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Press Release -- February 6th, 2014
Source: Vodafone Group
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Interim Management Statement for the Quarter Ended 31 December 2013

06 February 2014

Highlights1

  • Q3 Group organic service revenue declined 4.8%*; Europe down 9.6%*; AMAP up 5.5%*
  • Strong emerging market service revenue growth: India 13.2%*, Turkey 3.9%*, Vodacom 3.5%*
  • Conditions in Europe remain challenging; organic service revenue: UK -5.1%*, Germany -7.9%*, Spain -14.1%*, Italy -16.6%*
  • 9.8 million customers now on Vodafone Red: well on target to achieve 11-12 million customers by March 2014
  • 4G available in 13 countries, data usage double that of 3G plans, around 2 million 4G Red customers in Europe
  • Project Spring under way and on track
  • Unified communications: Portugal fibre build on track; Spain commercial launch in April
  • Acquisition of 76.6% of Kabel Deutschland (‘KDG’), domination agreement process on-going
  • US$130bn sale of US Group, including its interest in Verizon Wireless, expected to complete 21 February 2014
  • Net debt including joint ventures increased to £31.5 billion after the acquisition of 76.6% of KDG
  • Full year guidance confirmed2: adjusted operating profit around £5.0 billion; free cash flow £4.5 – £5.0 billion
  Quarter ended 31 December 2013 Change
Reported Organic
£m % %
Management basis1,3
Group revenue 10,977 (3.6) (4.3)
Group service revenue 9,856 (3.3) (4.8)
Europe 6,523 (2.7) (9.6)
Africa, Middle East and Asia Pacific ('AMAP') 3.221 (6.1) 5.5
Capital expenditure 1,808 20.7
Free cash flow 1,031 (14.2)
Statutory basis4
Group revenue 9,587 (1.5) (2.9)
Group service revenue 8,712 (1.7) (3.1)

Vittorio Colao, Chief Executive, commented:

“Our emerging market businesses are growing strongly, supported by consistent execution and accelerating demand for data. In Europe, conditions are still difficult, and we continue to mitigate these challenges through on-going improvements to our operating model and cost efficiency. In addition, the shift to 4G is gaining momentum and we have seen improving mobile customer net addition trends. We are therefore optimistic that our revenue performance will begin to improve as regulatory headwinds ease and customer appetite for video and content services increases.

“During the quarter we have made further progress in executing our long-term strategy. Project Spring, our £7 billion organic investment programme, will accelerate our plans to establish stronger network and service differentiation for our customers, with the first elements of the programme already initiated. After the imminent completion of the Verizon Wireless transaction, we will be very attractively positioned, with a strong balance sheet, improved dividend cover and the financial and strategic flexibility to make further investments in the business or returns to shareholders in the future.”

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Notes:

* All amounts in this document marked with an “*” represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. There have been two one-off items impacting organic growth rates in the quarter. For details see note 5 on page 11.

1  All amounts and growths are calculated on a management basis, consistent with how the business is managed and operated, and includes the results of the Group’s joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis.

2  Full details on this pro forma guidance are available on page 8 of the Group’s interim announcement for the six months ended 30 September 2013.

3  The Group revised its segment structure on 1 October 2013. For details see “Change in segments” on page 7.

4  The statutory basis includes the results of the Group’s joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, using the equity accounting basis rather than on a proportionate consolidation basis.

5  Analysys Mason 2013 M2M Scorecard

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