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07

Vodafone Group Plc

Annual Report 2012

Business review
Performance

36m

mobile
customers

Italy 

30m

mobile
customers

We are the largest mobile

operator in Italy

We are the leading mobile operator

inGermany, with a revenue market
share of 35%. In 2010 we became
thefirst operator in Germany to launch
super fast 4G mobile data services
withpeak data download speeds of
upto 50 Mbps. Germany is our largest
marketfor fixed broadband customers
with 3.4 million users.

We acquired operations in Italy in 2000.

In2011 we became the largest mobile
operator and now have a 37% revenue
market share. While the economic
recession led to a fall in revenue during
the year, our flexible cost structure, due
to low handset subsidies, has ensured
that overall profitability remains high.

Spain 

18m

mobile
customers

India 

150m

57m

Our largest market

bycustomers

The economic recession is extremely

harsh in Spain, with unemployment at
24% leading to significant declines in
organic revenue as customers cut back
on spending. We remain confident of
Spains longer term prospects and
therefore we recently invested around
500million in new spectrum which will
be used to rollout 4Gservices.

We acquired a controlling stake in India

in 2007. Since then we have grown the
customer base from 28 million to over
150 million and increased our revenue
market share from 16% to 21%. Through
our investments in 3G technology and
low cost handsets we are bringing
mobile internet services to this fast
growing market.

19m

mobile
customers

Our first market

We own 65% of Vodacom which covers

five countries in Southern Africa
including South Africa which is the
largest business, accounting for about
85% of revenue, Tanzania, Lesotho,
Mozambique and the Democratic
Republic of Congo. In South Africa we
arethe market leader and continue to
deliver strong revenue growth due to the
rapid take up of mobile data services.

We made the first UK mobile phone

callin 1985and we were the first UK
mobile network operator to launch
commercial 3G services in 2001. Our
business has expanded rapidly and
today we account for 26% of the UK
market (measured byrevenue) and
havea market leading 37% share of
themobile enterprise market.

Verizon Wireless 

93m

mobile
customers

Additional information

Challenging market
conditions

UK 

Growing strongly in Africa

mobile
customers

mobile
customers

Financials

Our largest market

byrevenue

Vodacom 

Governance

Germany 

A leading US operator
We own 45% of Verizon Wireless, the
largest mobile operator in the United
States measured by revenue. During last
year Verizon Wireless achieved 7.3%*
service revenue growth driven by
goodcustomer growth and the strong
take-up of mobile data services.
Itsleading 4G network now covers
two-thirds of the US population.

Note:
1 Represents 100%. The Groups share based on
its equity interests are 23 million in Italy and
42million in Verizon Wireless.

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10

Vodafone Group Plc

Annual Report 2012

How were doing

We track our performance against 12 key
financial, operational and commercial
metrics which we judged to be the best
indicators of how were doing.
Organic service revenue growth

EBITDA margin

Adjusted operating profit (AOP)

Growth in the top line demonstrates our

abilityto grow our customer base and
stabiliseor increase ARPU. It also helps
tomaintain margins.

Trends in our EBITDA margins demonstrate

whether our revenue growth isgenerating a
good return on our investment in customer
acquisition, and whether we can offset
underlying cost pressures in our business
with cost efficiencies elsewhere.

Because of the significant contribution

madeto our overall profitability by our
USassociate, Verizon Wireless, AOP is a
better determinant of overall profitability
than EBITDA.

Target: EBITDA margin to stabilise by March 2014.

2010

2010

2011

Target: 1 4% per year to March 2014.

2010 1.6%
2011

2.1%

2012

1.5%

2011
2012

achieved

33.1%
32.0%

on-track

Relative market share

performance

Faster, more reliable networks with

widercoverage stimulate data usage
andcreate aclear point of difference
overother operators.

We track our relative performance by

measuring the change in our mobile
marketshare against our competitors.
Target: Gain or hold mobile service revenue
marketshare in most of our main markets against
ourprincipal competitor.

on-track

We gained mobile service

revenue market share in
5 out of 7 of our main markets.

11.8bn
11.5bn

achieved

Returns to shareholders

82% 5/7
of European 3G network
atleast 14.4 Mbps,
up from 66% in 2011

2012

11.5bn

31.2%

% of European network with

3G(14.4 Mbps or better)

Target: 99% by March 2015.

Target: 11.0 11.8 billion in 2012 financial year.

achieved

Consistent and balanced returns to

shareholders demonstrate our commitment
tocapital discipline.
Target: Dividend per share growth of at least 7% per
year to March 2013 (excluding special dividends).
2010

+6.9%

2011

+7.1%

2012

+7.0%

achieved

11

Vodafone Group Plc

Annual Report 2012

Business review
3HUIRUPDQFH
Governance

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2010

7.0bn
6.1bn

43%

of European contract revenue

from integrated tariffs at March
XSIURPLQ

achieved

27%

European smartphone
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up from 19% in 2011

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employees level of engagement, a
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Target: 7RVLJQLFDQWO\LQFUHDVHHDFK\HDU

7.2bn

2011
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