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Vodafone Group Plc announces Q1 FY24 results

Service revenue declined by 1.3%* (Q4: -2.8%*) primarily reflecting the cumulative impact of customer losses over the past 18 months, partially offset by higher broadband ARPU. The improvement in quarterly trends includes the initial benefit of broadband price increases, which started to take effect from May 2023.

Fixed service revenue declined by 0.9%* (Q4: -2.1%*) driven by a lower broadband and TV customer base, partially offset by higher broadband ARPU. During Q1, we began the phased implementation of a broadband price increase across our customer base. This supported service revenues but impacted our commercial performance, as expected, with net cable customer disconnections of 70,000 and 51,000 DSL losses. The performance of our gigabit fixed network has continued to improve, with strong results in three independent network tests from Connect, CHIP and Computer BILD.

Our TV customer base declined by 120,000, and our consumer converged customer base remained broadly stable at 2.3 million. Preparationsfor the change to German TV laws in July 2024 continue to progress.

Mobile service revenue declined by 1.9%* (Q4: -3.7%*) driven by a lower mobile customer base and ARPU, as well as mobile termination rate cuts. The improvement in quarterly trends primarily reflected a tough prior year comparison in Q4 FY23. We added 24,000 contract customers in the quarter, supported by an improved Vodafone branded performance. We also added a further 2.2 million IoT connections. As part of our ongoing commercial repositioning, in June we refreshed our ‘FamilyCard’ plansto be fully flexible relative to the main tariff.

Service revenue declined by 1.6%* (Q4: -2.7%*) as a result of continued price pressure in the Consumer mobile value segment, partially offset by strong growth in Business fixed and new digital services. The improvement in quarterly trends was driven by an acceleration in Business growth and stabilisation of our mobile prepaid customer base.

In mobile, our Consumer prepaid active customer base was stable quarter-on-quarter. Our second brand ‘ho.’ has continued to grow, with 63,000 net additions, and now has 3.1 million customers.

Our fixed line customer base decreased by 19,000, however this was partially offset by 11,000 fixed-wireless additions which are reported within mobile. Business demand for new digital services is accelerating, and connectivity was furthersupported by the Business voucher programme, an initiative related to the EU Recovery and Resilience Facility that subsidises high-speed broadband. Our next generation network (‘NGN’) broadband services are now available to 23.8 million households, including 9.1 million through our own network and our partnership with Open Fiber. In addition, our 5Gfixed-wirelessservices nowcover 3.6million households, complementing our 4G fixed-wireless access products which reach an additional 1.7 million households.

Service revenue increased by 5.7%* (Q4: 3.8%*) with strong growth in Consumer,supported by annual price increases and a higher customer base, as well as continued good growth in Business, partly offset by lower wholesale revenue. Contractual price increasestook effect from April 2023, driving an improvement in quarterly trends.

In mobile, our contract customer base declined by 66,000 in Q1 due to the disconnection of zero-value SIMs provided to businesses during the COVID pandemic. Excluding these, our mobile contract customer base was broadly stable, despite implementing annual contractual price increases. Consumer contract churn remained broadly stable year-onyear.

In fixed, we added 42,000 broadband customers in Q1, and we now have 1.3 million customers. Through our partnerships with CityFibre and Openreach we can now reach over 12 million households with full fibre broadband, more than any other provider in the UK.

In June 2023, we announced that we had entered into a binding agreement to combine our UK business with Three UK to create a sustainable, and competitive third scaled network operator in the UK. Following the merger, which we expect to close before the end of calendar 2024, Vodafone will own 51% of the combined business and CK Hutchison 49%. This combination will provide customers with greater choice and more value, drive greater competition, and enable increased investment with a clear £11 billion plan to create one of Europe’s most advanced standalone 5G networks. Full details of the transaction can be found here:

Service revenue declined by 3.0%* (Q4: -3.7%*) due to a lower customer base and continued price competition in the Consumer value segment, partially offset by price increases. The sequential improvement in trends reflects a full quarter benefit from price increases implemented in Q4 FY23.

In Q1, our mobile contract customer base declined by 87,000 and our broadband base by 65,000. This wasin part due to a higher level of customer churn following our CPI-linked price increase. Atthe beginning of Q1, we also closed 15% of our retail stores and chose not to renew several sales dealership channels in order to increase our distribution efficiency. Our customer net addition trends have improved again since the start of June.

Other Europe
Service revenue grew by 4.1%* (Q4: 3.6%*) with good growth in all markets apart from Greece. This was supported by price actionsin 5 out of 6 markets.

In Portugal, both Consumer and Business segments continued to perform well with a further acceleration in service revenue trends,supported by CPI-linked contractual price increasesimplemented in March. In Greece,service revenue trends slowed following the delayed implementation of planned price increases, and strong public sector growth in Business during Q4 FY23. However, our mobile contract customer base continued to grow, with 44,000 additions in the quarter. In Ireland, our performance in both Consumer and Business improved, supported by price increases in April.

Vodacom’s service revenue grew by 9.0%* (Q4: 7.0%*), supported by growth in South Africa, Egypt, and Vodacom’s International markets. The acceleration in quarterly trends was largely driven by South Africa, reflecting an improved performance in Vodacom Businessfollowing a tough prior year comparative in Q4 FY23.

In South Africa, service revenue growth was supported by strong growth in mobile Consumer contract, which benefitted from price increases, and a resilient prepaid ARPU despite ongoing macro-economic pressures. We added 46,000 contract customersin the quarter, and now have a total base of 6.7 million. In prepaid ARPU increased by 6.9% supported by strong data demand, and we added 74,000 prepaid customers to reach a total base of 41.7 million. Financial services revenue grew by 15.5%* supported by strong insurance growth. Oursuper-app, VodaPay, continues to gain good traction with more than 3.7 million registered users.

In Egypt,service revenue continued to grow strongly reflecting good customer base growth, increased data usage and goodmomentumon Vodafone Cash.We nowhave 46.2million customers, an increase of 5.5% year-on-year, and ARPU growth was 19%.

Service revenue growth in Vodacom’sInternational markets wassupported by a higher customer base,strong M-Pesa and data revenue growth. M-Pesa revenue grew by 14.7% driven by customer growth, new service adoption and the reduction of mobile money leviesin Tanzania. Our mobile customer base now stands at 51.7 million having added 1.5 million customersin the quarter.

Service revenue growth in Turkey was driven by ongoing repricing actionsto reflect high inflation, continued customer base growth, and higher mobile data revenue. We maintained our good commercial momentum, adding 384,000 mobile contract customers during the quarter, including migrationsfrom prepaid customers.

CT Bureau

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