Focus on key areas of growth potential:

Emerging markets

Customer growth will be driven by rising mobile penetration and GDP growth

The number of customers using mobile services in emerging markets such as India and Africa has grown rapidly over the last ten years, increasing by over 17 times compared to nearly 130% in more mature markets such as Europe. In the 2010 calendar year the Indian mobile market increased by more than 225 million customers, nearly four times the size of the UK population. The key driver of growth has been a fundamental need for communication services against a background of low quality fixed infrastructure and strong economic growth.

Most of the future growth in mobile phone users is expected to continue to be in emerging markets where mobile penetration is still only approximately 70% compared with around 130% in Europe, supported by the expectation of continued strong economic growth. We expect to see between 20 to 40 percentage points of additional penetration by 2014 in emerging markets⁽¹⁾.

Data is the next major opportunity

Data represents a substantial growth opportunity as only 19% of our active customers in emerging markets use data services which is about half the rate in Europe. There are two significant opportunities. One is mobile broadband, helped by the lack of a comprehensive fixed broadband infrastructure in emerging markets. Already in South Africa mobile broadband accounts for around 90% of all broadband. The other is mobile internet which we are driving by:

• enhancing the mobile internet experience through our Opera Mini browser software which provides faster page downloads;
• driving down the cost of internet enabled handsets powered by Opera Mini, with prices starting at US$45;
• low day-to-day micro pricing which allows the purchase of individual data services, for example the download of a single ring tone; and
• locally relevant content and services in local languages.

Development impact of products and services

Mobile services are a key driver of economic development in emerging markets by increasing access to communications and mobile-enabled services. We continued to market Vodafone-branded competitively priced handsets, selling 1.7 million devices during the year in our emerging markets⁽²⁾.

The uptake of Vodafone M-Pesa, which brings financial services to people without bank accounts, continued to grow, making an increasing contribution to economic development in communities that lack conventional banking services. It now has over 20 million customers globally (11 million in 2010), who transferred around US$500 million a month during the year (up from US$300 million a month in the previous financial year). We launched Vodafone M-Pesa in South Africa, Qatar and Fiji during the year, bringing the total to six markets, and began pilots in India with ICICI Bank and HDFC Bank.

The Vodafone WebBox (see above) was launched in South Africa in February 2011 and other markets will follow in the 2012 financial year.

Strong performance

We are either number one or two in six of our seven emerging markets based on revenue. This year’s performance highlights include:

• increased revenue market share in India and Turkey;
• data revenue growth of 43.8%^(*) in Vodacom and 37.7%^(*) in Egypt; and
• surpassing the 134 million customer mark in India, an increase of 34 million over the year.

We launched 3G services in India in February 2011 and anticipate that this will provide further revenue growth opportunities going forward.

1. Notes:
2. Source: Informa WCIS.
3. India, Vodacom, Egypt, Turkey, Ghana, Qatar and Fiji.

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