1. Vodafone KPI analysis David Chow

2. Executive summary Key points Vodafone is in turnaround mode after £1BN cost cuts Voice revenues still falling, but data usage is up Vodafone net adds continue to grow, but its market share is in danger of becoming static Vodafone group has an aggressive strategy in place to dominate mobile data High hopes for hero devices to boost subscriber growth Vodafone concerned about from JV from a number of perspectives Conclusions Vodafone short-term strategy is to disrupt scale and cost advantage pre-JV Vodafone is accelerating data network rollout to cater for the increase in mobile internet traffic Approval of the JV could prompt Vodafone to partner with BT as an integrated telco proposition

3. Agenda Key Vodafone KPIs examined Vodafone strategy How will Vodafone react to JV Possible impact on Orange Recommendations

4. Vodafone service revenue and net adds signals economic turnaround Vodafone organic service revenue change (YoY) 3Q09 Vodafone UK contract net additions (‘000’s) Source: Bank of America/Merrill Lynch Global Research Source: Vodafone While organic growth is down, q-o-q, decline is leveling off due to start of economic turnaround. European GDP recovered from -3.8% (2009) to +2.2% (2010) so Vodafone’s revenues should boost mid to late 2010* While 3Q09 net adds of approximately 410K (244K contract) is impressive given service revenue has not grown, subscriber base could be eroded by O2 and H3G over next 24 months, during the JV transition period *Source: Bank of America

5. Vodafone voice revenues fall but bolstered by mobile data Vodafone Group voice service revenue change YoY Vodafone Group data revenue growth YoY Source: Bank of America/Merrill Lynch Global Research Whilst European customers are talking more again, voice revenues in the UK continue to fall under pressure due to intense price competition and a cut in MTR from July 2009 Mobile data revenues have increased by 22% and will continue to rise, YoY. Data traffic mix will shift from USB dongles to smartphones during 2010 to reflect social media consumption patterns Smartphones and more importantly the introduction of the iPhone and Google Nexus One in to UK portfolio should boost mobile internet usage further in the coming months

7. Strong contract net adds of 244K on Vodafone and 194K on Orange tied in to long-tenure customers (24 month contracts) should see an increase in revenue in mid 2010 for both operators

8. Based on current performance the forecast estimates that pre-JV, Orange EBTIDA would slip 1% over the next three years due to shortfall in voice revenue, averaging at 22% margin *Source: Orange/Bank of America

10. Vodafone lost customers and its prepay mix is lower at 56%. But the network’s historical contract base has traditionally been composed of corporate customers on high spending £40+ a month tariffs. 1H10 might see a further influx of contract customers following launch of iPhone, Nexus One and iPad on the network

12. Vodafone UK has an aggressive four year strategy plan for voice and data Purpose Goal Strategy Delivered through By Source: Vodafone

13. Vodafone UK’s strategic direction: protect existing customer base and take a lead on mobile internet UK strategy aligned with group key initiatives to cut costs, retain customers and take a lead in mobile internet Big push in 2010 for 360 mobile platform, iPhone and iPad to acquire and retain high-value customers Accelerated rollout of HSDPA and planned HSPA+ deployment to put a stake in the mobile internet ground as market leader Streamlining and centralization of distribution system to better serve SOHO and SME market segment with both fixed line and mobile services

14. How might Vodafone react to JV? Disruptive investment in web and retail channels to damage JV scale and cost advantage before it hits its stride in 2012 Accelerated network rollout of high speed data to provide ‘best in class’ mobile internet experience Make a push for consumer mobile email with RIM akin to Orange’s first-to-market prepay BlackBerry proposition Acquisition and retention plan of action to lock-in and protect customer base and attack JV’s dominance in market segment sweet spots such as mid-range post pay tariff space Challenge Orange in enterprise customer acquisition and attempt to capture a larger proportion of new business in Carphone Warehouse and Phones 4U where Orange and T-Mobile perform well Unified (total) communications effort could be accelerated by an alliance with BT in order to compete more effectively against Orange home and broadband

15. Vodafone potential challenges to JV May decide to attempt to displace O2 to become number two network in the UK, but won’t do this ‘acquisition at any cost’ because it cannot afford to get in to a subsidy battle Protecting its existing low-end consumer subscriber base from being poached by O2 and H3G Preventing migration of its high-value enterprise business to Orange/T-Mobile JV Refocusing efforts on home broadband and telephone service with the advent of its Sure Call femtocell product but still limited to 8MB line speed at present due to wholesale agreement with BT

16. Impact of Vodafone actions on Orange Aggressive A&R tactics spread over 24 months could impact q-o-q net additions on JV’s consumer, enterprise and SME subscriber base Giving up spectrum in order to complete JV on time, could affect QoS delivery of a best-in-class mobile network Potential slow down of iPhone sales and possibly missing out on iPad and the potential revenue share of iBook sales High level of network exclusivity for forthcoming smartphone portfolio on Vodafone could put Orange at a disadvantage to retain high-spending customers Vodafone powered Google Nexus One paired with forthcoming AdMob mobile advertising platform could threaten viability of Orange advertising funded tariff during next 12 months

17. Summary Voice revenues and ARPU still dropped in 3Q09, but rate of decline has leveled off thanks to the start of economic turnaround Vodafone net adds continue to grow, but ultimately its market share is in danger of becoming static post-JV UK mobile data usage is second highest in Europe. QoS will be of vital importance for customer retention Pillar to Vodafone’s strategy to lead mobile internet services, 360, could start to gain traction in 2010 Vodafone’s EBTIDA and FCF show early signs of recovery and on track with strategy Orange and Vodafone both looking to hero devices from Apple, RIM and Android to boost subscriber growth and retention of existing customer base Vodafone concerned about from JV from a market share perspective but also costs reduction savings from combined group, dominance of £30-35 post pay segment and SOHO enterprise space Recommendations Build out high speed data network to take advantage of increased mobile internet usage Continue to expand push email propositions to own consumer space with BlackBerry Leverage broadband and home phone business to grow double digital market share with ATL activity Accelerate new and unique offerings like Monkey and mobile advertising business opportunity over the next 24 months to head off Google challenge