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Business review Performance Governance Financials Additional information
21
Vodafone Group Plc
Annual Report 2012
3. Revenue 4. Cash ow
5. Shareholder
remuneration
6. Reinvestment
intothe business
People
We place signicant emphasis on the calibre
ofthe people we recruit, how we develop
them and the importance of our interface
withour customers. We are working hard to
buildamore diverse workforce that is more
representative of our customer base. We also
believe it is important for our people to be
thebiggest champions of our own products
andservices, so that we all become natural
Vodafone advocates. See pages 34 and 35 for
more information on our people.
Brand
Vodafone is ranked as the number nine
brandglobally with an attributed worth of
US$30billion (source: Brand Finance), and the
most valuable telecoms brand in the world.
The strength of the brand raises the prole
ofour distribution channels and is a major
driver of purchasing decisions for consumers
and enterprise customers alike. During 2012
we continued our title partnership with the
Vodafone McLaren Mercedes Formula One
Team to give ongoing global exposure for
ourbrand.
2. Customers
With 404 million customers globally, Vodafone
is one of the biggest mobile operators in the
world. Mobile communications are now a
wayof life, connecting people, stimulating
commerce, offering entertainment and
providing security.
Our customers also include many of the
world’s biggest companies: over 23% of
ourGroup service revenue comes from the
enterprise segment (see pages 28 and 29 for
further details).
What all our customers have in common is the
expectation of a great experience in what has
become an essential service.
3. Revenue
We generate our service revenue through
thesupply of calls, text messaging, data and
other services over our networks. Consumers
pay for these services either via contracts
(typically up to two years in length) or through
buying their airtime in advance (prepaid or pay
as you go). Enterprise customers often have
longer contracts.
These revenue models give us excellent
visibility of our business. In addition, we are not
reliant on single large contracts, with the top
ten biggest corporate accounts representing
less than 1% of annual revenue. Secondly, the
majority of our services are sold in advance –
reducing credit risk and generating an
attractive working capital prole. Finally, our
services have become such a part of our
customers’ everyday lives that they have
become non-discretionary in nature.
4. Cashow
Our track record of converting revenue
intocash ow is strong. Firstly, we run
highlyefcient networks where we seek
tominimise costs, thus supporting a strong
gross margin. Secondly, our market share
position in many markets is strong and
growing, with this in-market scale being a key
driver of cost efciencies and EBITDA margin.
5. Shareholder remuneration
The cash generated from operations allows
usto sustain a generous shareholder returns
programme while also investing in the future
prosperity of the business. Our annual
regulardividend per share, which we have
targeted togrow by at least 7% to March 2013,
is comfortably covered by our free cash
owguidance.
In addition, we have paid out a special dividend
from the income dividend from Verizon
Wireless, and are close to completing a
£6.8billion buyback programme nanced
through recent asset disposals. We have
returned over 30% of our market capitalisation
to shareholders over the last four years.
6. Reinvestment into the business
We have maintained a high and consistent
level of capex in recent years, to support wider
coverage, higher speeds and deeper capacity
in our networks. Through our IT investment
weare enhancing our customer relationship
capability and providing new customer billing
services. In addition, we have continued to
invest in our stores, our internet and social
media presence and spectrum licences to
support future services and growth. We have
successfully balanced the ongoing capital
requirements of the business with attractive
shareholder remuneration.