Vodafone Germany

Open Office

29 September 2016

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Disclaimer

2

Introduction

• Strategy and Consumer Mobile

• Consumer Fixed

• Enterprise

• Technology

Content

3

Vodafone Germany

Open Office

Dr. Hannes Ametsreiter CEO Vodafone Germany

Snapshot Germany

5

20%

53%

10%

12% 5%

33%

37%

30%

€18.3bn

FY 15/16

€18.3bn

FY 15/16

United Internet Telefonica

Deutschland Unitymedia Vodafone Deutsche Telekom

83m Population

€13 Mobile ARPU

Smartphone

penetration 137% Mobile

penetration

76%

75% Fixed broadband

penetration

Avg. TV MoU

per day

223

1. excl. Wholesale Revenue, incl. TV revenues, reflects only the market based on reported figures

Mobile Service

Revenue Share

Fixed Revenue

Share1

Market

A leading integrated communications company

6

TV Fixed Mobile

TV Subscribers (m), Q1 16/17 Broadband customers (m), Q1 16/17 Connections1 (m), Q1 16/17

43.4 41.1 41.9

2.82

7.8

Strong position in a 3-player market

Fastest growing broadband operator

1. Including IoT/MVNO connections

Cable

2.8

5.9

12.8

DSL 4.4

3.1

6.4

+252k YoY +415k YoY +140k YoY

2. Including IPTV and SAT

Kabel Deutschland Project Spring

Investments in Project Spring and KDG are paying off

7

Q1 16/17

0.46%

Q1 15/16

0.57%

Q1 14/15

0.77%

Q1 16/17

89%

Q1 15/16

78%

Q1 14/15

70%

€300m

Run-rate in FY 17/18: on track (80% secured

end of FY 15/16)

€3.5bn NPV (increased from €3.0bn): on track

Drop call rate

4G population coverage

4G customers (m) 5.5

Q1 14/15

1.5

8.4

Q1 15/16 Q1 16/17

+7%

Kabel Deutschland organic service revenue growth

in FY 15/16 – Maintaining strong momentum

Cost & Capex Synergies

Revenue Synergies

Turnaround achieved: with growth since Q4 15/16

8

Organic growth rate vs. previous year (%)

Incl. Kabel Deutschland

(1.8)

Q2

14/15

(3.6)

(3.9)

Q1

14/15

(5.5)

(5.4)

(5.6)

(6.6)

0.3

Q4

15/16

1.6

(0.3)

Q1

16/17

Q3

13/14

(8.0)

(8.6)

Q2

13/14

(6.3)

(6.8)

Q1

13/14

(4.8)

(5.7)

Q4

12/13

(2.8)

(3.5)

Q3

12/13

0.4

(0.2)

(1.7)

(0.4) (1.8)

Q2

15/16

(2.8)

(1.2)

(3.5)

Q1

15/16

(2.1)

Q4

14/15

(3.2)

Q3

15/16

Q3

14/15

1.6

Q2

12/13

2.4

1.6

Q4

13/14

(1.5)

Service Revenue Mobile Service Revenue

Strong commercial momentum: across segments

9

1

Service revenue YoY (%)

Total Mobile Postpaid

Revenue

Mobile Prepaid

Revenue

Fixed DSL

Revenue

Fixed Cable

Revenue

1. Impacted by an accounting reclassification of fixed line revenue. Reported fixed cable growth in Q1 was +9.5%,

underlying growth was +6.5%.

(1.2)

Q1 16/17 Q1 16/17

+4.3pp

Q1 15/16 Q1 16/17 Q1 15/16

6.6 +2.8pp

1.4 (1.7)

Q1 15/16

(0.9) (1.7)

+0.0pp 1.6

9.5

6.5

Q1 16/17

(5.2)

(12.2)

Q1 16/17 Q1 15/16 Q1 15/16

+13.6pp

-0.1pp

The future is digital and connected.

10

Our Vision: GIGABIT COMPANY

11

Power to you

“we empower the digital society” “#1 in speed and power”

Superior infrastructure and

convergent products

NETWORK AND PRODUCTS

Strong, emotional brand and

customer orientation

BRAND AND CXX

More innovative, focused, team

oriented: “winning mindset”

EMPLOYEES

Vodafone has a unique Gigabit positioning in the German market

12

4G

Gigabit zone

Ultra-high speed Technologies (>100 Mbit/s, evolving to

>1Gbit/s)

Copper Technologies

3G

Fixed

Broadband

Mobile

No Fixed Broadband

Attractive, profitable growth opportunities in our core business

13

Value positioning

More-4-More

Base Management

Convergence / HH penetration

GigaTV

Continuous growth in broadband

Growth in fixed

IoT

Convergence

Cloud and Hosting

Based on superior infrastructure

Mobile: Cable:

Consumer Enterprise

DOCSIS 3.0 DOCSIS 3.1 4G 4.5G 5G

Base Management

Unified Communications UCC

Differentiation: Customer eXperience eXcellence / CARE

14

Connectivity Always in control Reward loyalty Easy access

EX

AM

PL

E

GIGASPEED

1st operator offering

4G Max for ALL mobile

customers

Red Button

Direct access to agent

– immediate help 24/7

Speed up to 375MBit/s

Legacy2Red

Biggest mobile base loyalty

campaign in history of

Vodafone Germany

GIGATRAVEL

1st operator offering worry

free roaming for all new/

renewed contracts

KP

I Migrating 1.8m customers

to new tariff portfolios

this FY. NPS +16 pts.

EU roamer penetration

pushed from 27% to 52% in

last 12 months

MeinVodafone app

“connect test” winner with

>250m app visits p.a.

15

Consumer product simplification

Digitising Services

Enterprise interaction/ simplification

Network & IT enhancement

Optimising procurement spend

Process cost optimisation

Fit4Growth: driving efficiency to fuel profitable growth

Summary: back to growth

16

• Positioning as Gigabit Company

• Leading position and strong commercial momentum in each market segment

• Investments in Project Spring and Kabel Deutschland paying off

• Differentiation through CXX

• Continued efficiency improvement to fuel growth

Strategy &

Consumer Mobile

Dr. Hannes Ametsreiter CEO Vodafone Germany

Dr. Andreas Siemen Chief Financial Officer

• Integrated offering

• Covering premium segment via Vodafone brand and no frills market via Otelo

• Focus on profitable growth in the direct channels and ‘more-for-more’ customer value enhancement strategy

Clear positioning in challenging market environment

• More-for-more moves in

premium segment

• High promotional activity

in no-frills segment

Competition Regulatory

• EU Data roaming

• MTR regulation

• Theoretical reduction of MTR rate by 50%

would impact service revenue growth by

1.5ppt, margin impact is c.25% of revenue

impact

• Proceedings ongoing, decision in December

Vodafone Positioning

18

Prepaid active base turnaround

FY 2016 FY 2014 FY 2015 Q1 2017

+1.1%

-9.1% -3.0%

Postpaid Subscriber Growth

Excellence in Base management

We continue to drive the business back to growth

Active Prepaid base

15.5

FY 2014

16.2 16.6

FY 2015

16.6

FY 2016

+8k

Q1 2017

+350k +741k

Note: Postpaid customers include Enterprise

• -15% Cancellations

• +16 Points NPS improvement

• +200MB Data take-up

1 million customers proactively migrated into latest portfolio

Customer value through “More-for-More”

Postpay

Inflow ARPU +€3

LTEmax

EU roaming

19

Consumer Mobile

Direct GA share +7pp YoY

from 35% to 42% in Q1 16/17

(m)

We cover both ends of the two-tier market

Pre

miu

m

No

frills

€20-30

20

• 4G coverage: speed & quality

• Convergence offerings

• Brand & customer experience

Continued differentiation

Consumer Fixed

Dr. Manuel Cubero Chief Commercial Officer

Florian Landgraf Head of Consumer Fixed Business

• Converged offering nation-wide

• Leveraging speed advantage in cable

• Enabling future TV experience

Clear positioning in challenging market environment

22

Competition Regulatory

• Risk of “re-monopolisation”

with vectoring • Continued high promotional

activities

• Increasing demand for high

speed

Vodafone Positioning

Note: DSL customers and revenues include Enterprise

Broadband: continuous cable growth & DSL turnaround

Growing DSL base (m) Growing cable base (m)

Convergence offer Unmatched Speed

23

GigaKombi

runrate

RedOne

runrate

Nov 2015

0

400 mbps

100 mbps

Tomorrow

200 mbps?

>1000 mbps

Today

VDSL share %

-128k

2.822 2.805 -17k

+16k

Q1 16/17

2.821

FY 15/16 FY 14/15 FY 13/14

2.950

15% 13%

6% 2%

FY 13/14

2.178

+450k

3.020 2.628

+392k

FY 15/16

+92k

3.112

Q1 16/17 FY 14/15

Deutsche Telekom Vodafone

Convergence gross adds

HH ARPU

NPS

Churn

Convergence benefits

7.3 7.3

FY 13/14

7.3

FY 15/16 FY 14/15

Premium TV share %

23% 24%

25%

Vodafone maintaining largest TV subscriber base in Germany

TV business: penetrating stable base with new services

24

TV direct subscribers (m) Key features

Premium TV

• Continuous increase of Premium TV penetration

• Increasing TV ARPU through incremental

product take-up

• Re-aligned TV product portfolio in August

2016, bundling DVR to entry level product

VOD PAY TV 4 PARALLEL

RECORDINGS

REC

DVR

HD

Fixed Line: growth opportunities

Leverage Cable advantage

• 400 Mbit/s today and we

keep our powder dry for

more!

• Docsis 3.1 to enable >1Gbit/s

• All content

• All networks

• Maximize VDSL share

• GigaTV for DSL base

• Leverage 4G in DSL white

spots

Giga TV – a new TV experience Non-Cable footprint

25

• All Features

• All Screens

Enterprise

Alexander Saul Director Enterprise Business Unit

Anna Dimitrova Director Strategy & Digital

Clear positioning in challenging market environment

• VGE: unique global positioning with Vodafone Global Enterprise

• Mainly a two player market

• Pricing pressure continues

• Combined mobile/fixed offer

from single source becomes

standard

• Opportunities in Fixed, Cloud & Hosting and Unified Comms

• Further expand position as world leading mobile provider for IoT

Vodafone Positioning

Competition International leverage

27

Vodafone Enterprise Strategy to drive business back to growth

Enterprise Strategy: Top Priorities Market size and share (FY 15/16)

High potential

for Vodafone

to grow to fair

share

Strong market

position in

mobile

Others Others

Mobile Fixed For illustrative purposes only

28

Enterprise market trends: growth opportunities

Enterprise market trends Vodafone Enterprise solutions

One Net Business…

…is our core differentiator in Unified

Comms

Digitisation drives mobility

• Unified Comms solutions offer flexibility,

efficiency and effective collaboration

• All IP enables seamless communication

Dedicated Cloud & Hosting

Line of Business…

…is building market credibility

as we grow

Cloud is driving corporate strategies

• 7 out of 10 German companies use

Cloud services

• Expected benefits are: cost advantages,

shorter TTM and worldwide availability

Vodafone IoT…

…with substantial potential for

further growth by moving towards

vertical solutions

IoT reaches mainstream

• IoT installed base of 26 billion units1

expected by 2020

• Shift from functionality and performance

to quality of information

29 1. Source: Gartner estimate of global IoT units (cellular and non-cellular)

Technology

Dr. Eric Kuisch Chief Technology Officer

Gerhard Mack Chief Commercial Operations Officer

Voice over LTE Nationwide available as first provider in Germany VoLTE and VoWiFi customers approaching 1 million

Connect test confirms

Best Voice Network – almost no dropped calls

LTE population coverage at 89%

The Vodafone Network Today | Premium Mobile Network

of Germany

modernised

of all

Big Cities

of all

Motorways

LTE with 375 Mbps currently available in 22 cities, 1 Gbps in pilot areas by end of 2016

24,400 Base station sites

8.4m 4G customers (1.5m in April 2014)

+ 240% Data traffic since Apr. 2014

Lowest

Dropped Call Rate Drops reduced by 40%

since Apr. 2014

Fastest Vodafone Network Download Speed increased by 60%

since Apr. 2014

31

>90% of base

stations with high

capacity backhaul

The Vodafone Network Today | New Opportunities with our Cable Network

32

6000 FN

134,000

Amplifiers

Ca. 8.4m

Connected Homes

1,800 Hubs

2.2 m

Splitter / Branches

31,400 km

Cable Ducts

Ca.15.3 m Homes Passed

2 Playout Centres &

3 Data Centres

26 B-PoPs

Highly reliable network (99.9%)

Network is under- ground, providing high robustness

and stability

End-to-end monitoring and service approach

(including CPE specification, manned installation and

repair)

Highly standardised network components due to

uniform network history

151 TV (TPoP)

323 Docsis (CPoP)

242 VoD (VPoP)

5m households

with up to 400 Mbps cable speed

(12.3m total marketable households)

over 400,000 km Fibre- and Coax-Network

>1,400,000

WLAN Hotspots

32

100 Mbps

50 Mbps

VDSL LTE

We are the blueprint

for a digital agenda

2 years ago…

Cable

50 Mbps

33

100 Mbps

50 Mbps

Vectoring

We are the blueprint

for a digital agenda

Today…

Technology-Mix of the future

already today…

Cable

400 Mbps

LTE

375 Mbps

225 Mbps

4,5G

34

100 Mbps

400 Mbps

1 Gbps

375 Mbps

250 Mbps

LTE Vectoring

1 Gbps

Cable

We are on our way to

the Gigabit-Society

Cable and 5G as leading

technologies to exceed the

increasing demands of our

customers…

5G

35

Ensure Gigabit-Readiness | Network Innovation & Product Roadmap

Spectrum Utilisation Competitive Spectrum

positioning

LTE Advanced • Vodafone Crystal Clear Technology (EVS)

• Carrier Aggregation

• LTE-V(ehicle)

• NB-IoT

Cable Network

Evolution • DOCSIS 3.1

• Digitisation

One Sales

Foundation • Next generation Sales

• X-channel sales flows

• 360° view on products

and offers

Giga TV • Superior user

experience in

Video/TV anywhere

One Net Business • Digital Workplace from the Cloud

• Full Unified Communication and Collaboration Feature Set

36

Thank you