Vodafone K.K. FY04 interim results Period ended 30 September 2004

Transcription

1 Vodafone K.K. FY04 interim results Period ended 30 September Nov 2004

2 Presented by: J. Brian Clark Representative Executive Officer, President & CEO John Durkin Representative Executive Officer, CFO 1

3 Agenda Section 1 Financial highlights p. 3 Section 2 Corporate highlights p. 8 Section 3 Summary of mobile operations p.10 Section 4 Forecast for FY2004 p.18 2

4 -Section 1 - Financial highlights John Durkin Representative Executive Officer, CFO

5 Financial summary - consolidated Fixed line business deconsolidated on 1 October 2003 Vodafone K.K. (mobile) revenue down year-on-year due to fall in ARPU and lower customer growth ( billions) FY 2003 FY2004 FY2003 % chg interim interim full year Operating revenues % 1,655.7 Vodafone K.K. (mobile) % 1,509.1 Operating expense % 1,470.6 Operating income % Ordinary income % Net income nm EBITDA margin 30.5% 28.6% -1.9 pp 27.8% Consolidated highlights 4

6 Cash flow - consolidated Free cash flow higher due to lower tax payments CF from financing lower due to short term debt repayment ( billions) FY 2003 interim FY 2004 interim % chg CF from operations % CF from investment nm CF from financing nm Capital expenditures* % % Revenue 13.8% 13.8% 0.0 pp Depreciation % EBITDA % FCF** % Notes: Capital expenditures*= cash flow statement basis FCF** = CF from Operations - Capex Consolidated highlights 5

7 Financial highlights mobile operations Service revenue decline of 4.9% (yoy) Customer base growth: up 4.0% ARPU decline for the first half: 9.9% vs. interim 2003 Operating income decrease due to: Lower EBITDA margin from lower service revenue and higher retention activities, offset by improvement in handset provisions Increased depreciation from continued investment in 3G ( billions) FY 2003 FY2004 % chg FY2003 interim interim actual Operating revenues % 1,509.1 Service revenue % 1,206.4 Operating expense % 1,325.9 Operating income % Ordinary income % Net income % EBITDA margin 30.9% 28.6% -2.3 pp 27.7% Mobile highlights 6

8 Vodafone K.K. operating income ( B) 150 Revenue decline Customer acquisition incentive Retention incentive Handset inventory provision Depreciation 100 All other costs 50 FY03 H1 Operating income Y 122.3bn FY04 H1 Operating income Y 87.5 bn 0 : Increased charges : Improvements Mobile highlights 7

9 -Section 2 - Corporate highlights J. Brian Clark Representative Executive Officer, President & CEO

10 Corporate Actions during the period Vodafone Group increased ownership in Vodafone Holdings K.K. through TOB from 66.7% to 96.1%. (June) Vodafone Group increased stake in Vodafone K.K. from 69.7% to 98.2%. (July) Vodafone Holdings K.K. and Vodafone K.K. merged on 1 Oct. Vodafone Group currently holds 97.7% of merged entity (renamed Vodafone K.K.). 39.7% Former structure (as of 31 March, 2004) Vodafone Group Plc 66.7% Vodafone Holdings K.K. Current structure (as of 16 November, 2004) Vodafone Group Plc 97.7% Vodafone K.K. (Merger of former Vodafone Holdings K.K. and Vodafone K.K.) Vodafone K.K. 45.1% 100% Japan System Solution Telecom Express Japan System Solution Telecom Express 100% As a result of the above, Vodafone K.K. is expected to be delisted from the Tokyo Stock Exchange and Osaka Securities Exchange during fiscal Consolidated highlights 9

11 -Section 3 - Summary of mobile operations J. Brian Clark Representative Executive Officer, President & CEO

12 Path to commercial success Transformation plan on track FY 2004 FY 2006 Transforming internal operations Accelerating market momentum Achieving commercial success Fix the Fundamentals Cost Reduction Distribution 9 to 1 Integration, Processes Employees 3G Rollout Network build-out Differentiated, integrated offering Marketing Segmentation Improved brand building Address under-penetrated segments Differentiated 3G offering: -Network -Handsets -Content/services - Channels Operational best practices Competitive cost position Mobile operations 11

13 Operating highlights 3G rollout Fix the Fundamentals Marketing segmentation Mobile operations Target Introduce range of competitive 3G handsets Effective network buildout Enhance 3G service offering Improve organisational effectiveness Cost reduction Distribution 9 to 1 integration Improve global roaming convenience Introduce design initiative Penetrate corporate & smallmedium enterprise business Prepaid Results Announced seven convergence 3G handsets for launch in winter 04 3G network pop. coverage 99.67% (Sept.) Expanded MMS, longer Chaku-Uta,Megaappli Shiro Tsuda appointed President & CEO effective 1 December Voluntary retirement programme completed Review of OPEX, company wide cost reduction programme in execution Fortified relationship with key channels Projects done: Warehouse & SCM, customer care, network operations Projects ongoing: billing 107 countries for voice, 104 countries for SMS, 43 countries for Vodafone live! roaming Launched KOTO, swivel style, other design concepts announced Vodafone Mobile Office launched Market leadership with 11% of total subscribers 12

14 Customer and ARPU trends 27.6% Share of net additions 29.9% 30.6% 24.2% 22.4% (Yen) 8,000 6,000 7,900 ARPU Data Voice Data as % of revenue 7,900 7,500 7,400 7,360 7,180 6,970 6,490 6,280 20% 13.2% 4, % 15.3% 8.9% 2,000 10% 5.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2002 FY2003 FY H1 H2 H1 H2 H1 H2 H1 H2 H1 FY2000 FY2001 FY2002 FY2003 FY2004 0% Cumulative market share (thd.) 2,000 Number of prepay customers 18.5% 18.6% 18.4% 18.0% 1, % 18.1% 1, % 500 H1 H2 H1 H2 H1 H2 H1 FY2001 FY2002 FY2003 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2002 FY2003 FY2004 Mobile operations 13

15 Acquisition incentive, churn and upgrade rate 3.0% Churn rate 2.3% Acquisition incentive per gross add 36, % 2.0% 2.2% 2.1% 2.0% 2.0% 1.9% 2.0% 2.1% 1.9% 1.8% 1.8% 1.9% 2.0% 1.9% 32, % 4.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2001 FY2002 FY2003 FY2004 Upgrade rate 3.1% 2.6% 2.4% 2.0% 2.5% FY03 H1 FY04 H1 2.0% 2.0% 2.4% 2.0% 2.4% 1.9% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2002 FY2003 FY2004 Mobile operations 14

16 3G G update 300k 3G customers 20k Number of 3G base stations 250k 200k 15k 11.5K 13.5K 15.5K 150k 10k 100k 50k 5k 3.5K 0k Dec Mar Jun Sep Dec Mar Jun Sep (Y B) G Capital expenditure 3G & Others 225 0k 2002/ / / /09 Cost per base station FY2001 FY2002 FY2003 FY2004 Note: Cash flow statement basis forecast Mobile operations 2G 3G Launch Big Bang In-building etc. 15

17 Vodafone Group world-standard 3G handsets announced Improved competitiveness Vodafone 902/802/702 series 902SH (Sharp) 802SE (Sony Ericsson) 802N (NEC) 802SH (Sharp) 702NK (Nokia) 702MO (Motorola) 702sMO (Motorola) Mobile operations 16

18 3G G products and services Vodafone live! with 3G services (902/802/702 series) New mail platform: MMS, sending/receiving capacity of 300KB, Japan industry best Expanded download capacity: 200KB -> 300KB for web pages, large file downloads Mega-applis: V-appli size expanded to 1MB for richer experience Chaku-Uta /Long Version: seconds, over twice the size of previous versions Virtual live video. Animated web pages using Macromedia Flash TM Vodafone live! BB for downloading large-size content via PC New price plans Unlimited packet communications on Vodafone live! with Packet Free: 3,900 yen (4,095 yen w/ tax) per month New packet data communications discount service, Packet Economy: 2,000 yen (2,100 yen w/ tax) per month Mobile operations 17

19 -Section 4 - Forecast for FY2004 J. Brian Clark Representative Executive Officer, President & CEO

20 No Change to May 04 release forecast Forecast (JPY B) Revenue 1,531 Ordinary income 127 Net income 110 Consolidated forecast 19

21 Thank You Vodafone K.K. A member of the Vodafone Group

22 Forward-looking Statements This presentation contains certain forward-looking statements concerning the operations and strategy of Vodafone K.K. and its subsidiaries (collectively, Vodafone Japan Group ) and its expectations concerning its financial and operating results, in particular its fiscal 2004 performance forecasts (including consolidated operating revenue, ordinary income and net income), as well as expectations for trends in the Japanese fixed-line and wireless telecommunications markets and capital expenditure. By their nature, forwardlooking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: changes in economic conditions that would adversely affect demand for Vodafone Japan Group s services; greater than anticipated competitive activity; slower customer growth or reduced customer retention; the impact on capital spending from investment in network capacity and the deployment of new technologies, including 3G technology; the possibility that technologies will not perform according to expectations or that vendors performances will not meet Vodafone Japan Group s requirements; changes in projected growth rates in the wireless telecommunications industry; the accuracy of and any changes in Vodafone Japan Group s projected revenue models; future revenue contributions of data services offered by Vodafone Japan Group; Vodafone Japan Group s ability to successfully introduce new services, in particular 3G services, and the delivery and performance of key products; changes in the regulatory framework in which Vodafone Japan Group operates; and the impact of legal or other proceedings involving Vodafone Japan Group or other companies in the telecommunications industry. All written or verbal forward-looking statements attributable to Vodafone Japan Group or persons acting on its behalf made in this presentation or subsequent hereto are expressly qualified in their entirety by the factors referred to above. 21