Final Results - Part Three

Vodafone Group Plc
24 May 2005


PART 3

VODAFONE GROUP PLC
PRELIMINARY RESULTS


ASIA PACIFIC

Financial highlights                    Year ended 31 March
--------------------                    2005           2004        % change
                                          £m             £m         £   Yen
Turnover      Japan(1)                 7,396          7,850        (6)   (2)
              Other Asia Pacific       1,142          1,052         9
              Less: intra-segment
              turnover                    (7)            (6)       17
                                     --------       --------
                                       8,531          8,896        (4)
                                     --------       --------
Total Group
operating     Japan                      758          1,045       (27)   (25)
profit(2)  Other Asia Pacific(3)         192            167        15
                                     --------       --------
                                         950          1,212       (22)
                                     --------       --------
Japan
-----

Trading
results       Voice services           4,404          4,790        (8)    (4)
              Non-voice services       1,206          1,350       (11)    (7)
                                     --------       --------
              Total service revenue    5,610          6,140        (9)    (5)
              Net other revenue(1)        21             20         5      9
              Interconnect costs        (482)          (519)       (7)    (4)
              Other direct costs        (251)          (414)      (39)   (37)
              Net acquisition
              costs(1)                  (641)          (677)       (5)    (2)
              Net retention costs(1)    (716)          (607)       18     23
              Payroll                   (186)          (186)        -      4
              Other operating
              expenses                (1,380)        (1,519)       (9)    (5)
                                     --------       --------
              EBITDA                   1,975          2,238       (12)    (8)
              Depreciation and
              amortisation(2)         (1,217)        (1,193)        2      6
                                     --------       --------
              Total Group        
              operating profit(2)        758          1,045       (27)   (25)
                                     --------       --------
            EBITDA margin               26.7%          28.5%
KPIs        Closing Customers
            ('000)                    15,041         14,951                1
            Monthly average ARPU    Yen6,148       Yen6,725               (9)

(1) Turnover for Japan includes revenue of £1,765 million (2004: £1,690 million)
    which has been excluded from other revenue and deducted from acquisition and
    retention costs in the trading results
(2) Before goodwill amortisation
(3) Before exceptional items

See page 38 for definition of terms

Japan

Vodafone continues to encounter difficult market conditions in Japan due to the
strength of competitor offerings, specifically in 3G customer propositions. A
recent strengthening of the management team and the ongoing transformation plan
are intended to improve Vodafone's competitive position and financial
performance over the mid to long term.

Local currency turnover for the year ended 31 March 2005 fell marginally
compared to the prior year, with a 5% decrease in service revenue partially
offset by an increase in equipment and other revenue. Service revenue declined
following a reduction in ARPU, partially offset by an increase in the average
customer base.

The ARPU erosion was caused by the loss of higher value customers, through the
lack of a competitive 3G offering during the financial year, together with the
adverse impact of lower termination charges caused by changes to the regulatory
environment from 1 April 2004 and a total ban on using mobile phones whilst
driving from 1 November 2004.

The average customer base grew 4% over the financial year, although market share
declined from 18.4% at 31 March 2004 to 17.3% at 31 March 2005. Prepaid
customers comprised 11% of closing customers, up from 9% at 31 March 2004. By 31
March 2005, Vodafone had 798,000 devices registered to use 3G data services in
Japan.

Non-voice service revenue decreased by 7% over the comparative period, primarily
due to the loss of higher value customers, who generally use more data services,
and the increased proportion of prepaid customers, who can only access basic
data services. A new flat rate data tariff for 3G customers was introduced in
the winter and is anticipated to improve the competitiveness of the data
proposition.

EBITDA margin fell by 1.8 percentage points to 26.7% for the year ended 31 March
2005, principally due to the ARPU dilution, the continued focus on customer
retention and the migration of existing customers to 3G service offerings. The
impact of these issues has been partially offset by a decrease in other direct
costs due to a lower provision for slow moving handset stocks in the year ended
31 March 2005, and other operational efficiencies. The increase in payroll costs
was largely due to one-off charges of approximately £25 million associated with
a voluntary redundancy programme in the first half of the financial year, which
was part of the transformation plan noted below, offset by lower ongoing costs
in the second half of the financial year. Operating profit was impacted by
increased depreciation charges following 3G network roll out and the disposal of
assets in relation to the integration of regional systems.

During the financial year, Japan completed the majority of the consolidation of
its regional structure, with the integration of key business systems now
complete. The integration of billing and IT systems is a longer term, and more
complex project and is ongoing. Overall, Japan has improved its cost structure
through reductions in general overheads and the effective utilisation of dark
fibre.

The Group has strengthened its management team in Japan through the appointment
of Shiro Tsuda and Bill Morrow during the year. Formerly Senior Executive Vice
President at NTT DoCoMo, Inc., Shiro Tsuda brings considerable experience of the
mobile telecommunications industry, together with an extensive knowledge of the
Japanese business and consumer markets. Bill Morrow has gained significant
experience through various global leadership positions within the Vodafone Group
for the last eight years and was formerly President of Japan Telecom.

In the year ending 31 March 2006, management will focus on enhancing customer
satisfaction, through an improved handset portfolio, targeted new product
offerings, improvements in both network coverage and capacity and a renewed
focus on business customers. In addition, cost reductions are expected through
leveraging the Group's global scale and scope. With these measures it is hoped
that Vodafone will be more agile and commercially driven when facing mobile
number portability in the Japanese market in the next financial year.

In the first half of the year, the Group increased its effective shareholding in
Vodafone K.K. to 98.2% and its stake in Vodafone Holdings K.K. to 96.1% for a
total consideration of £2.4 billion. On 1 October 2004, the merger of Vodafone
K.K. and Vodafone Holdings K.K. was completed, resulting in the Group holding a
97.7% stake in the merged company, Vodafone K.K.

Other Asia Pacific subsidiaries

In the Australian market, value promotions and strategic changes in the tariff
structures led to Vodafone increasing market share, turnover and profitability.
ARPU also increased, despite falling prices, due to increased usage. In August
2004, Vodafone announced an agreement with another Australian telecommunications
carrier to share 3G network equipment to reduce the total cost of ownership of
the 3G network and increase speed to market. This is expected to lead to the
launch of 3G services in October 2005.

In New Zealand, turnover and market share improved over the year as a result of
enhanced customer propositions. The EBITDA margin also increased as reduced
equipment costs offset the effect of increased interconnection costs as the
proportion of activity to non-Vodafone networks increased. The launch of a high
speed network upgrade by competitors in the second half of the financial year
has intensified competition in the market. Vodafone is expected to launch 3G
services in July 2005.

Other Asia Pacific

China Mobile, in which the Group has a 3.27% stake, and which is accounted for
as an investment, grew its customer base by 42% over the year to 213,874,000 at
31 March 2005, including 26,831,000 customers added as a result of acquisitions.
Dividends totalling £18 million were received from China Mobile during the year.

Changes to the regional structure

From 1 April 2005, Vodafone Japan reports directly to the Chief Executive whilst
the Group's other operations in Asia Pacific form part of an extended Other
Europe, Middle East and Africa region, which will in future be referred to as
Other Mobile Operations.



Other Operations

Financial highlights                         Year ended 31 March
--------------------                            2005        2004      % change
                                                  £m          £m       
Turnover                Germany                1,108       1,002            11
                        Asia Pacific               -       1,126
                                             --------    --------
                                               1,108       2,128           (48)
                                             --------    --------
Total Group operating   Germany                   66         (58)
profit/(loss)(1)        Other EMEA               (37)         (1)
                        Asia Pacific               -          79
                                             --------    --------
                                                  29          20            45
                                             --------    --------

(1) Before goodwill amortisation


The Group's other operations comprise interests in fixed line telecommunications
businesses in Germany (Arcor) and France (Cegetel).

Germany

In local currency, Arcor's turnover increased by 14%, primarily due to customer
and usage growth, partially offset by tariff decreases in a competitive market.
Arcor strengthened its position as the main competitor to the incumbent fixed
line market leader during the year, growing contract ISDN voice (direct access)
customers by 83% to 712,000 and contract DSL (broadband internet) customers by
169% to 455,000 in the year ended 31 March 2005. Market share in the fast
growing broadband and direct access markets more than doubled in the year to 7%
and 6%, respectively. Revenue growth and further cost efficiencies generated a
significantly improved EBITDA margin and increased cash flow.

Other EMEA

The Group's associated undertaking, Cegetel, focused on increasing its share of
the fast growing DSL market, growing its DSL customer base by 566,000 to 841,000
in the year, which has led to higher acquisition costs and adversely impacted
operating profit.

Asia Pacific

The Group disposed of its interests in Japan Telecom during the previous
financial year and ceased consolidating the results of this business from 1
October 2003.


Global Services

One Vodafone

The One Vodafone initiatives are targeted at achieving £2.5 billion of annual
pre-tax operating free cash flow improvements in the Group's controlled mobile
businesses by the year ending 31 March 2008 ('2008 financial year'). The Group
also expects mobile capital expenditure in the 2008 financial year to be 10% of
mobile revenue as a result of the initiatives. These targets, and the analysis
below, have been prepared on the basis of UK GAAP.

Cost initiatives are anticipated to generate improvements of £1.4 billion, with
a further £1.1 billion from revenue initiatives. Of the £1.4 billion of cost
savings, £1.1 billion relates to savings in operating expenses, being payroll
and other operating expenses, and tangible fixed asset additions. The remaining
cost saving, of £0.3 billion, relates to handset procurement activities. The
Group expects that, in the 2008 financial year, the aggregate of mobile
operating expenses and tangible fixed asset additions will be broadly similar to
those for the year ended 31 March 2004, assuming no significant changes in
exchange rates and after adjusting for acquisitions and disposals.

Revenue enhancement initiatives are expected to deliver benefits equivalent to
at least 1% additional revenue market share for the Group's controlled mobile
businesses in the 2008 financial year compared with the 2005 financial year. The
Group will measure the revenue benefits in its five principal controlled markets
compared to its established competitors. Incremental pre-tax operating free cash
flow of £1.1 billion per annum is anticipated from these benefits, with the
majority expected to be derived from enhanced handset offerings in addition to
improved customer management and roaming.

The One Vodafone programme continues to make progress in delivering the benefits
of global scale and scope to the Group. Activity in the 2005 financial year has
been to establish the internal structure, organisation and detailed plans for
each area to deliver the One Vodafone targets. The programme has focused on the
following six key initiatives:

• The Group's aim for the network and supply chain management initiative is to
  exploit the benefits of the Group's scale beyond the current centralised 
  supply chain. Harmonisation of network design and planning along with 
  standardisation of network equipment specifications across suppliers is 
  expected to reduce maintenance costs and increase purchasing options. Sharing 
  of best practice across operating companies has already led to cost savings 
  from the replacement of leased lines with owned fixed optical fibre capacity 
  and microwave links.

• The service delivery platform initiative is aimed at consolidating European
  development and operations. Hosting centres in Germany and Italy are already
  operational and the Group's European mobile operating subsidiaries are 
  expected to begin migrating their service delivery platforms over the next 
  18 months. Development activities are to be consolidated into Germany, Italy, 
  the UK and the US.

• The Group has focused its plans for information technology delivery on the
  development of a roadmap towards the consolidation of billing and customer
  relationship management systems. This is expected to be a longer term project
  and is expected to deliver benefits over a number of years. A key theme is the
  identification of best practice and implementing this across existing systems.

• The development of an end-to-end terminals delivery process from initial
  design to delivery to customer, incorporating benefits from greater volumes of
  customised handsets, is intended to reduce time to market, through 
  consolidation of platforms and streamlined testing programmes and to generate 
  cost savings. These savings are expected to arise primarily from standardised 
  handsets and accessories, through better management of volumes across Europe 
  and efficiencies in logistics. The availability of a common portfolio of 3G 
  handsets following the launch of Vodafone live! with 3G in November 2004 is an
  early example of success.

• The customer management initiative aims to implement consistent segment and
  value based customer management across the Group to improve customer retention
  and satisfaction and, therefore, reduce churn.

• Finally, providing Vodafone's customers with better value when they travel
  abroad, as well as generating the best value inter-operator tariffs for the
  Group, are the key goals of the roaming initiative. The Group also expects to
  centralise certain support activities for roaming. The launch of the Vodafone
  Travel Promise in May 2005 is a key step in delivering better value for our
  customers when travelling abroad.

The objective for the 2006 financial year is to begin implementation of these
plans and deliver benefits in each area, although some initiatives will be more
advanced than others. Significant benefits are expected in the 2007 financial
year, with the full targets expected to be met in the 2008 financial year.


Vodafone live!

Vodafone live!, the Group's integrated communications and multimedia
proposition, initially launched in October 2002, has continued to grow strongly.
The proposition, targeted primarily at the young adult ('young active fun')
segment, has been launched in six new markets since 31 March 2004, bringing the
total number of countries now offering Vodafone live! to 22, comprising 15
controlled networks, 4 of the Group's associated companies and 3 Partner
Networks. New markets added in the 2005 financial year include Malta, Austria,
Belgium, Croatia and Slovenia. There were 30.9 million Vodafone live! active
devices, including 12.8 million in Japan, on controlled networks at 31 March
2005, with an additional 3.2 million devices connected in the Group's associated
companies.

The Group has continued to develop its Vodafone live! proposition by offering a
new range of services, content, handsets and tariffs. The design of the Vodafone
live! portal, through which customers can access a range of online services -
games, ringtones, news, sports and information - has been enhanced and an
improved search function has made it easier for customers to find and purchase
content.

Over 23 new handsets have been added to the Vodafone live! portfolio, with an
increased emphasis on exclusive and customised devices. The new handsets added
have offered improved imaging capability across the range, better connectivity,
with a significant proportion of devices now offering 'Bluetooth', and increased
memory card storage to enable customers to save content on their devices.

Vodafone live! with 3G

In November 2004, the Group launched Vodafone live! with 3G across 13 markets
with an initial portfolio of 10 devices. At 31 March 2005, there were 2.1
million devices on controlled networks capable of accessing the Vodafone live!
with 3G portal.

3G has enhanced the mobile experience with up to a ten-fold increase in portal
and content download speeds, giving Vodafone live! customers access to a unique
range of high quality content and communication services. Vodafone live! with 3G
customers can now experience news broadcasts, sports highlights, music videos,
movie trailers and a host of other video content at a quality approaching that
of digital television. With the signing of an exclusive deal with Twentieth
Century Fox, Vodafone UK customers were also the first to experience a new
generation of made-for-mobile TV and film content, so called 'mobisodes'.
Several markets have already launched TV broadcast services and these will be
developed further in the coming year. The wide bandwidth of 3G supports access
to sophisticated 3D games and Vodafone has introduced a range of branded titles.

The 3G service also supports full track music downloads which allow customers to
use their phone to listen to music, choosing from a range that currently
includes over 500,000 music tracks. Vodafone has secured music from some of the
world's greatest artists through agreements with Sony BMG Music Entertainment
and for music from the catalogues of EMI and Warner Music. Customers can also
download live performance videos and stream clips direct to their mobiles
through Vodafone's agreement with MTV.

Business services

The Vodafone Mobile Connect data card provides working mobility to customers
accessing email and company applications with access speeds up to 384 kilobits
per second when connected to a 3G network. The Vodafone Mobile Connect 3G/GPRS
data card has now been rolled out across 17 markets, including the Group's
associated undertakings in France, Belgium and South Africa and the Group's
Partner Network operators in Austria, Bahrain and Finland. The product portfolio
was enhanced in the financial year with the launch of a quad-band data card
allowing customers to connect whilst travelling in the US and a data card
supporting both GPRS and EDGE technology which provides high speed connectivity
in a number of the Group's Partner Networks. Vodafone Mobile Connect data cards
are available in an increasing number of distribution channels and with a
growing range of service and price bundles. At 31 March 2005, there were 0.5
million registered Vodafone Mobile Connect data cards on the Group's controlled
networks, including 0.3 million 3G/GPRS data cards.

The Vodafone Wireless Office service, which offers fixed line functionality and
the freedom of mobility in a single handset solution on either a group/team or a
company-wide basis, was introduced into a further seven markets in the financial
year, bringing the total to 11.

On 21 April 2005, the Group announced the roll out of push email, a service
providing real-time, secure and remote access to email, contacts and calendar
direct to a range of business-focused mobile devices. New email, calendar
appointments and contact details are automatically 'pushed' to the customer's
selected device and updates made on the device are automatically reflected on
the customer's PC. During the launch phase, the service will be supported by
four devices, with additional devices introduced in the coming months.

Other initiatives

In May 2005, the Group announced the launch of Vodafone Simply and the Vodafone
Travel Promise. Vodafone Simply is a new service designed to provide an easy to
use mobile solution for customers who want to use voice and text services with
minimum complexity to keep in touch with family and friends. The service
includes a new, stylish and easy to use Vodafone Simply mobile phone, which has
been developed with the emphasis on only the most commonly used functions.
The handset is aimed at people who do not want the extra features that most new
phones offer. The Vodafone Travel Promise is a new roaming campaign, the first
element of which is the Vodafone Passport price plan, an easy to
understand voice roaming price plan which provides customers with greater price
clarity when using their mobile voice services abroad.   For a one-off
connection fee per call, determined by the network operator, Vodafone Passport
customers will be able to make voice calls at domestic rates when roaming on
Vodafone's controlled networks (excluding Egypt) and the networks of selected
associated undertakings. In addition, when receiving calls abroad, customers
will pay the same connection fee, allowing them to talk for up to a maximum of
60 minutes, for no additional charge.

On 14 February 2005, Vodafone commenced field tests of the High Speed Downlink
Packet Access ('HSDPA') technology in Japan. HSDPA enables transmission speeds
of up to two megabits per second ('2 Mbps'), though 14.4 Mbps can theoretically
be achieved.

At CeBIT, the major trade fair for IT and communication held in March 2005,
Vodafone Germany launched Vodafone At Home, an alternative to a fixed line
network allowing private householders and home office users to replace their
existing fixed line connection. The Group also demonstrated new mobile TV
technology, a first prototype of an HSDPA data card and a number of new
handsets, including two Ferrari branded handsets jointly developed with Sharp.









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