terms of funding, the transactions will be funded in ZAR, in rand, and that's basically the profile of our funding book overall.

And so we'll be raising roughly about €9 billion to fund 20% that is settled in cash for the Vodafone Egypt transaction and the balance being in shares. And then in terms of CIVH, that is also going to be local funding, but that is further down the line.

We expect that Vodaphone will -- Vodafone Egypt will conclude well ahead of the CIVH transaction. Both of them, whilst it will increase our debt, the CIVH transaction is roughly about €13 billion for the 40%.

And once we conclude those transactions, we will still be within our the target of net debt-to-EBITDA being below 1.5x.

On the Spectrum, effectively, we've paid for we've paid part of it. We've paid -- €3.2 billion has been paid already.

The license has been issued. And the remaining €2.2 billion will be paid when more of the 700 spectrum essentially is made available.

So what I can say is [indiscernible] look, this is what's available today, which you can use. And that's what you need to pay for.

This is still subject to the digital migration, which should be done by end of June. So the remainder will be basically available from end of June.

Of course, it also is dependent on the ETV appeal and so on. But essentially, you'll be able to start using that spectrum.

So we should be able to start using it immediately. The license was issued last week.

That's on 2.6 million and also the 2.6 spectrum, definitely the 3.5 spectrum, and then the 700 where we can utilize it. Sorry, we can only use it from 1st of July because remember, it's still in the temporary regime until end of June and then 1st of July, we can start utilizing it.

So what we're doing right now is preparing, making sure where we've got the network equipment, the equipment that we're bringing in, where are we going to roll out and so on. So preparing ourselves to take advantage of the 1st of July.

And then also repurposing the CapEx in some way to make sure that it will be creating -- for example, would be if we got capacity. Now we can, instead of building new sites, we can use the spectrum first before we add new sites.

So there's a lot of that optimization and stuff going on, but it's within the CapEx envelope, which will be in the range of €11 billion going forward as well.

And just for completeness, that €3.2 million was paid subsequent to year-end. So it will come in the current financial year.

Okay. With that, we'll conclude, and thank everyone for their interest, their questions and look forward to engaging with you over the coming days and weeks.