Interim Results - Part 3

Vodafone Group Plc
12 November 2002



Vodafone Group Plc
Interim Results
For the six months ended 30 September 2002

PART 3


STRATEGIC DEVELOPMENTS

Products and Services

The Group's vision is to be the world's mobile communications
leader.  A major focus of the Group's strategy is to  offer
innovative  products and services within  Vodafone-branded,
end-to-end customer propositions which utilise the  Group's
global  footprint  and global brand to  offer  customers  a
unique   mobile   experience  and  seamless   international
services.

Brand

Since April 2002, a number of significant achievements have been
made to progress this strategy. The company implemented its
strategy  to  introduce the Vodafone  brand  into  all  its
controlled mobile businesses and, at 30 September 2002, all
mobile subsidiaries other than Italy and Japan had migrated
to  the  single Vodafone brand. Omnitel Vodafone  in  Italy
rebranded as Vodafone Omnitel during June 2002.  In  Japan,
J-Phone  Vodafone  is  to migrate to the  single  brand  by
December  2003.  As a result of the brand rollout  and  the
continuing 'How are you?' advertising campaign,  the  Group
has  improved  considerably its brand awareness.   Vodafone
branding  is  now  focused  on  building  upon  its   brand
awareness and turning this into brand preference.

This year, the Group became a principal sponsor of Ferrari,
further  promoting the awareness of the brand globally  and
creating   joint  product  development  and   merchandising
opportunities.  Vodafone also continues to benefit from its
sponsorship of Manchester United.

The  strength  of  Vodafone's brand and  its  portfolio  of
international  services led to the  signing  of  a  further
partner   agreement  with  MTC  of  Kuwait.    Under   this
agreement, both Vodafone and MTC customers will now be able
to  benefit  from  easy access to Vodafone's  international
services.   The  Group's two existing  partner  agreements,
with  Radiolinja  of Finland and TDC of  Denmark,  are  now
fully  operational.  These agreements allow  the  Group  to
secure  a  return on its investment in a global  brand  and
have  the  added  benefit of extending the  Group's  global
footprint without the need for equity investment.

New service offerings

The Vodafone brand is also of fundamental importance to the
Group's  latest,  and  most significant  service  offering,
Vodafone live!. Launched in seven countries during  October
and  early  November, Vodafone live! is a major  Group-wide
programme,  designed  to offer the customer  an  integrated
experience  of  handset and services.   Vodafone  live!  is
built  around easy to use mobile services such  as  picture
messaging,  games, ringtones and mobile content.   Vodafone
live! and Vodafone Mobile Office, the business proposition,
are   both  expected  to  build  brand  preference  amongst
customers.

Vodafone live! represents a significant step forward for the
Group,  involving  development of  an  integrated  customer
proposition   and  service  offering  together   with   the
customisation of handsets with the Vodafone brand, Vodafone-
specific  menus  with embedded links and  Vodafone-specific
games  and  content  all launched on  a  co-ordinated  pan-
European basis.  It represents a significant building block
in the attainment of the Group's data strategy.

Part of the Vodafone live! customer offering is a wide range of
high   quality,   multi-media   entertainment-led   content
containing both international and local information.   This
is  provided by Vodafone Global Content Services,  formerly
Vizzavi,  which  became a wholly-owned  subsidiary  of  the
Group in August 2002.

Vodafone further extended its range of compelling product and
service  offerings for customers with the launch, in  July,
of  a  prepaid top-up service for international travellers,
enabling prepaid customers to use their mobiles when abroad
as  if  they are using them at home.  This service  is  now
available  in  eleven  countries.  This  was  followed,  in
September,  by the launch of Eurocall Platinum,  a  service
aimed  at reducing the cost of calls for high value roaming
customers,  building on the success of Eurocall, Vodafone's
single rate European price plan, launched in January 2001.

Another major part of the Group's growth strategy is Vodafone
Mobile  Office.   The  Group already offers  services  that
provide  mobile access to corporate intranets  and  office-
based  applications at speeds comparable to those available
through  standard  fixed  telephone  lines.  With  Vodafone
Mobile  Office,  the  Group's offerings  for  business  and
corporate  customers  will be brought together  to  deliver
easy  and seamless access to corporate information  systems
and  business applications over the Vodafone network.   The
first   part  of  the  Group-wide  Vodafone  Mobile  Office
programme  will be launched shortly and is called 'Vodafone
Remote  Access',  a pan-European Vodafone-branded  solution
for  secure, remote connection of laptops to the  corporate
network  using  a  Vodafone-enabled  GPRS  data  card   and
customised  software.  With over eight million  laptops  in
Western  Europe  alone being accessed away from  the  desk,
this represents a significant opportunity for the Group.

3G

The development and rollout of the Group's 3G networks remains an
important  element of its data strategy, with  3G  networks
offering  both increased spectrum capacity and  quality  of
service.   A  Group-wide 3G programme management  team  has
been  put  in place to oversee the project.  To  date,  the
Group  has achieved its initial operating target of  having
commenced  internal  user  field trials  in  five  European
networks  as well as in Japan. Over the next 12 months  the
Group  intends  to  have its 3G infrastructure  technically
ready  and  operational in major markets, with Japan  being
the  first  of the Group's networks to launch  in  December
2002.

Synergies

The globalisation of the Group's supply chain relationships is
advancing.   The  Group  is  now  either  managing  or  co-
ordinating centrally the purchase of network infrastructure
(including  that related to 3G) and IT platforms  used  for
building services, as well as handsets and other items such
as  consultancy services. Global supply chain management is
generating significant synergy savings for the Group and is
playing  a  key  role  in  the  Vodafone  live!  programme,
ensuring   availability  of  Vodafone-configured   handsets
through intensive liaison with handset suppliers.

Good progress has been made on the synergies arising from the
Mannesmann  transaction. It is expected that the  #500m  of
forecast  post tax cash flow synergies for the year  ending
March 2003 will be exceeded.

Corporate Social Responsibility

The Group's corporate social responsibility ('CSR') programme is
moving  ahead  with the commitments made in  its  2002  CSR
report,  published  in June 2002.  The Group  continues  to
strengthen  its  CSR management system  and  has  initiated
several  projects to further quantify the benefits  arising
from  action on key social and environmental issues.  These
include  initiatives  to  understand  and  deliver   energy
efficiency   improvements,  to  explore   selected   mobile
applications  offering  specific  environmental  or  social
benefits,  and  to  promote  additional  schemes  aimed  at
incentivising customers to return handsets and  accessories
for reuse or recycling. Vodafone also remains a constituent
of  the  FTSE4Good  index and the Dow Jones  Sustainability
index of companies.

FINANCIAL UPDATE

Profit and loss account

Total Group operating profit/loss

Before goodwill amortisation and exceptional items, total Group
operating profit increased 37% to #4,640m in the six months
ended  30  September 2002 from #3,392m in  the  six  months
ended  30  September 2001, comprising #4,650m  profit  from
continuing operations and #10m loss from the acquisition of
Vizzavi.

After goodwill amortisation and exceptional items the Group
reported a total operating loss of #2,197m, compared with a
loss of #7,820m for the comparable period.  This net change
of  #5,623m  arose  as a result of a #4,515m  reduction  in
respect  of  exceptional items, and a #1,248m  increase  in
operating profit partly offset by a #140m increase  in  the
goodwill amortisation charge, which increased primarily  as
a  result of the acquisition of J-Phone Vodafone and  Japan
Telecom  in  the  second half of the 2002  financial  year.
These  charges for goodwill amortisation do not affect  the
cash flows of the Group or the ability of the Group to  pay
dividends.

Exceptional items

There were no exceptional operating items charged in the six
months  to 30 September 2002.  During the comparable period
to  September 2001, exceptional operating items of  #4,515m
consisted  primarily of impairment charges in  relation  to
the   carrying  value  of  goodwill  for  Arcor  and  Grupo
lusacell.

Exceptional non-operating income of #267m (30 September 2001:
charge of #248m) mainly represents a profit on disposal  of
fixed  asset investments of #268m, principally relating  to
the  disposal  of  the Group's interest in Bergemann  GmbH,
through  which  the Group's 8.2% stake in  Ruhrgas  AG  was
held.

In accordance with UK accounting standards the Group regularly
monitors  the  carrying value of its fixed  assets.  At  31
March  2002, a review was undertaken which assessed whether
the  carrying value of its assets could be supported by the
net  present value of future cash flows derived from assets
using  cash  flow projections for each asset in respect  of
the  period to 31 March 2011.  This review resulted in  the
impairment  of  certain of the Group's assets.   A  further
review  was undertaken at 30 September 2002 which  included
monitoring   actual  cash  flows  to  date  against   those
previously  forecast. The results of the  review  indicated
that no further impairment charges were necessary.

Interest

Total Group net interest payable, including the Group's share of
the  net  interest expense of joint ventures and associated
undertakings, increased from #381m for the six months ended
30  September  2001 to #390m for the six  months  ended  30
September  2002.  Net  interest costs  in  respect  of  the
Group's  net borrowings increased to #239m from  #188m  for
the  comparable period, reflecting the increase in  average
net  debt  levels. Group interest is covered 24.6 times  by
Group  EBITDA  (before  exceptional items)  plus  dividends
received  from  joint ventures and associated undertakings,
compared with 17.8 times for the six months to 30 September
2001.  The  Group's  share of the net interest  expense  of
joint  ventures and associated undertakings decreased  from
#193m  to #151m due primarily to the consolidation  of  the
Group's former associated undertakings, Japan Telecom and J-
Phone, Vodafone from October 2001.

Taxation

The effective rate of taxation, before goodwill amortisation and
exceptional items, for the period to 30 September 2002  was
37.7%,  2.0%  higher than the rate for the  year  ended  31
March  2002,  principally as a result  of  changes  in  the
Italian  tax  regime,  the absence of last  year's  one-off
German  tax  refund and the consolidation of Japan  Telecom
and  J-Phone  Vodafone  into the Group's  results  for  the
period.

Exchange rates

The effect of translating the results of overseas subsidiaries and
associates  at exchange rates prevailing in the  comparable
period  to  30 September 2001, would have been to  increase
total  Group operating profit, before goodwill amortisation
and  exceptional items, for the six months to 30  September
2002 by #28m.

Earnings per share

Basic earnings per share, before goodwill amortisation  and
exceptional  items, increased 31% from 2.51p to  3.28p  for
the period to 30 September 2002.

Basic loss per share, after goodwill amortisation and exceptional
items, decreased from a loss per share of 14.36p to a  loss
per share of 6.36p for the period to 30 September 2002. The
loss  per  share of 6.36p includes a charge of  10.03p  per
share  (30 September 2001: 9.88p per share) in relation  to
the  amortisation  of goodwill and a credit  of  0.39p  per
share  (30  September 2001: charge of 6.99p per  share)  in
relation to exceptional items.

Dividends

The Company has historically paid dividends semi-annually, with
the  regular interim dividend in respect of the  first  six
months  of  the  financial year payable in  February.   The
directors  expect  that the Company will  continue  to  pay
dividends semi-annually.

In considering the level of dividend to declare and recommend, the
Board  takes  account of the outlook for  earnings  growth,
operating   cash   flow  generation,  capital   expenditure
requirements,  acquisitions and divestments  together  with
the  possibilities for debt reductions and share buy backs.
Accordingly,  the  directors are  recommending  an  interim
dividend  of  0.7946  pence per share, representing  a  10%
increase over last year's interim dividend.

The record date for the interim dividend is 22 November 2002, the
ex-dividend  date is 20 November 2002 and the  dividend  is
payable on 7 February 2003.

Cash flows and funding

The increase in operating profit, before goodwill amortisation and
exceptional  items,  in  the  six  month  period  ended  30
September 2002 translated into strong operating cash flows,
which  increased 56% over the comparable period to #5,676m,
including  over #1.4 billion of operating cash  flows  from
the  Group's  former associated undertakings Japan  Telecom
and J-Phone Vodafone.

During the six months ended 30 September 2002, the Group increased
its  operating  free  cash  flow  by  80%  to  #2,947m  and
generated  #2,878m of free cash flow, exceeding the  levels
generated for the whole of the previous financial year,  as
analysed below:

                                    Six months    Six months
                                            to            to       Year
                                  30 September  30 September      ended
                                          2002          2001   31 March
                                            #m            #m       2002
                                                                     #m

Net cash inflow from operating
  activities (Note 7)                    5,676         3,640      8,102

Purchase of intangible
  fixed assets                            (59)         (223)      (325)
Purchase of tangible
  fixed assets                         (2,705)       (1,816)    (4,145)
Disposal of tangible
  fixed assets                              35            35         75
                                       --------      --------    -------
Net capital expenditure
  on intangible and
  tangible fixed assets                 (2,729)       (2,004)    (4,395)

                                       --------      --------    -------
Operating free cash flow                 2,947         1,636      3,707
Dividends received from
  joint ventures and
  associated undertakings
  (note 1)                                 314            32        139
Taxation                                 (154)         (545)      (545)

Interest on group debt                   (211)         (449)      (854)
Dividends from investments                  19             -          2
Dividends paid to
  minority interests                      (37)          (33)       (84)
                                       --------      --------    -------
Net cash outflow for returns
  on investments and
  servicing of finance                   (229)         (482)      (936)

                                       --------      --------    -------
Free cash flow                           2,878           641      2,365
                                       ========      ========    =======

Notes:
(1)   Six months ended 30 September 2002 includes #250m from
Verizon Wireless.

The  Group  also invested a net #0.9 billion in  merger  and
acquisition  activities, and an analysis of the  significant
transactions is shown below:


                                              Impact on net debt
                                                  # billion
Stake increase in China Mobile                          0.5
Stake increase in Vodafone Spain                        0.4
Purchase of minorities in Vodafone AG                   0.3
Increase minority stakes in other subsidiaries          0.2
Purchase of remaining 50% interest in Vizzavi           0.1
Disposal  of  Ruhrgas  and  Arcor's  Telematik         (0.7)
business

As a result of the significant levels of free cash flow generated
and  after  merger and acquisition activity, Group  dividend
payments  of #511m and #155m of foreign exchange  movements,
the  Group's consolidated net debt position at 30  September
2002  decreased to #10,697m, from #12,034m at 31 March 2002.
This  represented  approximately 19% of the  Group's  market
capitalisation at 30 September 2002 compared with 14% at  31
March  2002. A further analysis of net debt can be found  in
Note 8.

The Group remains committed to maintaining a solid credit profile.
Following the proposed acquisitions of interests in  Cegetel
Groupe  S.A., Fitch affirmed Vodafone's stable  outlook  and
long  term credit ratings at A and short term credit ratings
at  F1  on  16 October 2002. On 17 October 2002, Standard  &
Poor's  affirmed  Vodafone's stable outlook  and  long  term
credit ratings at A and short term credit ratings at A1  and
Moody's,  although changing Vodafone's outlook to  negative,
affirmed  the  Group's long term credit ratings  at  A2  and
short term credit ratings at P1.

The Group's credit ratings enable it to have access to a wide
range of debt finance including commercial paper, bonds  and
committed bank facilities.  The Group currently has  US  and
euro  commercial paper programmes of USD 15 billion  and  #5
billion,  respectively, which are used  to  meet  short-term
liquidity requirements.  The commercial paper facilities are
supported  by a USD 11.025 billion committed bank  facility,
which  may  be  extended for one year from June  2003.  This
facility  replaced  the Group's previous  USD  13.7  billion
committed  bank  facility and as at  30  September  2002  no
amounts had been drawn under it. The Group also has a JPY225
billion  committed bank facility which was fully drawn  down
on  15  October  2002 and a new fully underwritten  Eur  3.5
billion bank term loan, maturing in January 2006. This  term
loan  is available should the total consideration in respect
of  the  acquisition  of interests in  Cegetel  Groupe  S.A.
exceed  Eur 5 billion and existing pre-emption periods  have
either been waived or have expired. At 31 October 2002,  the
Group  had  approximately  #10.5  billion  (pounds  sterling
equivalent) of capital market debt in issue, with maturities
from  April  2003 to February 2030 and #3.0 billion  (pounds
sterling equivalent) of term funding.

Equity shareholders' funds

Total equity shareholders' funds at 30 September 2002 decreased
from  #130,573m at 31 March 2002 to #125,912m. The  decrease
comprises the loss for the period of #4,336m (after goodwill
amortisation  of  #6,837m),  dividends  of  #542m  and   net
currency  translation  gains  of  #199m.  The  decrease  was
partially offset by the issue of new share capital of #18m.

OUTLOOK

For the year ending 31 March 2003

The  strategic focus on acquiring and retaining  high  value
customers  is expected to continue to benefit the  Group  in
the   second  half  of  the  financial  year,  with  organic
proportionate customer growth sustaining the momentum of the
first half into the second.

The achievement of the expected organic customer growth rate and
the  increase  in proportionate customers that would  result
from  the  exercise of the put option held by  the  minority
shareholders owning 6.2% of Vodafone Spain, should  generate
annual growth in total proportionate customers of over 10%.

In addition, the trend seen in the six months to 30 September 2002
of either stabilisation or modest improvements in seasonally
adjusted  ARPU in some key markets against that achieved  in
the  same period last year is anticipated to continue in the
second  half,  driven  by further improvements  in  customer
activity  levels, a higher proportion of contract  customers
in  the total base and increased voice and data usage.   The
double-digit  proportionate revenue growth achieved  in  the
first half is expected to continue.

The proportionate mobile EBITDA margin increased in the current
period  to 39.0%, an increase of 3.6 percentage points  over
that  achieved in the comparable period last year.  For  the
full  year  it  is  expected that the  proportionate  mobile
EBITDA  margin  will  exceed  that  achieved  in  the   last
financial  year and the proportionate mobile  EBITDA  margin
for  the second half will be better than last year's  second
half.   However, the proportionate mobile EBITDA margin  for
the  full year is expected to reduce from the level achieved
in  the  first half of this financial year, primarily  as  a
result  of  the cost of advertising campaigns promoting  our
new  service  offerings and the impact of expected  incoming
call  termination rate reductions in a number of the Group's
key markets in the second half of the year.

Total Group operating profit, before goodwill and exceptional
items,  for  the  year is also expected to be  significantly
better than that achieved in the previous financial year  as
a  result of the consolidation of Japan Telecom and  J-Phone
Vodafone for a full year and an increased contribution  from
existing  businesses.  However, the  expected  reduction  in
mobile EBITDA margin in the second half of the year together
with  higher depreciation, particularly in Japan as  the  3G
network opens for service, is expected to lead to the second
half year operating profit, before goodwill amortisation and
exceptional  items, being lower than that  achieved  in  the
first.

Strong free cash flow generation is expected to continue in the
second  half of the year with total free cash flow  for  the
year  expected to exceed that achieved in the previous  year
by  a  substantial margin. However, free cash flow  for  the
second  half year is expected to be less than that  achieved
in  the  first half, both as a result of the lower operating
result  outlined  above and higher tax payments,  which  are
expected  to approach #1 billion for the full year  compared
with #154 million for the first half. Capital expenditure of
over #5.5 billion is now expected for the year.

In  the second half of the year, in addition to acquiring an
increased interest in Vodafone Spain, the Group may  acquire
further  interests in Cegetel and in its controlled publicly
listed  companies. These stake increases  would  impact  the
expectations  for  the  second half of  the  financial  year
outlined above.

For the year ending 31 March 2004

In respect of customer growth, the combination of high single-
digit organic growth and stake increases is expected to lead
to  average  customer numbers increasing over  10%  compared
with  this  financial year.  The expected  trend  in  ARPUs,
combined  with this customer growth, should lead to  double-
digit revenue growth.

The  expected  revenue growth combined  with  modest  margin
improvements  is  expected  to  generate  growth  in   Group
proportionate  EBITDA for the year ending 31 March  2004  of
above 15%.  Tangible capital expenditure is expected to be a
similar  level  to the 2003 financial year although  capital
efficiency, measured as the ratio of capital expenditure  to
statutory turnover, is expected to improve.

Any significant acquisitions or disposals of businesses would
impact  the  expectations for the financial year  ending  31
March 2004 set out above.

Transactions

The Group undertook the following significant transactions in the
six months to 30 September 2002:

Acquisitions

a)  Acquisitions of minority stakes in subsidiary undertakings

On 2 April 2002, the Company acquired a further 2.2% stake in
Airtel   Movil,  S.A.  ('Vodafone  Spain'),  for  the   Euro
equivalent of #0.4 billion, following the exercise of a  put
option  held  by Torreal, S.A.  This increased  the  Group's
interest in Vodafone Spain from 91.6% to 93.8%.

On  3 May 2002, the Group completed the purchase of the 4.5%
minority interest in Vodafone Pacific, as a result of  which
Vodafone   Pacific   became   a  wholly   owned   subsidiary
undertaking.

The  Group  increased its interest in its listed  subsidiary
companies,   Vodafone   Telecel-Comunicacoes   Pessoais   SA
('Vodafone Portugal') and Europolitan Vodafone AB ('Vodafone
Sweden'),  through a series of market purchases at  a  total
cost  of  #151.4m.   As at 30 September  2002,  the  Group's
interests  in  Vodafone  Portugal and  Vodafone  Sweden  had
increased   by   10.5%  and  3.6%  to   61.4%   and   74.7%,
respectively.

On 21 August 2002, the Group bought out the outstanding minority
shareholders in Vodafone AG, formerly Mannesmann AG, for the
Euro equivalent of #281m.

b)  Other acquisitions

On  18  June  2002, the Group purchased a further  stake  of
approximately 1.1% in China Mobile for USD 750m,  increasing
the Group's interest in China Mobile to approximately 3.27%.

On 29 August 2002, the Group acquired Vivendi Universal S.A.'s 50%
stake  in  the  Vizzavi joint venture,  which  operates  the
mobile content business, for Eur 143m.  As a result of  this
transaction,  the  Group  owns 100%  of  Vizzavi,  with  the
exception  of  Vizzavi France which is now wholly  owned  by
Vivendi Universal S.A.

Disposals

On 8 July 2002, the Group completed the sale to E.ON AG of its
23.6%  stake  in  Bergemann GmbH through which  it  held  an
effective 8.2% stake in Ruhrgas AG.  The total cash received
amounted to Eur 0.9 billion.

Subsequent events

Cegetel Groupe S.A. ('Cegetel')

On 16 October 2002, the Group announced that it had agreed to
acquire BT Group plc's ('BT's') 26% interest in Cegetel, the
controlling  shareholder of the French mobile operator  SFR,
and  SBC  Communication  Inc.'s ('SBC's')  15%  interest  in
Cegetel  for Eur 4.0 billion cash and Eur 2.3 billion  cash,
respectively.   At the same time, the Group  also  announced
that it had made a non-binding cash offer of Eur 6.8 billion
to Vivendi Universal, S.A., ('Vivendi') for its 44% interest
in  Cegetel.   Vivendi has pre-emption rights  over  BT  and
SBC's interests in Cegetel.

On 21 October 2002, the Group announced plans for financing these
transactions,  including details of a new  Eur  3.5  billion
bank  term loan which matures in January 2006 and  which  is
available  upon  completion  of  the  acquisition.   Further
funding  would  be met from a combination of available  cash
resources, commercial paper programmes and existing  undrawn
bank facilities.  The Group would not need to raise funds in
the  bond  markets  to  finance these acquisitions.   On  18
October 2002, the Group cancelled USD 174m of its USD 1,750m
February   2005   dollar  bond  that  had  previously   been
repurchased.

On 29 October 2002, the Board of Vivendi announced it had decided
not to accept the Group's offer to purchase its 44% interest
in Cegetel and, accordingly, the offer lapsed.

On 6 November 2002, the Group announced that Vivendi will be
entitled to exercise its pre-emption rights from 21 November
2002  until 10 December 2002.  The Group also announced that
it  has  renewed  its initial offer at  the  same  price  to
Vivendi  to last for the duration of the pre-emption period.
Until  such  time  as  the  offer is  formally  accepted  by
Vivendi, the Group reserves the right to withdraw its  offer
at any time.




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