Annual Report for the year ended 31 March 2010

Service revenue (%)

• Around 80% of our service revenue comes from traditional voice and messaging services. The remaining 20% stems from the faster growing areas of mobile data and fixed broadband.

Our revenue from traditional voice and messaging services in mature markets is declining due to ongoing competitive and regulatory pressures, partly offset by faster growth in newer areas of data and fixed services.

We have seen demand for data services such as laptop access to the internet and mobile internet browsing lead to a four fold increase in our data traffic over the last two years. Data revenue has expanded from £1.1 billion in the 2006 financial year to £4.1 billion in the 2010 financial year. Data growth has been driven by faster network speeds and increased penetration of mobile broadband services and smartphones.

Our fixed services mainly comprise fixed broadband rather than fixed voice calls. The number of fixed broadband customers has grown to 5.6 million at 31 March 2010 from 2.1 million in March 2007.

Smartphone share of global handset shipments (%)

• Global handset volumes increased 5% per annum over the last three years. In this time the mix has changed, with more demand for both smartphones and low cost devices at the expense of mid range feature phones.

The mobile industry shipped around 1.1 billion handsets worldwide in 2009. These include ultra low cost devices for more value conscious consumers, standard feature 2G and 3G devices, and high-end smartphones which can access the internet and download increasingly popular user applications. We have seen a change in mix, with increased demand for both smartphones and low cost devices.

Smartphones accounted for 15% of the industry handset shipments in 2009 compared to 8% in 2006. 24% of our new handset sales in Europe during the year were smartphones and this is expected to grow further over the next few years.

Industry annual handset shipments

1.1bn

Product focus: Vodafone 360 Samsung H1

Customers are increasingly using high-end smart phones to download applications and browse the internet.

Our low cost devices are targeted at developing markets and certain prepaid segments in Europe. Demand has been driven by lower prices and an expanding portfolio with attractive features, including touchscreen and data capabilities.

Vodafone mobile peak downlink speeds (Mbps)

• Our industry is undergoing significant technological change, with faster download speeds and product innovation improving the customer experience.

Our technological capabilities are rapidly changing. Our networks have evolved from 2G or second generation systems for voice, text and basic data services to 3G or third generation networks which also provide high speed internet and email access. Vodafone’s peak mobile data download speeds have increased to up to 28.8 Mbps. Looking forward we, along with other operators, have been testing 4G, or fourth generation, technologies which offer even faster network speeds to enhance the customer experience.

We have been a pioneer in a range of new products. These include high speed mobile broadband for internet and email access and femtocells to enhance customers’ indoor 3G signals via their household broadband connection. We have also developed quality of service techniques which enable careful management of the assignment of capacity in our networks during the busiest times to enhance our customers’ experience.