#1Safaricom acquisition Investor presentation May 2017#2Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated ('relevant persons'). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Group. Promotional material used in this presentation that is based on pricing or service offering may no longer be applicable. This presentation contains certain non-GAAP financial information which has not been reviewed or reported on by the Group's auditors. The Group's management believes these measures provide valuable additional information in understanding the performance of the Group or the Group's businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group's industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to, the comparable GAAP measures. This presentation also contains forward-looking statements which are subject to risks and uncertainties because they relate to future events. These forward-looking statements include, without limitation, statements in relation to the Group's projected financial results.. Vodafone, the Vodafone logo, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone WebBook, Vodafone Smart tab, Vodafone 858 Smartphone, Vodafone Passport, Vodafone live!, Power to You, Vodacom, Vodacom M-Pesa, Vodacom Millionaires, Vodacom 4 Less and Vodacom Change the World are trademarks of Vodafone Group Plc (or have applications pending). Other product and company names mentioned herein may be trademarks of their respective owners. 2 2#3Transaction summary Overview • Vodafone currently holds a 40% interest in Safaricom through a wholly-owned subsidiary, Vodafone Kenya Ltd ('VKL') Vodacom has agreed to acquire an 87.5% interest in VKL, representing a 35% interest in Safaricom 1.62x Vodacom shares per 100 Safaricom shares¹, representing: Valuation Consideration - (5.9)% discount vs 1.72x closing price as of 12 May 2017 - (4.8)% discount vs 1.70x 1m VWAP - (0.6)% discount vs 1.63x 6m VWAP • The exchange ratio implies a valuation for Safaricom: • 7.5x EV/FY17 EBITDA 11.3x EV/FY17 OpFCF 5.7% FY17 LFCF yield Share swap transaction - issue of new Vodacom Group Limited shares Vodacom will issue 227m new shares, resulting in total issued shares of 1 715m² Financial effects Approvals and governance . Vodacom's 35% stake in Safaricom will be equity accounted as an associate investment Slightly HEPS accretive (excluding the effects of amortisation on intangibles on acquisition) based on FY17 results • • Transaction is subject to shareholder approval (excl Vodafone) and a general meeting will be held on 15 August 2017 • Vodacom will be entitled to appoint 3 directors to the board 1 Shares issued to be adjusted for any Safaricom or Vodacom distributions between signing and closing. 2 Including shares held in treasury. 3#4Rationale | Strategic investment in a quality asset Premier telecom operator in East Africa Market leader in the dynamic high growth Kenyan market State of the art infrastructure and spectrum portfolio M-Pesa is the best in class mobile money platform Upside potential from nascent fiber opportunities, further mobile penetration and data growth Diversify Vodacom economic exposure Financially attractive transaction Ability to drive more value through closer cooperation Diversifies Vodacom's financial profile Complementary to Vodacom's existing footprint and simplification of structures Strategic stake acquired at an attractive valuation Strong historic operational performance expected to continue - Double digit revenue CAGR over last 5 years 48% adjusted EBITDA margin Generating high returns in excess of cost of capital Stronger regional presence in East Africa to drive regional and pan African enterprise propositions Improved sharing of best practices Ability to replicate M-Pesa success across other Vodacom territories 4#5Vodacom Group | Presence in Africa DRC Ownership 51% Active customers1 10.4m Market Position 1st Lesotho Ownership 80% Active customers1 1.5m Market Position 1st South Africa Ownership Active customers¹ Market Position Kenya Safaricom Ownership - Active customers¹ Market Position 35% 28.1m 1st Tanzania Ownership 82.2% Active customers¹ 12.7m Market Position 1st Mozambique 93.75% Ownership 85% 37.1m Active customers¹ 5.1m 1st Market Position 1st Source: Company public filings; 1Active customers are based on the total number of mobile customers using any service during the last three months (total mobile customers for Safaricom as reported) 5#6Kenya | Market overview opportunity Mobile Telecom Market share¹ Kenyan macro environment (2016)³ airtel 18% Safaricom 71% 7% 4% orange M-Pesa Market Share² Equitel airtel 21% Safaricom 67% 4% Equitel 6% MOBIKASH 2% 1% tangaza poss orange . Population of 45m GDP per capita of US$ 1516 vs US$ 5 261 for South Africa 6.0% real GDP growth and 6.3% inflation Kenyan telecom market (2016) • 39m mobile customers • 88% mobile penetration vs 146% in South Africa Source: Communications Authority of Kenya, quarterly report (Dec-2016), IMF World Economic Outlook (Apr-2017 Edition), WCIS as of Mar-2017 1 Based on mobile customers. 2 Based on customers. 3 Based on IMF 2016 latest estimates. 6#7Safaricom | The premier East African telecom business Key Business Highlights Pioneer in mobile money FY2017A Service Revenue Split 79% of mobile customers using M-Pesa - c.19m active customers¹ 3% 2% 8% Well invested network infrastructure and spectrum portfolio 14% - Mobile coverage: 2G: 95%; 3G: 85% 46% Strong ongoing growth opportunity: - 88% Kenyan mobile penetration 69% of mobile customers using data M-Pesa generates 27% of service revenue Nascent opportunity in fixed line data Experienced management team with deep market knowledge Source: Company filings, WCIS as of Mar-2017, Communications Authority of Kenya quarterly report (Dec-2016) 1 M-Pesa 30 day active customers/ total 30 day active customers as of 31-Mar-2017 2 Mobile data 30 day active customers/ total 30 day active customers as of 31-Mar-2017 27% Voice Messaging M-Pesa Fixed service ■Mobile data Other service 7#8Safaricom | Strong performance indicators Total customers (m) M-Pesa customers¹ (m) +8.1% 5yr CAGR 25.2 28.1 23.3 21.6 19.1 19.4 +15.9% 5yr CAGR 16.6 13.9 12.2 10.5 9.1 19.0 2012A 2013A 2014A 2015A 2016A 2017A 2012A 2013A 2014A 2015A 2016A 2017A Capex (KES'bn) +6.5% 5yr CAGR Total ARPU (Kshs) +6.6% 5yr CAGR 24.0% 20.0% 19.2% 20.6% 17.2% 16.6% 557.5 586.9 597.7 636.1 33.7 33.3 35.3 462.4 506.6 25.7 24.9 27.8 2012A 2013A 2014A 2015A 2016A 2017A 2012A 2013A 2014A 2015A 2016A 2017A Capex % of Sales Source: Company Filings. Mar-YE 1 Active customers refers to Mpesa customers that have been active in the past 30 days 8#9Safaricom | Strong financial performance Revenue (KES'bn) EBITDA (KES'bn) +14.8% 5yr CAGR 195.7 212.9 163.4 144.7 107.0 124.3 +22.5% 5yr CAGR 103.6 83.1 71.2 60.9 49.2 37.5 39.6% 42.1% 43.6% 44.5% 48.1% 35.0% 2012A 2013A 2014A 2015A 2016A 2017A 2012A 2013A 2014A 2015A 2016A 2017A -Adjusted EBITDA margin 3 OFCF1 (KES'bn) +42.2% 5yr CAGR EPS (KES) +30.5% 5yr CAGR 68.3 0.22 0.31 0.47 0.64 0.76 0.97 49.7 1.21 37.5 0.95 33.2 0.80 24.4 0.57 11.8 65.9% 0.44 59.9% 0.32 54.4% 49.5% 52.7% 31.3% 2012A 2013A 2014A 2015A 2 2016A 2017A O-% Cash flow conversion 2012A 2013A 2014A 2015A 2016A 2017A DPS Source: Company Filings. Mar-YE 1 Defined as EBITDA-Capex. 2 Defined as (EBITDA-Capex)/EBITDA 3 Margin is calculated on total revenue (less construction revenue) plus other income 9#10Diversify exposure | Complements growth strategy The proposed transaction is to be equity accounted in the Vodacom Group financial statements. The below charts are an illustrative contribution based on our proportionate shareholding in Safaricom; in practice Safaricom will only be reported in the "profit from associates" line within the Group income statement. Diversify exposure FY2017 Service revenue 24.6% 12.6% Enhances growth drivers FY2017 Service revenue Contribution 12% 5% 6% +27.7% 12% 21.5% 4% +19.3% 3% 75.4% 66.0% 31% +17.4% +16.2% 33% ■South Africa ■International ■South Africa International Safaricom FY2017 EBITDA 14.5% ■South Africa 85.5% International 13.7% 12.5% 73.7% South Africa International Safaricom 46% 47% -3.9% -4.9% Source: Company Filings. Note: ZAR converted to KES at average FX rate for FY2015/16 and FY2016/17.% are for the growth 2015-16 to 2016-17. Vodacom Group Combined Voice ■Data M-pesa Messaging Other 10#11Transaction structure Vodafone will transfer part of its stake in Safaricom to Vodacom in exchange for newly issued shares Pre transaction 65.0% Vodafone vodacom 100% VKL 40% Post transaction 69.6% Vodafone vodacom 12.5% 87.5% VKL 40% 25% 35% 25% 35% Free float Safaricom + Govt. of Kenya Free float Safaricom Govt. of Kenya Source: Company Note: Vodacom and Safaricom shareholdings based on total shares in issue (including treasury shares). Ownership in Safaricom is effective ownership through Vodafone Kenya Limited 11#12Timetable and key requirements Key Dates 05 July 15 August 16 August August Release of shareholder GM GM result announced Expected close circular Call for General meeting (GM) Key milestones and requirements SARB approval Ordinary resolution approving the transaction as a related party transaction in terms of JSE Listings Requirement It should be noted that Vodafone will not be able to vote on the matter but will be counted for quorum Special resolution to issue consideration shares in terms of section 41(1)(b) of the Companies Act Vodafone can vote on this resolution Ordinary resolution to approve the issue of the consideration shares in terms of clause 5.7.2 of Vodacom's memorandum of incorporation The Capital Markets Authority of Kenya confirming that Vodacom is not required to make a mandatory offer to the remaining shareholders of Safaricom 12#13Contacts Visit Our Website for More Information 8 About Us Investors Press Careers O Annual results Financial reports Stock information Presentations Annual general FAQ's meeting Financial FAQ's Integrated Share price reports Annual results Dividend calculator Investment Case Annual general meeting Vodacom Annual results Preliminary results for the year ended March 2017 Other Interim results Analyst coverage Quarterly results Calendar CLICK TO VIEW Unclaimed entitlements Annual results Social Report Integrated reports Vodacom Foundation ADR program In the world of Vodacom m vod vodacom 0:00 vodacom Vodacom has mobile network operations in South Africa, Lesotho, Tanzania, the DRC and Mozambique. Through Vodacom Business Africa, we also offer business managed services to enterprises in over 30 countries across the continent Share price ZAR cent15,189 -29.00 -0.19% (Delayed by 15 minutes)12/05/2017 15.500 15.250 http://www.vodacom.com/about-us/investors/investors-home Contact us Investor relations: [email protected] Company Secretary: [email protected] 13#14O Thank you 14