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Vodafone Group Plc⫶Q3 FY23 trading update

1 February 2023

Europe slowing as expected, resilient performance in Africa

• Group service revenue growth of 1.8%* (Q2: 2.5%*), with the slowdown in quarterly trend driven by Europe
• In Europe, declines in Germany, Italy and Spain partially offset by good growth in UK and Other Europe. Quarterly trend impacted by lower roaming growth and phasing of Business revenue in FY22
• Portfolio progress: Vantage Towers strategicco-control partnership progressing towards completion, Vodafone Hungary disposal completed, transfer of Vodafone Egypt to Vodacom completed

Q3 performance summary	Q3 FY23	Q3 FY22	Reported	Organic
€m	€m	growth %	growth % 1
Service revenue		9,520	9,647	(1.3)	1.8*
- of which Germany	2,882	2,936	(1.8)	(1.8)*
Other revenue	2,118	2,037
Total revenue		11,638	11,684	(0.4)	2.7*

* represents organic growth. See page 2. ǀ1. Non-GAAP measure. See page 7.

• Service revenue in Turkey increased by 52.9%* (Q2: 43.9%*), driven by high inflation. Group service revenue
  growth excluding Turkey was 0.5%* (Q2: 1.4%*)
• Broadening price actions across Europe, with 8 markets now operatinginflation-linked pricing models
• Vodafone Business service revenue growth of 2.4%* (Q2: 3.4%*), driven by digital services
• Growth in Africa driven by data and financial services. We now have 73.5 million financial services customers in Africa (including Safaricom)
• Continuing to target updated FY23 guidance: Adjusted EBITDAaL €15.0 - 15.2 billion and Adjusted FCF c.€5.1 billion

Margherita Della Valle, Group Chief Executive, commented:

"Although we're continuing to target our financial guidance for the year, the recent decline in revenue in Europe shows we can do better. We need to do more for our customers by delivering quality connectivity in an easy way. We've already taken action, including simplifying our structure to give local markets full autonomy and accountability to make the best commercial decisions for their customers. In addition, we now have initiatives underway to generate around half of our €1 billion cost savings target. There is more to do and our focus is to provide a better service to our customers, become a simpler business and deliver growth."

For more information, please contact:	Media Relations
Investor Relations
Investors.vodafone.com	Vodafone.com/media/contact
[e-mail]	[e-mail]

Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England. Registered in England No. 1833679

A webcast Q&A session will be held at 10:00 GMT on 1 February 2023. The webcast and supporting information can be accessed at investors.vodafone.com

Vodafone Group Plc⫶Q3 FY23 trading update

Performance review⫶Europe slowing, resilient performance in Africa

• Group service revenue growth of 1.8%* (Q2: 2.5%*), with the slowdown in quarterly trend driven by Europe
• In Europe, declines in Germany, Italy and Spain partially offset by good growth in UK and Other Europe. Quarterly trend impacted by lower roaming growth and phasing of Business revenue in FY22
• Germany service revenue declined by 1.8%* (Q2:-1.1%*), largely reflecting customer losses since H2 FY22 related to the implementation of new sector legislation
• Service revenue in Turkey increased by 52.9%* (Q2: 43.9%*), driven by high inflation. Group service revenue
  growth excluding Turkey was 0.5%* (Q2: 1.4%*)

Organic growth

All amounts marked with an '*' in this document represent organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions, the hyperinflation adjustment in Turkey and other adjustments to improve the comparability of results between periods. Organic growth figures are non-GAAP measures. See non-GAAP measures on page 7 for more information.

Geographic performance summary

		Germany		Italy		UK	Spain	Other	Vodacom	Other	Vantage	Common	Elimi-	Group
				Europe	Markets1	Towers	Functions	nations
Q3 FY23
Service revenue		2,882		1,071		1,327	858	1,275	1,234	802	-	134	(63)	9,520
Other revenue		465		153		423	113	214	380	136	329	227	(322)	2,118

Total revenue (€m)

Organic service revenue growth (%)2

Q3 FY22 Service revenue Other revenue

Total revenue (€m)

3,347	1,224	1,750	971	1,489	1,614	938	329	361	(385)	11,638
(1.8)%	(3.3)%	5.3%	(8.7)%	2.1%	3.5%	34.1%	-			1.8%
2,936	1,107	1,292	940	1,257	1,172	867	-	136	(60)	9,647
437	149	445	137	190	354	105	312	213	(305)	2,037
3,373	1,256	1,737	1,077	1,447	1,526	972	312	349	(365)	11,684

Organic service revenue growth %2				FY22						FY23
Q1	Q2	H1	Q3	Q4	H2	Total		Q1	Q2	H1	Q3
Germany	1.4	1.0	1.2	1.1	0.8	1.0	1.1	(0.5)	(1.1)	(0.8)	(1.8)
Italy	(3.6)	(1.4)	(2.5)	(1.3)	(0.8)	(1.0)	(1.8)	(2.3)	(3.4)	(2.8)	(3.3)
UK	2.5	0.6	1.2	0.9	2.0	1.4	1.3	6.5	6.9	6.7	5.3
Spain	0.8	(1.9)	(0.6)	(1.6)	(5.1)	(3.4)	(2.0)	(3.0)	(6.0)	(4.5)	(8.7)
Other Europe	4.2	2.4	3.3	2.9	2.7	2.8	3.0	2.5	2.9	2.7	2.1
Vodacom	7.9	3.1	5.4	4.4	3.1	3.7	4.6	2.9	4.8	3.9	3.5
Other Markets1	18.4	19.7	19.1	19.8	19.8	19.8	19.4	24.7	26.7	25.7	34.1
Vantage Towers	-	-	-	-	-	-	-		-	-	-	-
Group	3.3	2.4	2.8	2.7	2.0	2.3	2.6	2.5	2.5	2.5	1.8

Downloadable performance information is available at: https://investors.vodafone.com/reports-information/results-reports-presentations

Notes:

1. Includes Egypt.

2. Organic service revenue growth is a non-GAAP measure. See page 7 for more information.

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Vodafone Group Plc⫶Q3 FY23 trading update

Germany⫶Continued impact from commercial underperformance

Service revenue declined by 1.8%* (Q2: -1.1%*), primarily due to the impact of customer losses since H2 FY22 related to the implementation of new sector legislation. The quarter-on-quarter slowdown was driven by lower growth in roaming and visitor revenue, and a stronger Business performance in Q3 last year.

Fixed service revenue declined by 2.0%* (Q2: -1.7%*), primarily due to a lower broadband customer base as a result of specific operational challenges related to the implementation of policies to comply with the Telecommunications Act, which are now largely resolved. In October, we announced an enhanced product portfolio supporting customer upselling and ARPU growth from new customers. Consumer and Business customers can now benefit from up to five times higher upload speeds, flat rate phone calls, and no upfront connection fees, in return for a higher monthly fee. Our cable broadband customer base declined by 25,000 and we lost 14,000 DSL broadband customers, partly reflecting our decision to increase retail prices. Our TV customer base declined by 112,000 in the quarter, and our converged customer base remained broadly stable at 2.3 million converged Consumer accounts. Half of our cable broadband customers now subscribe to speeds of at least 250Mbps and Gigabit speeds are available to 24.1 million households across our network.

Mobile service revenue declined by 1.7%* (Q2: -0.4%*), driven by a lower customer base, a continued reduction in MVNO revenue, lower ARPU reflecting mobile termination rate cuts, and a change in sales channel mix towards indirect customer acquisition and service providers. The quarter-on-quarter slowdown was primarily driven by lower growth in roaming and visitor revenue. We added 8,000 contract customers during the quarter and reduced mobile promotions which supported ARPU from new Vodafone customers. Mobile contract churn increased by 1.0 percentage point year-on-year to 13.3%, driven by higher service provider churn and the termination of two public sector contracts.

Italy, UK, Spain and Other Europe⫶Continued growth in the UK and Other Europe

Italy

Service revenue declined by 3.3%* (Q2: -3.4%*) as a result of continued price pressure in the mobile value segment and a lower contribution to growth from MVNO revenue. These factors were partly offset by strong Business demand for connectivity and digital services, and targeted pricing actions which are supporting mobile ARPU.

In mobile, our second brand 'ho.' continued to grow, with 52,000 net additions, and now has 3.0 million customers. Our fixed line broadband customer base decreased by 15,000 customers, however, Business demand for both connectivity and digital services was strong, with encouraging customer take up of the Business voucher programme, a local initiative related to the EU Recovery and Resilience Facility that subsidises high-speed broadband connectivity. Our Consumer converged customer base remained stable at 1.3 million, with 55% of our broadband customers now converged.

In October, we launched our new 5G fixed-wireless service and now cover around 3.2 million households. This complements our 4G fixed-wireless access products, which cover 2.2 million households. We added 8,000 fixed- wireless access customers, which are included in our mobile customer base.

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Vodafone Group Plc⫶Q3 FY23 trading update

UK

Service revenue increased by 5.3%* (Q2: 6.9%*), driven by good customer growth and price increases. The change in quarterly trends primarily reflects lower roaming and visitor revenue growth, and ARPU dilution from retail price competition.

In mobile, we added 94,000 contract customers during the quarter, supported by a strong commercial execution during the iPhone and Black Friday trading periods. Contract churn increased by 0.9 percentage points year-on-year to 13.4%, primarily driven by a public sector Business customer cancelling low-usage SIMs. Our digital sales mix also continued to improve, increasing by 3 percentage points year-on-year to 36% of total sales in the period.

In fixed, our broadband base increased by 47,000 in the quarter and we now have 1.2 million broadband customers, more than half of which are converged. Through our partnerships with CityFibre and Openreach we are able to reach over 10.5 million households with full fibre broadband, more than any other provider in the UK. We also announced the extension of our exclusive retail partnership with Currys, covering almost 300 stores as well as digital channels, with a renewed focus to growing beyond mobile with home broadband and connected devices for around the home.

Spain

Service revenue declined by 8.7%* (Q2: -6.0%*) due to continued price competition in the value segment, a lower customer base, and a reduction in mobile termination rates. The deterioration in quarterly trends was driven by lower roaming and visitor revenue growth, strong Business demand in the prior year period, and the phasing of price increases which were implemented in Q2 in the prior year, compared to Q4 this year.

Mobile contract churn improved by 3.0 percentage points year-on-year to 18.6% in the quarter, supported by simplified and more transparent plans, as well as operational improvement measures. In September 2022, we announced that tariffs will be increased in line with CPI for Consumer, SME and SOHO customers with Vodafone branded contracts, effective as of mid-January, and on an annual basis thereafter. Our mobile contract customer base declined by 19,000, reflecting the initial impact of the announced price increases. Our broadband customer base also declined by 27,000, reflecting the communication of price increases and the ongoing DSL shutdown. Our converged customer base declined by 6,000 and is 2.2 million.

On 12 January 2023, we announced that Spain will become part of the 'Europe Cluster', managed by Serpil Timuray, CEO Europe Cluster. Colman Deegan, CEO of Vodafone Spain, has decided to step down as CEO effective 31 March 2023 and his successor will be appointed in due course.

Other Europe

Service revenue increased by 2.1%* (Q2: 2.9%*), with growth in all markets other than Romania, which was impacted by a reduction in mobile termination rates. The slowdown in quarterly trends was driven by lower growth in roaming and visitor revenue.

In Portugal, we maintained our good commercial momentum and added 49,000 mobile contract customers and 14,000 fixed broadband customers during the quarter. In Greece we added 57,000 mobile contract customers and 27,000 prepaid customers.

In Ireland, service revenue increased due to continued customer base growth. We added 15,000 mobile contract customers during the quarter and our mobile contract loyalty remained strong, with churn at 9.0%. In December, Vodafone Ireland acquired 160Mhz of spectrum across four bands with a 20-year licence through to 2042 for €48 million. The spectrum will enable us to significantly expand network capacity to meet growing demand for reliable, high-quality voice and data services.

In September 2022, we announced that we had entered into an agreement to buy Portugal's fourth largest converged operator, Nowo Communications, from Llorca JVCO Limited, the owner of Masmovil Ibercom S.A.. The transaction is conditional on regulatory approval, and we continue to expect completion in the first half of this calendar year.

On 9 January 2023, we announced that 4iG Public Limited Company and Corvinus Zrt (a Hungarian state holding company) completed due diligence and entered into binding terms in relation to the sale of 100% of Vodafone

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Vodafone Group Plc⫶Q3 FY23 trading update

Hungary. The transaction completed on 31 January 2023 and Vodafone Group has received a total consideration of HUF 660 billion (€1.7 billion).

Vodacom⫶Strong demand for financial services and continued growth in data usage

Vodacom's service revenue grew by 3.5%* (Q2: 4.8%*), due to strong demand for mobile data and continued growth in both financial services and our customer base. The slowdown in quarterly trends was driven by a lower rate of growth in Vodacom's international markets, primarily a result of a natural disaster and fuel supply challenges in the Democratic Republic of Congo.

In South Africa, service revenue growth was driven by mobile contract price increases, a good commercial performance in the Consumer segment and higher data usage, partially offset by lower wholesale revenue. We added 132,000 mobile contract customers during the quarter, benefitting from a successful summer campaign and best-in- class network resilience and availability as we successfully managed challenges with nationwide electricity supply. Across the overall active mobile customer base, 74.9% of our customers are now using data services. Financial services revenue in South Africa grew by 12.5%* to €45 million, benefitting from continued demand for our insurance services and 'Airtime advance', a product that allows prepaid customers to receive airtime or data in advance of topping up. Our 'super-app' VodaPay has already reached 2.7 million registered users and celebrated its one-year launch anniversary in the quarter.

In Vodacom's international markets, service revenue growth was supported by data usage and higher M-Pesa transaction volumes, notably in Tanzania, following reductions in levies on mobile money transactions introduced in the prior year. The slowdown in quarterly trends was driven by slower growth in the Democratic Republic of Congo due to severe flooding and fuel supply challenges in the country, which impacted network availability. Our mobile customer base in Vodacom's international markets is 48.1 million with 60.5% of our active customer base using data services. M-Pesa revenue as a share of service revenue improved by 2.8 percentage points year-on-year to 25.7%. M- Pesa transaction volume increased by 14.0% during the quarter.

Other Markets⫶Turkey, Egypt and Ghana

Service revenue grew 34.1%* (Q2: 26.7%) reflecting a higher contribution from Turkey, impacted by accelerating inflation, as well as the continued growth of our customer base and higher ARPU.

Service revenue growth in Turkey was driven by ongoing repricing actions to reflect high inflation, continued customer base growth, and higher roaming and visitor revenue. We maintained our good commercial momentum, adding 439,000 mobile contract customers during the quarter, including migrations from prepaid customers.

Service revenue in Egypt continued to grow strongly, reflecting another quarter of good customer base growth and increased mobile data usage.

On 13 December 2022, Vodafone completed the transfer of its 55% shareholding in Vodafone Egypt to Vodacom. This transfer simplifies the management of our African assets. Vodafone Egypt will benefit from closer co-operation with Vodacom, enabling it to accelerate growth in financial services and IoT. Vodafone received cash proceeds of €577 million and 242 million shares in Vodacom in exchange for Vodafone's shareholding in Vodafone Egypt. Following completion, Vodafone's shareholding in Vodacom has increased from 60.5% to 65.1%. Vodafone Egypt will be included within the Vodacom reporting segment from 1 April 2023.

Hyperinflationary accounting in Turkey

Turkey was designated as a hyperinflationary economy on 1 April 2022 in line with IAS 29 'Financial Reporting in Hyperinflationary Economies'. During the quarter, service revenue in Turkey increased by 52.9%* (Q2: 43.9%*) due to ongoing repricing actions to reflect inflation. Organic growth metrics exclude the impact of the hyperinflation adjustment in Turkey in the quarter. Group service revenue growth excluding Turkey was 0.5%* (Q2: 1.4%*).

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