Good morning. I'm Alex, Chief Commercial Officer of Vodafone Group. Welcome to the third of our Virtual Investor Briefing series for this year. In this briefing, we'll be looking into how we are continuously deepening our customer relationships through new services across our different geographies and customer segments. As you will see today, some of these digital services and capabilities are maturing, others are scaling fast and others are earlier in their development, but all of them contribute to strengthening the bond between customers and the Vodafone brand.
I have the pleasure of talking you through how we are strengthening the relationships we have with our consumer customers by deploying and scaling shared digital platforms. I will then explain the suite of digital services we have developed for consumers that not only present a compelling opportunity in their own right, but importantly, a significant impact on improving the loyalty of our customers in our core connectivity products. My colleague in the Group Executive Committee and CEO of Vodacom, Shamil, will present the work his team have done to build the leading fintech platform in Africa today and the exciting plans they have to extend their advantage. Finally, the Vodafone business team of Vinod and Eric will present a deeper dive into the IoT business, which is the leading IoT connectivity provider globally. As the team and I talk you through the materials, please also look out for the red play icon.
These are links to supporting case study videos where you will hear from more people on the team on a range of areas such as our approach to always on digital marketing, our AI assistant, Toby and the launch of our FinTech super app. Earlier this year, in May, Nick outlined the next phase of our strategy to become a new generation connectivity and digital services provider. In this briefing, we are focusing on the deep and trusted relationship we are building with our customers through having the best connectivity products and services, leading innovation in digital services and through outstanding digital experiences. These three areas are all focused on consistent revenue growth in both Europe and Africa. When supported by our group scale and expertise, we convert this revenue growth into mid single digit EBITDA growth, which underpins our overarching financial ambition, which is to improve our return on capital to at least our weighted average cost of capital.
The relationships we have with our customers are the foundation of our financial performance and strategic ambition. Over the last three years, we have delivered on our promise to deepen the relationship with our customers, and we're now proudly number one or number two in Net Promoter Score in 13 of our markets. Looking ahead, the needs of our customers continue to evolve, and this gives us an opportunity to further engage with our customers. Firstly, through our brand, which remains of paramount importance. We recently refreshed our positioning to reflect the work we have undertaken over the last couple of years on our purpose.
Secondly, we have made good progress on our multiproduct strategy, but we can do significantly more to build out relationships further beyond individual connectivity to full household connectivity. Thirdly, we have developed an integrated suite of digital first platforms to manage the end to end customer lifecycle. These platforms are not only significantly more efficient than traditional channels, but most importantly, they are faster and easier to use for our customers. Lastly, we are creating adjacent digital services to complement our core connectivity offering, which I will turn to now. At our last virtual investor briefing in June, my colleague, Johan, discussed our technology plans and the work his team is doing to enable and support our product roadmap ambition.
Connectivity undoubtedly remains core to everything we do across Vodafone. But there are a series of additional growth opportunities that we are focused on. I will focus on five key product areas for our consumers. Firstly, Vodafone TV. It is one of the largest television content distributors in Europe with over 22,000,000 customers across 11 markets.
Secondly, we have all seen the dramatic changes to our working and personal lives and the increased importance of our homes with our digital lives powered by connectivity. Thirdly, whilst Vinod and the team will discuss our large IoT operation in Vodafone business, I will talk you through our IoT offerings for the consumer market. The fourth area is device lifecycle services, which is how we support customers from their initial device decision and purchase through to the point they are looking to upgrade and recycle their products. Finally, we will look at the role of loyalty platforms and engaging customers further with Vodafone on our digital touch points. As I mentioned, Shamil will cover our exciting plans for fintech in Africa in further details later on.
But I wanted to highlight here the scale of our business today and the size of the opportunity available to us. Since the launch of M Pesa as a money transfer service in 02/2007, we have built the clear leading fintech platform in Africa. We have almost 60,000,000 financial services customers that transact over USD 25,000,000,000 every month. We have strong positions in each of Vodacom's markets and through Safaricom in Kenya. But we also see great opportunities for our fintech platform in our leading connectivity business in Egypt, and we have been recently awarded a license to build another connectivity business in Ethiopia, Africa's second largest market by population.
So in addition to extending our geographical reach, we have a unique opportunity to build our presence further in FinTech, insurance, e commerce and e services. These areas have a total addressable market of well over US50 billion dollars The financial services business is also now of real scale and importance to Vodacom. It contributes USD 1,300,000,000.0 of revenue and 17% of their profit before tax. Earlier this year, in March, Vinod and his team introduced Vodafone Business to you. Around EUR 10,000,000,000 of our group service revenue is from our business customers.
And of this, around EUR 900,000,000 is from our IoT operation. We are the largest IoT connectivity provider globally, and we connect around 130,000,000 devices. Our scale in this area is essential as it means we can disproportionately invest in technology platforms and end to end solutions, while still delivering double digit service revenue growth and a strong incremental return on capital. Our consistent focus on this emerging opportunity over the last decade has led us to being consistently recognized by Gartner as a leader in managed connectivity for the last seven years. You can also see from the chart the clear advantage we have built over our competitors for both the ability to execute and the completeness of our IoT vision.
I hope this introduction to our Digital Services investors briefing has sparked your interest and that you will now spend time with us to explore the content further. Just over three years ago, we began the first phase of our strategy to be a stronger connectivity provider. A core part of the strategy was a systematic approach to deepen the relationships we have with our customers to ultimately deliver a more consistent commercial performance. Whilst we still have much more to do, we have made significant progress and are now proudly number one or number two in Net Promoter Score in 13 of our markets. We have achieved this by being a multiproduct company from mobile to fixed to TV and offering conversion propositions.
By launching Value Brands, we have a separate case study video exploring our coordinated approach across Europe on Value Brands. By upgrading our base to unlimited data plans and by becoming much more digital in all our customer interactions. These actions have had a direct impact on a series of measures. 23,000,000 homes are now on our next generation broadband infrastructure. 10,000,000 customers have upgraded to unlimited data plans.
Almost 6,000,000 customers have chosen our second brands and over 40,000,000 customers are active on My Vodafone. This deepened relationship has translated into a consistent reduction of mobile churn over the last three years and a consistent increase in Vodafone's group digital NPS. Whilst we have made good progress, we cannot stand still. We need to embrace some of the new and emerging customer trends. All of our customer research points to the importance of engaging customers in multiproduct experiences on both mobile and fixed.
The more they use different Vodafone products, the more satisfied they become, typically representing a 10 increase in NPS. We can also see a clear difference in NPS for customers that trade up to our larger data allowance plans. Let me comment on network quality in particular. For home broadband, this research by Analysis Mason points to a higher satisfaction as customers upgrade from DSL to next generation broadband. But it also highlights that fiber and cable technologies achieve the same levels of satisfaction.
This is also our experience in Germany, where customers are not able to distinguish which technology they are using, but they can very well feel the experience difference as they upgrade out from DSL. The COVID pandemic has also accelerated some longer term consumer trends. The need for value and simplicity in our core connectivity products. Our commercial strategy remains to be price competitive against our reference competitors, but also to look at value beyond pricing. Value is also about the quality of our networks being recognized.
It is about the quality and simplicity of the experience that customers will receive and the breadth of services they can benefit from. Second trend, the importance of purpose in driving loyalty. At Vodafone, we have seen a clear increase in NPS throughout the pandemic when customers have relied even more on our service and have seen our commitment to digitalizing society, ensuring that no one is left behind. Our Keeping The UK Connected program has resonated very well with customers and has been a key component of Vodafone regaining the number two spot in NPS in The UK after many years of being behind the pack. Customers have become more digital and their expectation is simply for excellent digital experiences.
Whilst we aim for great digital only journeys, we still need to leverage our assisted channels as half of our customers are transitioning to multichannel journeys. Finally, the importance of the home. With 49% of our customers having experienced working from home, the home is now an environment where connectivity is paramount. On average, nine devices are connected per household and some very digital households have over 20 devices connected. I believe Vodafone is very well prepared to win from these longer term trends.
We have a fantastic brand, refreshed in 2021 with the launch of Together We Can, a purpose led positioning. We have growth opportunities in offering fully converged connectivity. We have the industry's leading capabilities in digital channels to engage customers, and we are building a range of complementary digital services that will further create loyalty in our customer base. I will address the first three of these now and then cover digital services in Part two of this virtual briefing. The Vodafone brand has evolved over time.
Our brand's positioning, Together We Can, reflects our deep belief in a more meaningful role for technology in our digital society. Recent proof points include the success of our partnership with Dreamlabs in using our network to help cancer and COVID research and the announcement that Europe's largest digital connectivity network is now 100% green. I recommend you see how we are using this positioning in our latest TV commercial in Vodafone Germany, the green gigabit network. We have strong assets in both mobile and fixed connectivity networks. In mobile, our opportunity is to continue upgrading our base to unlimited data plans, which currently represent only a third of the addressable base.
In home broadband, our opportunity is to upgrade customers from legacy DSL infrastructure to next generation experiences. Another growth opportunity is to cross sell to our mobile only customers or fixed only customers and increase customer loyalty. Vodafone is present in over 65,000,000 households in Europe. This is tremendous scale. But in a large portion of these households, we still only sell one product.
This represents a significant cross selling opportunity. In Germany, with the integration of the KDG and Unity Media cable assets, we are in a position to converge our customer base. To do so, we are replicating our experience from the Dutch market, where convergence is not about price discounting but cross benefits that customers value, for example, additional data or a higher speed. In Spain, a highly converged market, our Hogar ilimitable proposition retails at EUR 100 per household, which is five times the stand alone mobile ARPU and achieves less than half of the market churn levels. I would now like to take more time to describe to you Vodafone's advanced capabilities to engage customers at scale in Europe.
With more than 130,000,000 European customers, our channel and base management strategy is highly digital and highly automated. Our capabilities have been created around four core shared technology platforms, which are aligned to critical phases of the customer life cycle. We begin with an always on and digital first approach to find potential new customers. We are then optimizing our digital and traditional retail channels underpinned by shared analytics platform and unified data ocean. Once someone has become a Vodafone customer, we are then increasingly automating our interactions with the customer through our AI based assistant, Tobii.
Then finally, to ensure a longer term and valuable relationship for both the customer and Vodafone, we are automating and standardizing our approach to customer base management to further reduce churn and extend customer life cycles. We have consistently deployed a marketing tech stack across Europe to optimize the efficiency of our marketing campaigns to prospect customers and existing customers. Our technology, built in partnership with large tech brands, enable us to leverage our own and third party data to have very efficient targeted campaigns and to move from mass marketing to very targeted real time delivery of personalized messages. These tech capabilities put Vodafone in the top 1% of brands in terms of digital marketing capabilities. Having in sourced all our digital marketing operations across Europe and using a single tech stack has accelerated the efficiency and effectiveness of our marketing spend.
To help dive into this area in more detail, we have prepared a case study with our Group Marketing Director, Nikos. We have over three forty million customers across our group, and we interact with them across a suite of channels from mobile apps, web and assisted channels. We are building shared group wide technology platforms to ensure a consistent and simple experience for our customers, whilst also improving both the efficiency and effectiveness for us. To put it simply, many customer journeys across Europe are the same: purchasing a new mobile contract, topping up a SIM card, booking an appointment for a field technician. So instead of replicating development efforts and optimizing these customer journeys 15 times in every market, we are unifying these experiences.
These standardized customer experiences across our channels are powered by shared group wide analytics platform, which is in turn built on a unified data ocean to run our data models. Toby, our digital assistant, is our most visible execution of a single platform strategy. Originally designed as a chatbot to respond to frequently asked questions, Tobii has developed with shared capabilities offering cognitive conversations on chat and voice across all our touch points on my Vodafone, online, on WhatsApp and in our call centers. Our vision is that 100% of our customers will engage with Tobi when contacting Vodafone. Today, we already process 30,000,000 conversations per month, which makes Tobii the busiest AI enabled digital assistant in Europe.
The single architecture for Tobii is yet another example of the benefits of scale to reduce the cost of conversations, but to also increase the data pool from which the AI can learn and improve the quality of its answers to customers. Originally focused to respond to customer queries or problems, Tobii is now expanding into active selling in Italy and Turkey. This is another interesting area I could spend a lot more time on, so please take a few minutes to explore our supporting video case study. The last step in our digital first approach to customer lifecycle management is ensuring our customers want to stay with Vodafone as their initial contracts expire and extending the number of products and services they buy. Behind all the channels and ways to contact customer is an advanced base management capability, offering always on marketing.
We pull together data of individual customers and of households and let our real time algorithms recommend the best possible action for each and every unique customer at any point in time. We now have over 200 data scientists who develop advanced models from churn management to new product recommendation. This proactive and digital first approach of base customer management generates immediate and tangible value. In Germany, we can attribute over 10% of our annual service revenue activities. Deepening our customer relationship is our main commercial priority in Europe.
A loyal customer base is the foundation of economic value creation. Fixed only or mobile only customers present good incremental economics with a high contribution margin, reducing commission intensity and improving NPS. However, when that fixed only or mobile only customer becomes a converged customer, we can see an improvement in NPS, lower churn and significant reductions in commission intensity. This all adds up to the lifetime value of that customer being at least three times higher. When the customer then also takes on a digital service such as TV, security or IoT, we see further improvements in NPS, commission intensity and the value of that customer to us over time.
To deepen this customer relationship, we have built the right capabilities at scale, which helps us transition from an analog only world to a highly digital engagement with our customers. This drives further productivity gains as the cost of digital acquisitions and engagement is significantly lower than traditional ways of engagement. You can see the examples we have here in The UK, where the proportion of customers buying exclusively through our digital channels is increasing and in Italy, where over 60% of our customer interactions do not need to involve human assistance. It is these initiatives plus many more that are enabling us to transform our operating model, which translates to both significant reductions in operating expenditures and the systematic improvement in customer loyalty I have spoken about. Thank you for taking the time to watch this first part of our Digital Services Investor Briefing.
Please join me in the next section, where I will discuss our plans and progress in developing complementary digital services for our connectivity customers.
Hi, I'm Tanja Rainerke. I'm Vodafone's Global Head of Marketing. Today, I will speak to you about our second brand strategy and approach. Why have more than one brand in the first place? Well, everyone knows the main Vodafone brand.
It's big, bold, it's red, and it stands for premium and convergence. But it's exactly that premium positioning alongside with our very large customer base that makes it hard for us to react to changes in the low segment of the market. This is where second brands come in. We have three principles for launching a second brand: first of all, competing in the low value of the market while not diluting the Vodafone brand second, to defend against a market disruptor and third, to improve our performance in a specific segment, mainly the youth segment. This lack of customer base in that specific space plus the ability that we can do everything digital first enables us to move at speed.
So we get our fair share of the market, but we do so rationally as we don't want to lead the market down. These value customers want simpler propositions. They worry less about connected devices, exotic roaming destinations or complex convergence propositions. We manage everything digital first, and that allows for a much lower cost to serve. This works particularly well as Vodafone's leading in digital.
Now let's hand over to Loli to talk to us about the Spanish market context in which we launched a second brand, Lohi.
Hello. I'm Loli Marine. I'm LOWI Director and Board of Spain. Spain is a complex telco market with intense and fragmented competition with upwards of 20 brands competing in the value segment with most offering mobile and convergence. This level of competitive intensity is unique in Europe.
The traditional high and medium brands are focused on quality, technology, retail presence, content, devices, and added services, whereas the new entrants and value brands focus mainly on price. This is why in 2014, we launched our first second brand, Is positioned as a simple and trustworthy brand with a value for money proposition, focused on the value seeking segment. There is also no commitment as these customers appreciate freedom, but we give our customers very good reasons to stay with us. We make it simple for them through MyLowe app as the cottage point.
We are simple and transparent. In this sense, all customers automatically get the benefits a new customer receives. And we tactically use promotions to encourage loyalty. For example, our summer promo regularly delights existing and new customers with extra gigas. Low e is digital first.
Our obsession is to build consistent and easy journeys in the web and app for customers. There is nothing more powerful than user experience and recommendation. And on this category, our community is a key asset. 15% of our gross additions are driven by recommendation. Second brand enable us to be a lot faster.
When a competitor moves in the market, it takes us on average just forty eight hours to respond, driven by a flexible pricing architecture. They understand we're fast, and we don't just sit back and lose market share. Logui and Vodafone reached two discrete customer segments. The Vodafone main brand, represented by the color red, stands for quality, reliability, and superior service, characteristics important to the premium segment of the market, while LOWI is clearly positioned to communicate best price, simplicity and transparency, characteristics important to the digital savvy low value segment. But don't just take my word for it.
Here is what our customers have to say.
As you can see, our brand Lohi has been a success and allowed us to defend market share. We now have second brands live in six markets, and we've built a clear operating model that we can lift and shift from one market to the next by replicating marketing approaches, by replicating digital capabilities that we've built, such as chatbots and apps. Here are some of our main second brands: HOMOBAL in Italy, SIEMON in Germany, just to name a few. They have all been designed with a specific target segment in mind, being great value, digital first and very simple. So to recap, second brands allow us to serve all segments and to get a fair share in those segments that we're after in a rational manner.
Second brands come with a different cost structure because all of the offerings are simpler and digital. And that way, we get to lower unitary economics. And last but not least, we can be really quick. We can launch and adapt second brands. And so we can be even faster in the market with our second brands.
I have some questions.
Some big questions. Can we cure every disease? Can we make sure nobody is left behind?
Can we go faster than nine point five eight?
Can we change our ways before it's too late? Can we all drive cleaner?
Can we go even further than we've gone already?
Humanity and technology. Together, we can.
Hello and welcome everyone. My name is Nikos and in this short video, I will take you through our digital transformation journey in the marketing media and advertising space. Let me start with some context and consumer insights that inform our strategy and plans. There are four big forces and trends that are exploding, especially post pandemic, because of smart devices penetration and Internet usage liberation both on mobile and fixed. The first one is around customers generating loads of personal data that brands can use to do better, more targeted marketing.
Traditional marketing organizations using layers of agencies struggle to collect, consolidate and utilize all those data in a holistic way. Hence they rely on third party data at agency operated pixel channels. The second trend is about traditional macro segmentation breaking up as consumers expect real personalized treatment from brands. Again traditional marketing has no way to go down to the segment of one. The third one is about content, context and relevance.
Consumers today are bombarded with an average of 5,000 messages per day. Hence, attention span is reducing. The fourth one is about channels and journeys blending. They are not linear anymore. Some industry data points here is that 50% of consumers will start in one channel and will switch to another while 85% will be browsing in stores while checking reviews in prices on digital.
Traditional marketing organizations with less control on channels, journeys and lack of data will struggle to adapt. Let me now explain why Vodafone is uniquely positioned to respond to those insights and trends and create competitive advantage in the marketing space. We have a unique advantage with our global footprint and reach that gives us a huge wealth of scaled first party customer data. Hundreds of millions of customers and prospect profiles, behaviors and trends with an average of about 150 data points per profile are collected from all our campaigns around the world. We also have a direct and close one to one relationship with our customers, averaging a personal contact per customer every three days.
Three to 4,000,000,000 personalized messages are sent per year across our one to one channels, the app, the web, SMS and social. These messages are produced real time by our globally designed and deployed machine learning artificial intelligence algorithms and big data models. These models are constantly trained to produce highly effective personalized experiences. Our centrally designed marketing and advertising technology has capabilities to personalize content real time, run AB testing using creative assets from across our markets and optimize at scale also taking a lot of contextual factors into account like location, customer mood, weather, etc. Finally, have control distribution channels.
We have 70% control of purchase journeys and channels and 100% control of in life journeys and channels. We design, optimize digital journeys and assets globally and we deploy with adaptations across our geographies. This created the appetite and the ambition for Vodafone to lead the telco industry and beyond in transforming marketing from traditional to a fully automated global digital platform, deliver revenues and cost benefits as well as competitive edge versus other telcos. This transformation started three, four years ago. It was based on three key pillars and is now completed in all our markets since summer twenty twenty.
The first pillar is around tech. Since twenty seventeen-twenty eighteen, we decided to break away from agencies, take direct ownership and implement in all our markets appropriately Vodafone marketing and advertising technology. These are globally selected and Vodafone customized products from the best Martech ad tech partners integrated in a unique Vodafone blueprint that we call the Martini Glass. Billions of data points a day flowing seamlessly in our big data lakes hosted on the cloud. Those data are used to feed our in house machine learning and artificial intelligence models informing in real time all our campaigns and channels touch points on prospects and existing customers.
Adobe is the biggest and most strategic partner in designing and optimizing our martech and ad tech. So let's hear from Paul how Adobe sees Vodafone in the marketing and advertising technology space.
Over ten years ago, Vodafone came to Adobe to help design and create and deliver marketing technology if it drives relevance, personalization, and creativity at scale and at speed. Vodafone is truly a pioneer in what they do. What truly sets them apart is how creativity is informed by a deep understanding of the needs of their customers. Ours is a unique partnership when nothing is off the table. Our partnership goes beyond the pure supply of software as we co create and we co generate ideas around what would deliver amazing digital experiences for Vodafone's customers.
Using Adobe's marketing cloud, Vodafone taps into data to see what customers are doing and what they're responding to, and then creates seamless digital experiences across every digital touch point. With millions and millions of customers operating across 21 different markets, Adobe software has given Vodafone the ability to adapt campaigns while they're alive and to modify that content or change the product's positioning to suit a different audience. And that has been transformational for the Vodafone business. It's enabled a faster route to market. It's enabled mature usage adoption across all the different scenes.
And being free from that outdated technology and those lengthy processes, it means that Vodafone can roll out engaging real time experiences like countdown offers and targeted deals based on customer behavior. Our relationship with Vodafone has also meant that it's not just about the software. Vodafone works with Adobe on our roadmap, an active participant in our customer advisory board, which means that Vodafone gets access to early product innovations. Crucially, this has meant that Vodafone is leading the way at delivering scale at speed. Vodafone has always been bold in their thinking and quick to adapt to the changing marketplace and technology, putting them at the forefront of the marketing technology space.
This need to evolve and adapt has never been more important to brands than it is today. We have gone from living in a world that has digital in it to truly a digital first world. Vodafone should be very, very proud of its sophisticated approach to digital marketing. It's flexible. It's responsive.
It's fit for today's age, and we are truly proud to be a partner.
Second pillar is around skills. Starting 2019 and following the insourcing of tech, we also took in house and away from agencies the operations of our marketing and advertising technology. By summer twenty twenty, we hired two fifty highly skilled digital media professionals and trained 1,200 digital marketeers on analytics, and marketing automation. Those 1,500 colleagues are now the global digital marketing community operating and constantly optimizing our campaigns across search, social, and programmatic. Our new media agency, Dentsu, was a key partner in this transformation and keeps managing our traditional media buying needs delivering global economies of scale.
Let's hear from Peter how Dentsu sees Vodafone.
Rarely do businesses have such a clear vision for media, data and tech of where they are on their journey and where they want to go. We often see clients focusing their transformation on either a specific channel, market or brand in their portfolio. Rarely do we see companies with a rounded global vision and plan who've also consistently delivered on it. Dentsu has the strongest digital profile of all the agency groups. But even so, delivering with flexibility and speed at the scale that you are asking for inspired our entire network and, to be honest, has supported the acceleration of our own transformation.
What you have done is a phenomenal achievement and sets a new standard in Telkom. Congratulations on that performance and we look forward to continuing to partner with you on this journey.
The third pillar is global marketing Leveraging our global scale and the in sourced digital marketing operations, Vodafone is the only operator that is a direct media buying contracts with all the global digital marketing brands like Google, Facebook, Amazon, TikTok, etcetera. This is giving us an additional unique advantage to be first and in the forefront of all new innovations, tools and capabilities released by our global marketing partners. We have joint business plans focusing on constantly testing, learning and adapting our data driven marketing decisions ahead of competitors as well as continue improving by benchmarking ourselves with the best digital brands beyond the telco industry. Let's hear from Matt how Google see Vodafone in the digital marketing space.
Thank you for the partnership and the progress we're making together, in enabling the sort of progress in digital maturity, whether it be looking at omnichannel retailing, driving store footfall, in Germany and The Netherlands, some great examples there. Whether it be on automation in Italy and Greece, getting that stuff live so that teams can really focus on the strategy and the machine can focus on the execution. We're seeing strong results as the world's changing fast from using automation to help marketing. And also measurement, which is making progress in sophistication everywhere. Really important to understand what's working and how could we refine things together.
So looking forward to working with you to achieve that across the region. Thank you.
Let's hear from Nicolas how Facebook sees Vodafone in the digital space.
As one of our key partners, it's been absolutely fantastic to be able to work so closely with you. Your desire to take your data and move it with the Facebook data, bring it together really will deliver smart communications to your customers. Now delivering data driven targeting and automation and using first class measurement and attribution, well, that is just the gold standard of partnership. And I'm thrilled to see how our teams have been working together all over the world. Now bringing your biddable teams in house, well, that was just a game changer and give given you a real competitive advantage.
And I think together, it's created a seismic shift to allow us to work more closely together, to be able to plan, to test, to be able to adapt your marketing, and we do it quickly and at speed, and I'm happy to say, with very little friction. So I'm looking forward to us continuing to strengthen our partnership together to exploring new opportunities and to continue to build on the fantastic success that we already have together.
This was a big transformation that has changed Vodafone, and it has already delivered 30,000,000 to €40,000,000 of cost synergies per year and a 20% to 30 improvement in conversion rates helping to drive top line growth. The journey continues with three upcoming transformations in the next twelve to eighteen months. The first one is around insourcing, automating and optimizing digital creative assets with the use of our double marketing cloud capabilities at global level. The second one is evolving our segmentation strategy to understand and effectively personalize propositions, offers and communication at the household level and beyond connectivity to entertainment and new digital products and services. And the third one is establishing a culture of constant experimentation by enabling thousands of live experiments in our digital marketing platforms, the results of which will be used by all markets to constantly optimize marketing decisions and improve revenues.
We estimate that those three initiatives above have the potential to deliver significant service revenues benefits, media efficiencies and another 25% reduction on our cost per acquisition whilst continuing to improve our marketing competitiveness and position Vodafone in the tech space along other big tech brands. So thank you very much and see you all next time with great stories and insights from marketing at Digital Voda.
Thank you for introducing yourself, Toby. Toby is a key driver of our digital first strategy, providing our customers with service 20 fourseven through a channel of their choice and in a personalized way. Improving Toby means not only do we respond to our customers faster and with much more consistency, but at the same time, we are saving costs. Toby is responsible for handling around 30,000,000 conversations a month, and 67% of those he resolves completely by himself. That's over 200,000,000 conversations a year.
He is our busiest agent and truly world class. Today, Toby is live in 15 markets. What he offers varies from simple FAQ style responses to really advanced functionality.
In Vodafone Turkey, Toby has been handling customer inquiries for now two years and have developed some advanced capabilities for our chat interactions, whether they may be on the Vodafone website, My Vodafone app, or WhatsApp. He can deal with all the usual queries, such as billing and account questions, but he is also highly proactive. In the digital experiences, impresses his customers by providing the information they need with images and interactive cards, not just by text. Because TOBY is integrated with our other systems, he can predict intention and be proactive in anticipating needs such as potential upgrades, network issues and new sales opportunities, which we launched earlier this year. Overall, Tobee handles around 6,000,000 conversations per month with strong customer sentiments of over 50 points, even stronger than our human teams.
We're really excited to see what the future will hold for Toby.
It's great to see what Toby has achieved, but this year, one of our big focuses is improving Toby in the voice channel. So let's hear an example from Toby in Italy. Developing TOBI in the voice channel depends on new components in our technology platform, and our ambition is to rapidly evolve TOBI across all of our markets. So let's hear from one of our platform experts.
Now you've seen the advanced capabilities that Tobii can offer to our customers. Driven by our technology team, we're standardizing such capabilities across the group as we continue to integrate all markets into a single centralized cloud based global Tobii platform for all chat and voice interactions. This means all relevant local and external systems will be plugged into our global platform to enable our teams of bot designers to apply the latest advancements conversational AI from the top global technology partners to improve customer journeys once centrally. One great example of this is our integrated speech recognition and speech synthesis services, which gives Sobe its unique and personalized voice in each market across languages from English to Hungarian. These partner services were integrated into our central Tobii platform once and then easily deployed to each of our markets.
A leading feature enabled by our uniquely flexible platform is our integration with cognitive translation services. When a customer in a market, such as Albania, asks a query in their local language, it is translated into English in real time so our TOBI model can understand it, and then TOBI's response is translated back into the respective language. This all happens in real time ensuring the customer conversation is fluid. This is an example of how we enable support for markets where language support is not offered by vendors off the shelf. So what does this all mean?
This means we're recognized as a world leader in the deployment of conversational AI.
So to recap, Toby handles 30,000,000 customer interactions a month to date, including some really advanced capabilities solving complex customer issues in some of our markets. We are working to standardize our Toby experience across all markets, leveraging our central platform, driving scale and accelerating our ability to continuously improve. Through his connection to big data, Toby will be more intuitive and proactive. He will predict intentions and alter his conversations accordingly. He will be the agent of choice for our customers.
And this will enable us to increase the scope of Toby. We hope to be handling 100% of inbound conversations in the future, freeing up our agents to focus on really complex issues or sales. And with Toby, we will also make buying products even easier Through the credibility and trust that we are building in him today as a service agent, he will deliver over 1,000,000 sales in the next twelve months. We want Toby everywhere, always available, fast, simple, personalized.
Welcome back, everyone. In this second part of our briefing, we shall share with you growth opportunities beyond connectivity in Europe. I'll take you through four areas: first, the compelling opportunities we have second, the capabilities we have to deliver on these opportunities third, a deeper look at the services themselves and fourth, the economic model that drives these opportunities. It's important to set out early on here that whilst these digital services opportunities have attractive models in isolation, the real value is the impact they can have on the core connectivity business through lower churn and lower commission intensity. My colleague, Johan Wieberg, first presented this slide at our last investor briefing in June, where he was discussing the operating model transformation that we are conducting in order to deliver on these commercial opportunities.
My key area of focus is to deepen the customer relationships in Europe within our consumer segment by selectively expanding into adjacent markets on top of connectivity. We have identified five key portfolios of services, which we bring to customers and which are currently in different stages of development: TV content, home services, consumer IoT, device lifecycle services and loyalty platforms. The total addressable markets of these five digital services are all large and are all growing, albeit at different levels, closely correlated to the maturity of each market. Vodafone's right to play and right to win in these services is based on our customer reach in markets and across Europe. For example, in TV, where we already have over 22,000,000 customers.
It's based on our expertise that is necessary in the technology side in particular. For example, it is very relevant in the case of the home and consumer IoT portfolios. And it is based on our scale that supports better cross market economics, particularly in the case of device insurance and loyalty. To successfully capture these opportunities, we balance in house product management and platform development with strategic partnerships. Our product management teams have end to end accountability for developing innovative products that will make a real difference to our customers' lives and their relationship with Vodafone.
Strategic partnerships are an essential element of our overarching group strategy to ensure we can deliver the very latest in content, in technology and solutions to our customers, but at an investable economic level. This is particularly important for Vodafone TV, which I will discuss shortly. These shared and scaled capabilities at a Pan European and Pan African level are then complemented by our deep reach into each local market. It is this matrix of shared capabilities and local expertise that is the core of our new operating model. We have deep functional experts whose responsibility is to build pan European capabilities, products and platforms.
This scale approach enables us to attract specialized talent for these new digital services. And we complement that by local operational and marketing teams that bring these products to life for our customers, taking into account local customer needs and competitive dynamics. They remain in charge of the go to market of our services and the integration in the local marketing mix. We are already a significant player in each of these portfolios. Today, over 20,000,000 unique customers are already engaged in any one of our suite of products.
Of course, many of these customers are highly engaged, so are already subscribing to more than one of our digital services. Our aim is to engage over 50,000,000 monthly active users in these digital services in order to deliver mid to high single digit growth in service revenue. Given the relatively low capital burden in our strategic partnership model, these platforms can contribute positive double digit return on capital as we scale and apply a consistent operating model. And remember back to my central messages of Section one earlier, these digital services also have a significant impact on customer loyalty, leading to lower rates of churn and lower commission intensity. Across Europe, we serve over 22,000,000 customers with our Vodafone TV platform.
This scale and access to customers is a key strength in our relationship with content partners as they contract only once with Vodafone and technically integrate once with our Vodafone TV platform to access all of Europe. As an example, we are launching Facebook Watch to our installed customer base across many markets in one go. This scale also enables us to develop cost effective in home devices with leading brands like Devialet, Bengh and Olufsen or Amazon. Vodafone TV is an important asset in our drive for convergence. It increases base loyalty and drives differentiation versus connectivity only players.
Our case study on Vodafone Portugal at the end of this section exemplifies how to be successful in TV without the heavy financial burden of exclusive sports rights. We also have a more detailed case study video I hope you can take the time to watch, particularly for those of you in The U. K. Or in The U. S.
Who don't have access to our platform as a customer. We are present in over 23,000,000 homes with our next generation network broadband, and we are expanding our home services to deliver the best possible and most secure WiFi in the
home. Five out
of 10 customers are not able to access WiFi in every room. Our unbreakable Internet promise relies on Super WiFi, a set of physical extenders and cloud based software to bring WiFi wherever you are in your home. Eight out of 10 customers are worried about their data privacy and security. SecurNet is a network based capability to filter incoming traffic from viruses and malware. Nine out of 10 customers have tried to find their own little fixes when facing home connectivity issues.
With home tech experts, we offered a paid for service to provide assistance at home over the phone or in person to leave no one unattended. These new technologies also provide Vodafone deep insights in how individual households use their home broadband. Our service, Wi Fi Doctor, in Italy, for example, automatically diagnoses the actual Wi Fi experience of a customer and optimizes both the WiFi and network settings to individual usage. In Italy alone, we perform 16,000,000 auto optimizations every day. The world of consumer IoT is rapidly growing as consumers discover new use cases on how connected devices can simplify their lives.
Our NEO and CURVE product ranges are designed specifically to take customers onboard this journey of discovery. We have another case study video for you, which details the design journey and customer use for our latest curved devices for cyclists. Alongside our range of connected devices, we provide a one stop shop for third party device connectivity and distribution. Watch manufacturers in particular, but smart speakers or other hardware can integrate once with the Vodafone's network capabilities and immediately benefit from pan European reach. The recent Samsung Watch, for example, is powered by eSIM and uses our One Number feature, where customers' smartphone number is replicated on the watch to take calls and browse the Internet.
With 10,500,000 devices shipped last year, Vodafone is a leading distributor of handsets in Europe. Whilst traditionally we have simply distributed devices, we can now play a larger role in the life cycle of devices through a range of complementary services. At the time of purchase, we now offer financing, old device trade in and new device insurance capabilities. With repair and diagnostic services, we can extend the life cycle of devices, offering refurbished devices to our customer base. These services require a unique blend of scale technologies and a deep integration in the sales flow of our connectivity services.
Vodafone UK's EVO proposition brings these capabilities to life for customers who can now flexibly upgrade their smartphone over a one to thirty six month installment and trade in their old devices, thus lowering their monthly bill over a longer period of time. This is all entirely customizable for each and every individual customer. For Vodafone, this results in more attractive acquisition offers with lower hardware investments while also extending customer contract periods and the overall customer lifetime with us. Our last focus area for adjacent digital services is our loyalty platforms. A great example of a digital service that leads to higher customer satisfaction to more engagement and more spend with Vodafone over a sustained period.
We have loyalty capabilities in most of our markets where we engage customers in gamified experiences for free benefits, which strengthen our value perception. For example, the Scratch and Win program in Ireland or Spin the Wheel in Turkey. We are now expanding into rewards programs where we offer third party brands the opportunity to access our customer base by offering discounts and special offers. This is the case with Vodafone UK's Very Me service or in Italy, where we have started monetizing the service through a premium version called Happy Black. Vodafone Turkey has been leading the way in the evolution of our in house platform.
We are now going one step further and enabling third party brands to access our customer base through a marketplace capability. Vodafone is credible in these services because of our large reach in Europe, 41,000,000 active customers on My Vodafone and our big data models that are able to recommend relevant and valued products to our customers. We have chosen these new digital services very precisely to respond to customer pain points, to leverage our strength and credibility versus new entrants and to target mid term returns with low capital requirements. Each digital service has attractive stand alone economics. Our mature Vodafone TV business is growing at low single digit levels, but has low incremental capital needs, delivering high incremental returns.
By contrast, our nascent consumer IoT business is growing at significantly faster rate. But given our end to end strategy, it does have relatively higher capital investment needs, leading to slightly lower but still good incremental returns. However, beyond their value as stand alone businesses, they all contribute to our main commercial objective, to deepen customer engagement and thus positively impact core connectivity loyalty. Thank you again for your time in getting to know more about the importance of digital services and the impact this can and does have on our core connectivity business. Please also join my colleagues, Shamil and Vinod, as they explain their opportunities and plans for FinTech in Africa and IoT for our business customers.
I then look forward to answering questions from our equity research analysts in a live video
Hello. I'm Louis Lopes, Director of Fixed Entertainment here at Vodafone. Consumers love TV, spending more than four point five hours per person per day in 2020, and this is expected to continue to grow. Vodafone is already providing TV services to over 22,000,000 households across 11 markets, making us one of the largest operators in Europe. Our ambition is to transform this business that still depends to a large extent on traditional linear pay TV viewing to become the entertainment platform of choice for our consumers.
To achieve this vision, we have a strategy driven by two key pillars: delivering the best experience on a new generation cloud based TV platform and offering the widest and best content choice. Proliferation of over the top content, video services and the shift from linear to nonlinear TV creates an opportunity to solve consumer pain points around content, discovery and aggregation. To address these pain points, together with our technology partners, we've been developing a new generation TV product. We called it Vodafone TV. It combines OTT over the top content with traditional linear TV, creating personalized experiences, simplifying content search and managing multiple subscriptions of OTT services.
VTV works not only on our bespoke hardware, but also on many smart TVs, Fire TV, Apple TV, Internet browsers. And of course, it has a companion mobile app for when you're on the go. But with our hardware, we went further and also wanted to create the strongest viewing experience. Combining in one box, four ks native quality video, Dolby Atmos sound quality, add in amazing voice search capability, and this becomes the center of home entertainment. Our second strategic pillar is ensuring that best content is available to our customers.
Our European and African scale enable us to have strong meaningful relationships with the full breadth and depth of content partners in the market. This spans from creation of local TV channels through the deep integration of major streaming players like Amazon Prime, Netflix, Apple TV, Disney plus and Discovery. This content can be accessed directly via our platform today. But don't just hear from me. This is what they have to say.
Hello. I'm Kasia Keary, the President and Managing Director of Discovery EMEA. We have been in partnership with Vodafone for many years. Earlier this year, in January, we have signed a new deal, long term multi platform partnership that will see bringing our content, both our best in class linear channels as well as our unique streaming service Discovery plus to all Vodafone subscribers across Europe. We will be available in TV, broadband and mobile platforms.
It is a truly exciting partnership. By integrating our app into the Vodafone ecosystem, consumer will have a very easy access to best in class content, while Vodafone Reach will allow us to further grow Discovery plus in Europe. I would like to thank Vodafone team. It is a very complex and multilayered partnership, and we saw fantastic collaboration and a true spirit of partnership with getting this deal done, the same as we have felt when we were launching into our first market, The U. K.
Thank you very much.
We really appreciate the feedback from such a valued partner. Importantly,
being a
one stop shop for entertainment and content aggregation also empowers other business opportunities. Through the data we are collecting, we can address targeted advertising, which we've just started exploring. The European market, where our initial focus will be, is estimated to be worth €46,000,000,000 in a decade, with 20% to 35% of linear TV advertising shifting to targeted advertising. So in summary, we continue to believe in the future of TV and entertainment businesses, and we are very well positioned to lead the transformation from the traditional linear pay TV to entertainment everywhere and anytime.
I'm delighted to welcome you to this product launch. Our vision is to improve everyday living through the magic of Smart Tech, and we've built a world class in house team of experts across design, product and customer insight to help us do so. Over the last year, we've pioneered a range of smart devices combining leading industrial design with global connectivity to help people connect to what matters most. And today, I'm excited to introduce the third pioneering product in our designed and connected by Vodafone range, Curve Bike Light and GPS tracker. The heartbeat of everything we do is understanding our customers and their needs.
So we've spent hundreds of hours talking to commuter cyclists across Europe. We know that they worry about their safety on the roads and bike theft, which is why we've built a device that helps them stay safe and ride with confidence. With record numbers of in next next next be in the the
slide.
One, take one.
Best place to start. Hey, I'm Tom Guy, Chief Product Officer for Vodafone Smart Tech. So I'm here to show you the latest product from the Designer Connected by Vodafone range, the Curve, ByteLight and GPS tracker. To get started, there's a quick start guide and all of the instructions are also in the Vodafone smart app. There's three main parts of the product.
There's the bracket that goes onto the bike seat post, the brains of the product, which is GPS tracker and siren, and the intelligent bike light. And when attached to the siren and tracker, it automatically turns on. And the first thing to do is select the correct rubber adapter to make sure that it fits snugly. And there's five in the box to choose from. Now let's install it on a bike.
First of all, you find the rubber adapter that fits onto the seat post. You put that into the bracket. Put that around the seat post. You then put the tracker connected to the bracket. And there's a special screwdriver in the box where you just tighten the screw to the seat post about halfway down.
And the next step is just to attach the light to the tracker itself. You just line up the two lines and fix it on with a quarter turn. And the light will come back on to the last mode that you put it on. With the light on, there's a button that you can control the modes of the light. You've got solid, flash, and pulse.
There's also a smart brake light, when you slow down, the light intensifies, showing drivers behind that you're braking. And we've included ultra bright lights on the side to increase the field of view, so you can be seen from anywhere. It's really easy to charge it. You just take the light off, you charge the light, and you'll see a USB C, and leave the rest of the product on the bike. And then when you put it back on in the morning, that charges the rest of the unit.
And to activate security mode, you just twist the light off, and as you can see, the red warning light comes on. And if anyone starts to tamper with your bike, the siren will go off. And now it's all installed, the product really comes to life in the smart app. Curve bike light and GPS tracker has been designed by cyclists for cyclists. It's packed with the features that commuter and weekend cyclists told us they most wanted to see.
Just open the Vodafone smart app to view your bike's location. Curve bike tracker is connected to Vodafone's global network via the built in smart SIM. If you can't remember exactly where you've parked your bike, use the app to make the device play a sound. If someone tampers with your bike, you'll get an alert to your phone, and the siren will sound as a deterrent. You can receive alerts by push, text, and even an automated call.
You are in complete control. You can turn the security mode on and off from the app. Curve bike light and GPS tracker comes with a built in impact detection, meaning friends and family are notified when you might need help. They'll get an alert or automated call to let them know where you are and can view your location. Ride Insights automatically tracks every ride and are shown in your app, so you can look back over when you finished.
With Bike Passport, you can store important information about your bike, like the make, model, and add photos to make it easier to identify if you need to.
That's the
end of the Curve bike light and GPS tracker demo. I hope you enjoy it as much as we enjoy designing it.
Hello, everyone. It gives me great pleasure to share with you today some of the new and exciting products that we have launched at Vodacom Financial Services, both for our Consumer and Small Merchant segments. You will see that our focus this year has been on digital first, mobile first. And to keep the presentation interesting, I've included a few user videos so that you're all able to get a real feel of what the product experience is for our customers. So I'll start with VodaPay, our lifestyle companion app.
This will be the first super app of its kind on the African Continent, launched on the back of the world renowned Alipay technology. The app will service consumers as well as merchants, and it's really a massive ecosystem from which users will be able to transact, pay, lend, save, invest, insure as well as gain access to an entire e commerce experience where they can purchase from a host of online merchants who will come onto the app as mini programs or mini applications. More can be seen in this prelaunch video. So really slick and very cool. Another slick and cool product is our Voucher Advance product that we have launched this year.
It is essentially a buy now, pay later product, which has been built on the back of our very successful airtime credit product in South Africa, where currently 45% of all prepaid airtime goes through airtime credit with a bad debt rate of less than 0.5%. And so utilizing the same credit algorithm, we have now launched Voucher Advance, which allows us to advance other products and services besides Airtime at a zero interest charge to customers. This next video will take you through the user journey, which is currently live in the My Vodacom app. So users click on Vouchers, review some educational content on the product, telling them what it is and then get started. They first see what the credit limit is that they have been pre vetted for before selecting the type of product that they are interested in purchasing or advancing.
In this case, our customer is interested in a food product from Nando's. She selects the voucher, selects whether she would like to purchase the voucher at a discount
the
which payment a
So
her to proceed, reviews the summary page, and if she's happy, concludes the transaction. The voucher code is then sent to the customer's mobile phone for redemption in store. This next video demonstrates how easy it is for a merchant to apply for a VodaPay point of sale device from Vodacom in a fully digital experience. All KYC and FICA requirements are catered for in the user journey using the best technology. And finally, in this last user journey, we will demonstrate how easy it is for a merchant to track, manage, order and grow her business all through the VodaPay super app.
So the app allows the merchant to easily transition between experience. The merchant can also access third party mini apps, example, Xero in this case, which is an accounting software program, which the merchant can download if they choose. Users are able to view their daily sales and payment transactions, both in the online as well as the physical store environment through the physical point of sale device, which is also provided by Vodacom. Merchants can also track daily performance of channel sales through a very user friendly dashboard. And in the Suggested For section, merchants are offered additional personalized propositions, in this case, a business loan.
In the app, the merchant can also access the trading platform page, which allows example, the merchant is viewing daily specials from suppliers, which also provides large FMCG companies an opportunity to advertise to their merchants on a daily basis. Merchants can then view the specials, order immediately and pay all in the app. In the My Products section, the merchant can also access a dashboard of current products which they may have with us, example, business loans or insurance. In this instance, the merchant has a few funeral insurance policies for her employees, which she can then monitor in terms of the number of policies, the employees whose lives have been insured, etcetera. And for businesses who need access to funding, our business lending product can be accessed all through the same in app experience as the merchant has already been pre credit vetted and potentially approved, this done fully digitally in three easy steps.
During the process, the merchant can also view the repayment breakdown for how the loan will be settled. And upon approval of the business loan, the funds will be transferred immediately into the merchant's VodaPay store value account. So that, in a nutshell, is a sneak peek into some of the exciting capability that our new platform affords us, and we now look forward to executing on this in the coming months. Thank you for listening.
Good day and welcome. I'm Chamille Joseph, the CEO of Volucom Group, and it gives me great pleasure to present on our Financial Service business. My presentation will cover four sections, starting with the platform we have built and concluding with our strategic road map for growth. Horicom Group is Africa's largest telecom and fintech operator by market capitalization. Our group addresses a massive population of over 400,000,000 people, with Ethiopia recently added to the portfolio.
South Africa is the group's largest contributor, representing 74% of our operating profit in financial year 'twenty one. In addition, we have leading market share positions across the rest of our portfolio, which includes the DRC, Tanzania, Mozambique, Lesotho and Kenya. We operate in Kenya through our 35% associate holding in Safaricom. Varicom has a strong track record of innovation and execution. From the first telco globally to launch prepaid in 1996, we're now to contribute around 30% of Vodafone's operating profit.
We see an exciting growth path ahead for Vodacom, supported by our core mobile services and accelerated by our new services, which include financial and digital services, IoT and fiber. Financial services is integral to our purpose led business model, our commitment to improving lives and is a clear strategic differentiator. Before we dive into financial services, I thought it would be useful to provide some context around how it fits into the overall group strategy. Our strategy, which comprises eight connected pillars, sets out to deliver exceptional value to our customers. We implement our strategy through our system of advantage, which is designed to grow with our customers as we strive to be a strategic partner of choice and an integral part of their lives, homes and offices.
In this slide, we set out our consumer system of advantage. As you can see, it incorporates a multi product approach. Our Future of the Home strategy integrates our customer propositions, embedding Vodacom in the lives of our customers as we strive to go further together. Core to our business is driving data penetration. This is supported by smartphone adoption, which we are accelerating through partnerships with global tech firms and innovative financing solutions.
Leron five gs leadership in this space enhances our customer proposition. Complementing our data penetration strategy is our progress on the reasons to consume, which we support through our digital platforms. These span across the entertainment verticals with a number of strategic partnerships providing exciting future growth path. As we unlock our growth potential beyond mobile, our focus on financial services is extremely important. As we set out in the slides to come, we intend on leveraging our existing scale to capture significantly more addressable market share.
Putting all of these services together is our big data capability and the three sixty degree view of our customers. This view provides us with more than seven sixty unique customer insights and, when coupled with AI, allows us to personalize to a segment of one in mobile and in our new products and services. We call this capability our global recommender, and it will support the generation of next best activities for our customers, both in mobile and in financial services and in digital services. Our behavioral loyalty program cuts across our products, incentivizing and rewarding engagement. Since its launch in September 2020, the program has attracted 24,000,000 unique customers in South Africa who earn, bank and spend their Voda Bucks via our My Vodacom app.
We have given away a retail value of over $500,000,000 in lifestyle rewards to our customers. Financial services has been an integral part of the group's strategy for many years. In fact, we launched the iconic M Pesa service back in 02/2007. Our unrelenting focus on the customer proposition and innovation has seen us constantly add services and value to customers over the years. Today, we are honored to be Africa's leading fintech player, measured by customers' revenues and transaction values.
As at March 2021, we had 58,000,000 financial service customers. This number continues to grow meaningfully, and we recently announced that M Pesa customers has reached the 15,000,000 customer milestone when also including Egypt and Ghana. Adding on our 13,000,000 to 14,000,000 financial service customers in South Africa, we are closing in on 64,000,000 financial services customers across Africa. From a transaction value perspective, we processed US25 billion dollars per month across our platform and generate US13 billion dollars of revenue in the last financial year. This scale, combined with the compelling economics, which I will talk more to later, means that it already makes up 17% of Vodacom Group's profit before tax.
Our Financial Services business is built on a compelling customer proposition. The key pillars of this proposition were and still are trust, simplicity, depth and value. This slide shows how we enable these pillars and some of the remarkable KPIs we've achieved. The ubiquity of the M Pesa platform should not be underestimated. We have 500,000 agents across our footprint who enable a vibrant ecosystem.
Enablers of our success have also supported meaningful financial inclusion. For example, we have facilitated fifteen million first time borrowers and collapsed barriers to inclusion through nano products. This concept of nano is also a major strategic and competitive advantage versus traditional financial institutions. We are able to facilitate millions of transactions a day with loan denominations of less than a few dollars at a time. This is very important across the markets where we operate as the majority of our customers earn and spend on a day to day basis.
This nano product capacity is supported by our class leading big data and machine learning capabilities. These capabilities allow us to manage risk. Interestingly, and I will elaborate more on this later, our day to day low income customers present less credit risk to us than some of our better off postpaid customers. This slide provides a high level view of our key financial service revenue drivers. When M Pesa launched in 02/2007, it was premised on basic mobile money services such as cash in, cash out and peer to peer payments.
As highlighted earlier, the ubiquity of our Asian network, low transaction costs and our simple and secure USSD interface has supported sustained growth in transactions and users. For example, in the last financial year, each M Pesa customer in Kenya transacted 20x per month. This was up 35% year on year. Money transfer services in aggregate make up almost 80% of the M Pesa revenue base, with digital payments and new financial services such as micro loans making up the balance. In general, we make a fee on each transaction linked to the transaction value.
Our Financial Services business in South Africa primarily generates revenue from our Airtime Advance and Insurance products. In both respects, these products are big data led. Our Airtime Advanced service provides Airtime loans to customers at a modest fee. The Airtime loan and fee is repaid when a customer tops up at their convenience. Our insurance business offers include both short term and long term products.
Our short term products include home and road assist and device, while our long term products include life and funeral cover. These insurance products leverage our own insurance license, which when combined with our big data capabilities, provides very attractive economics. Our claims processing is done in five minutes, while our claims ratios are truly class leading. We see financial services as a platform for growth. As part of our response to COVID-nineteen relief efforts, we stimulated platform economics by facilitating free person to person transfers for M Pesa.
In the most recent financial quarter, transaction volumes reached US25 billion dollars per month, up 64% year over year and annualizing at a staggering US300 billion dollars To put this into context, U. S.-listed payments company Square is annualizing US170 billion dollars from a volume perspective, M Pesa is almost double the size that is of Square. From a contribution perspective, M Pesa across our international markets and Safaricom makes up 28% of our service revenue. This revenue contribution was supported by scaling new services onto the platform, including international money transfers, loans and savings. For example, in the previous financial year, we facilitated nano loans of US3.3 billion dollars through our Fulisa and Songesha products.
When we say nano, these loans are on average US4 dollars per ticket. This concept of high volume nano products is a function of the platform we have built, a clear competitive advantage and a good segue into our South African business. Following strategic reset of our South African financial service business five years ago, it has grown at an impressive 32% revenue CAGR. The strategic reset focused on how the business was managed, how it incorporated into our system of advantage and how it leveraged our best in class big data capabilities. We now have over 13,000,000 customers in South Africa, up 15% in a year.
In the insurance space, we have 2,100,000 policies and are South Africa's fifth largest insurer by profitability. In addition to our success in the insurance space, our big data led model has supported strong growth in our Airtime Advance product. On a daily basis, we advance 5,000,000 Airtime loans to our customers, which are repaid when they top up. These loans equate to $50 cents per ticket, so a truly nano product. Our data led model is also critical to managing bad debts.
For example, we know that on average people who wake up between four and six a. M. Are more credit worthy than people who wake up at seven a. M. Our average bad debt on these 5,000,000 advances a day is just 0.5%.
In my intro, I positioned us as Africa's leading fintech player. In the chart on the left, we compare the scale of our financial service business to African telco peers, fintech pure plays and a leading digital bank in Africa. A similar, if not even more pronounced comparison emerges on a revenue basis. Scale is important as it not only supports the economics of the stand alone business, but also provides for improved partnership models with global tech and payment companies. Switching gear to regulation, which is summarized on the right hand side of the chart, our scale also means we work closely with central banks to empower digital economies and drive financial inclusion.
Unlike traditional deposit taking banks, our mobile money services do not require capital. In Kenya, by way of example, the M Pesa float is held in trust, with interest on the float used for charitable causes. In South Africa, we are a fully licensed insurance provider. To our knowledge, this is unique across the telecoms industry. As a licensed operator, we are able to capture the full return of our innovative insurance products, which are guided by our big data capabilities.
We are seeing some very exciting growth opportunities ahead for our financial service businesses. We're further to go with penetrating our money transfer and basic services across the portfolio. Notably, our financial service penetration is still below 60%, and we see no reason why this can't reach the same or above the levels of penetration in Kenya. Over and above this, Ethiopia, a population of over 100,000,000 people, provides a transformational opportunity for M Pesa when we are granted a mobile money license. And then, of course, from a Vodafone perspective, Egypt, another 100,000,000 population market, provides further upside as it scales post COVID.
In addition to the penetration opportunities across our footprint, we believe our expanding product set also unlocks a rapidly growing addressable market. Research providers share our optimism and predict CAGR growth rates of almost 30% for fintech over the years to come. Growth drivers include digital payments and personal finance. In addition to the fintech opportunity, we are seeing significant scope to grow in the insurance space, both in South Africa and across our footprint. Insurance is a massive market at US44 billion dollars and we make up a very small fraction of this revenue pie today.
Our existing platforms, big data capabilities and investment into class leading consumer and merchant digital products positions us to capture significant upside from these addressable markets. To capture more share of the addressable fintech and insurance markets, we need to lead in the digitization of financial services in Africa. We are doing just this and have developed a comprehensive suite of financial products, which provides a compelling proposition to both consumers and merchants. We see the merchant play as a critical part of the fintech value chain. Our enterprise resourcing tool called Botatrade facilitates billion per annum of transactions between merchants and FMCG organizations.
On the payment side, we have launched our own Android powered physical point of sale devices in South Africa, complementing our already scaled M Pesa Till service. The payment ecosystem provides insurance and lending opportunities, such as invoice financing and SME lending. Pulling our merchant and consumer capabilities together and launching them into the next realm is our super app approach. In South Africa, this is named VodouPay. While across all our markets, will retain the iconic M Pesa brand, our South African lifestyle super app, VodouPay, is supported by the world class technology of Alipay and zero rated for consumers.
The app offers services ranging from loans and savings, international money transfers, seamless QR and person to person payments. It also has entertainment and personalized shopping experience. The shopping platform is supported by South Africa's leading retail brands across all key verticals. When saving rather than shopping, the platform will provide a marketplace of investments and saving options, including fractional ownership for nano investing. This functionality will be replicated across our M Pesa footprint, supported by Alipay's mini app capabilities.
To capture the growth opportunity in fintech, we need to execute with a balance of speed to market and adaptive product. To this end, we have set up an efficient corporate structure to support our new commercial model. At the heart of our M Pesa commercial model is M Pesa Africa, which coordinates and implements our strategy, driving product expansion and leveraging best practice across the portfolio. Products and services are created in the hub and then deployed to the operating companies. Similarly, when global tech and payment companies want to explore partnerships, Epeisa Africa maximizes the opportunity across the portfolio.
A good example of this coordination role is the international money transfer hub we have set up. This hub approach guarantees partners scale and our customers the best value proposition. The same is true for our financial service business in South Africa, which facilitates a nimble and innovative approach to market. From a legal standpoint, Vodacom and Pesar businesses have been separated from the telco. This ensures that we have the dedicated strategic and management focus required to maximize our organic growth opportunities, while also making it easier for shareholders to track our progress and determine the see through value of these assets going forward.
Our Financial Services business also receives all the capital and operating investment it needs given the higher margin we can generate, alongside the capability and development benefits of our technology partnership with Alipay. In order to maximize the value creation opportunities for our shareholders, we are currently focused on delivering our strategic ambitions. Along this journey, we will consider portfolio optimization options as these arise and if the value of this unique business is not fully reflected over the medium term. Mindful of this, we will also give consideration to the optimal longer term legal structure of our Fintech assets at the Borucom Group level. Earlier I called out that including Safaricom on 100% basis, our financial service portfolio generated CHF1.3 billion of revenue in the 2021 financial year.
To enhance our disclosure on financial services, we've also provided some color on a proportionate basis, which accounts for minorities and associate holdings. This is especially relevant when comparing fintech valuations to market cap. The low capital intensity profile of financial services means that it generates a higher profit margin and ROCE than our core mobile businesses. In fact, 17% of our group's proportionate profit before tax comes from financial services at a margin of around 40%. This equates to billion or close to $300,000,000 In addition to the attractive economics of our financial service portfolio, it plays an important role in our purpose led business.
From payments to lending to savings, our products support financial inclusion and key United Nations sustainable development goals. From this year, we've also incorporated financial inclusion into our remuneration scorecard impacting long term incentive awards. From our 57,700,000 customers at March 2021, we are targeting 72,600,000 financial service customers by 2024. In the previous slide, we showed that our existing financial service businesses is scaled and generates attractive economics. This is largely a core function of our core payment services, which is volume based and orientated towards a largely feature phone market.
As we move into the digital space, which is orientated more towards smartphone users, our commercial model has adapted to providing products across the Fintech value chain. This approach is supported by our own product development through Vodacom South Africa and our Mpesa South Africa Innovation Hubs, but also through partnerships. This hybrid or marketplace approach to product development ensures scalability. Then we add in the power of the Super App, and the opportunity and economics becomes truly compelling. The super app gives us the ability to open up the system from a few partners to thousands of service providers.
It removes the barrier of physical limitations for both consumers and merchants, which can then expand beyond their geographical boundaries. And put simply, as the transactions compound, we take our cut a bit like an iOS or Google Play Store. The Soup app also gives us the ability to aggregate the digital shopping mall experience with entertainment and our broader fintech services like money transfer, lending and savings. The consumer experience is further enhanced through our big data driven personalized offers and loyalty that helps shape behavior. From each of these components, there is a revenue opportunity, which in some cases can be compounded by combining services.
For example, on an e commerce transaction, we can generate revenue from the merchant on listing and payment fees and where credit is provided, commissions on the loan origination. From a returns perspective, we already generated a 40% PBT margin on financial services, and we see our push into digital services creating more reasons to keep the money in the system. This provides further upsize opportunity for margins with cash in and cash out making up 80% of our direct costs. There's also a benefit for the telco business with lower churn, retention and acquisition costs. The higher margin and ROCE profile of financial services is further supported by its low CapEx intensity.
We expect this to remain a feature of our Financial Services business as we leverage the best global tech partnerships in our own centers of excellence. My presentation up until this point has covered the Financial Services business we have built, the business we are building and the exciting economics on offer. What is left for me to do is to pull these threads together into our strategic road map. Our Vision 2025 strategy aims to meaningfully scale the contribution of new revenue streams, while contributing to increasing the penetration of our core connectivity services. Financial services is core to the strategy of our system of advantage, which is set up to deliver exceptional value to our customers.
We see scope for our financial services businesses to grow at least 20% CAGR over the medium term. We believe that by combining the best of Teck with the products that span across the financial services value chain, we will remain Africa's clear fintech leader. And finally, I wanted to reconcile our Vision 2025 growth roadmap with our medium term service revenue target and the shape of our business in the years to come. In the top row, the green bubbles show the evolution of our new services, which include digital and financial services, IoT and fiber. On a consolidated basis, we see this beyond mobile service revenue contribution increasing from 17% today to around 25% to 30% by financial year 2024.
And by 2026, there is scope for these revenues to exceed a 30% contribution to our consolidated service revenue. Delivering on these targets will support our core purpose, which is to connect customers for a better future. Financial services is integral to our purpose led business model, our commitment to improving lives and is a clear strategic differentiator. Thank you for your time today.
The last one year has been one of our biggest years in M Pesa. We formed M Pesa Africa, consolidating our road map across the entire continent, putting in new capabilities, standardized platforms as we begin the journey of looking at M Pesa as one unit. Now I'd like you to take a look at a short video, and please enjoy it, of the new M Pesa app.
My name is Robert Toho. I'm from Kureine. I am a teacher. I'm a businessman, and I'm a community social worker. My business is mostly majorly for recreational purposes.
I have a gym. We have a DJ in school. We have a PlayStation. I am a teacher by profession, so I have little time to to be around my business. All the business transactions usually come directly to the M Pesa business phone.
So even when I'm not in or around the business, I'm able to know that so and so has paid up for for a service. My businesses majorly are, you know, under services, service providing. When I want to buy maybe, you know, stock maybe like printing papers for my cyber or I want to buy spirit for my kinesi. So it helps me when I want to purchase anything. And even I want to pay, you know, my my employees, I can pay them directly, you know, using the Business TU app instead of giving them them cash.
Log on to www.m-pesaforbusiness.c0.ke.
Hello, everyone. My name is Vinod Kumar, CEO of Vodafone Business. It's good to see you again. And in our last section for today, we will provide a more in-depth look at our leading Internet of Things or IoT business. This is a really exciting space at the moment, especially as we help industries, government and society rebuild after the events of the last few years.
We are seeing strong structural growth across a range of verticals. This is not just in connectivity where we continue to grow at around 2,000,000 connections per month, but also for our own innovative solutions. This section is split into four parts. First, I will talk to you about our history in IoT and how we built the leading IoT business. Then Eric Branais, the Director of IoT here at Vodafone, will talk to you about the market opportunity and why it is so strong.
Eric will then talk to you about how we are capturing this opportunity through smart, scalable products and services that are unlocked by our group scale. And finally, I will go over where we are investing our capital and our best in class economics. At Vodafone, we have a long history of IoT. In fact, our history predates the name IoT and goes back to when it was called machine to machine. We created our IoT division back in 2008 and started development on our platform in 02/2009.
This means we've had well over a decade to understand the market and improve our ability to serve it. We've done this through the continued evolution of our platform, which now handles over 130,000,000 connected devices. And we have not been playing catch up with anyone. We were recognized as a Gartner leader in our managed connectivity back in 2014, its first year, and we have continued to be recognized as a leader ever since, continuing to push the boundaries forwards. Our IoT business consists of three parts: Connectivity, Hardware and Integrated end to end solutions.
We continue to grow our leadership in connectivity. We see a big opportunity in the IoT solutions space and aim to be a leader in integrated plug and play solutions that will drive the adoption in IoT in businesses both big and small. We call such solutions end to end solutions. An example of an end to end solution is a logistics firm that no longer wants just connectivity but wants insights. They want to understand where all their vehicles are and how they can save fuel or reduce insurance premiums.
We've been building our knowledge of this space through targeted acquisitions of leading IoT startups such as IoT. Next and Grandcentrics. And our business is, of course, underpinned by Vodafone's strong network position across Europe and Africa alongside our international partnership. These enable us to serve customers in 190 markets and five seventy different networks globally. We are the world's leading global IoT connectivity business.
We are seeing strong growth. We have nearly doubled our connections in the last three point five years to 130,000,000 as of Q1, and it is accelerating. In Q1 of this year alone, we added 7,000,000 connections over 2,000,000 per month. Data usage growth has also been strong, typically around 60% to 90% per year, except for FY 2021, where there was a temporary slowdown due to COVID-nineteen. Data usage is now accelerating, partly driven by increased connections, but this is primarily the result of our smart commercial approach, which unlocks new use cases and new demand.
We think this data growth is only the beginning and that many more data demanding use cases will materialize across multiple sectors. As you know, everything is increasingly software based today, cars, industrial machinery, supply chains and life saving equipment in hospitals, just to name a few. This makes the need for reliable and ubiquitous connectivity ever more important. Overall, service revenue in Q1 was very strong at 22%. It is important to call out that this growth on an underlying basis is around 11% as we benefited from annualizing a weak quarter in the prior year resulting from the initial and temporary COVID-nineteen slowdown.
This underlying growth also strips out the benefit we've had from software upgrades, which will repeat in the future, but with a hard to predict phasing. I will cover how we are growing across each of our product classes, connectivity, hardware and end to end solutions later in this presentation. Our strong growth is broad based coming from all of our key verticals: automotive and insurance, healthcare, energy and utilities, logistics and transport and a growing range of other industries such as manufacturing, security We really have scale in each of these verticals and work with the largest companies in these spaces. For example, in automotive and insurance, our fast growing and largest vertical, We are the supplier for eight of the 10 largest global automotive brands. And we have deep expertise on all aspects of their value chain.
We integrate IoT into their factories to improve industrial efficiency. We embed IoT SIMs directly into the control units inside their vehicles, showing how critical connectivity is for them. It's no longer just an add on, but a key requirement. Once the car leaves the factory, we enable over the air software updates, fleet management solutions for enterprise customers and insurance providers and then Internet in the car for consumers. Healthcare has also seen a rapid growth in connections this year, in part driven by the pandemic with governments and health authorities rolling out field hospitals and managing vaccine distribution.
But looking forward, we also see structural growth as these authorities look to digitalize and improve effectiveness through remote medicine and patient monitoring solutions. We have real leadership in this area, thanks to our center of competency, Innovus, which Eric will tell you about later. Energy and utilities also continues to grow as these companies plug IoT into their existing grids and networks to identify faults and reduce wastage. Logistics and transport companies on the whole saw increased demand for connections driven by the pandemic as supply chain management increasingly became a focus for firms. And given recent supply shortages in some sectors, this growth is expected to continue.
And we see increasing use cases across a wide range of other industries such as industrial automation, connected payment services, security and a whole lot more. Vodafone is the largest international IoT company. We have the most connections of any provider outside China, over 130,000,000, which is nearly two thirds more than the next largest player. Not only do we have leading scale in connections, we have the ability to connect devices everywhere we want to in 190 markets globally. In other words, we serve customers everywhere apart from certain sanctioned markets.
We know we have the best global reach, driven not only by the strength of our partnerships, but also our deep regulatory experience. We are the only provider that can sell across all the highly regulated markets such as China, India, Russia, Brazil, Egypt and Turkey. This is a moat that is tough to replicate or cross. Only the strength of the Vodafone brand and the regulatory teams allowed us to navigate these processes and only the strength of the Vodafone technology team and the flexibility of our platform enabled us to meet these markets requirements. But we are not just the leader in terms of size and connections.
Let me give you a few more reasons why companies come to us first. We have leading expertise in our verticals through leveraging our centers of competency. IoT has to be right first time and companies don't want to take a risk when it comes to connectivity. And Vodafone is a trusted brand in this space. A lot of companies are also embarking on their own digital transformations.
And as you know, we are a leader when it comes to multi access edge computing, being the first to launch in Europe with AWS and in mobile private networks where we have 20 live networks today. This leadership means that we know how to take their plans for IoT to the next level, integrating IoT into our other solutions as required. Our scale enables us to have a large channel ecosystem of more than 3,500 indirect sellers across the globe, complementing our generalist IoT sales teams and two fifty IoT sales specialists. We also use our scale for procurement and logistics, enabling us to procure hardware and manage customer devices at strong economics. Our leading platform, which we built and continuously evolve and enhance, is a key advantage.
It gives us leading economics, the ability to link third party services easily via APIs and enables us to integrate security from start to finish. Our platform also allows us to scale and create leading analytical capabilities centrally. And our technical capabilities are underpinned by our leading technology team, which has over 500 developers working to create products and improve our platform and portals in an agile way. I've spoken a lot about our leadership, but now you can see the proof. Our NPS is at a record high at 57 as of FY 2021.
And on the right, you can see that Gartner recognizes us as a leader in the Magic Quadrant and have done so for seven consecutive years. This is the most important industry benchmark. When customers want IoT, the first thing they do is refer to this quadrant. We are clearly at the top both for the completeness of our vision and for our ability to execute with a large gap to the competition. But we don't want to rest.
We continue to improve our capabilities year over year, pushing the boundaries ever further. There is no doubt that we are the global IoT connectivity leader. Now over to you, Eric, to talk about the market opportunity.
Thank you, Vinod, for highlighting the scope, scale and strengths of our business. Hello, everyone. I'm Erik Branais, the Director of IoT at Vodafone. Now I'd like to tell you a little bit about the addressable market for IoT. First, let's look at some customer research to see why customers use IoT.
These recent findings highlight the potential for Vodafone. First, the data shows that IoT adoption is growing rapidly. This supports our ambition to deliver even more solutions to customers over the coming years. Adopters experience significant operational advantages. The majority adopt IoT to achieve operating cost reductions and to better understand how they can reduce their CO2 emissions.
Other use cases are, for example, to gain valuable insights to improve employee productivity and customer loyalty. These benefits then create a virtuous cycle leading to even more IoT projects. A vast majority of adopters, over 80, are spending more. Finally, today, it's mostly large national or multinational enterprises that have adopted IoT and we're great at serving these customers. But SME and SOHO firms also present a large opportunity for Vodafone.
We have strong pre existing relationships with these customers and we're helping them to access the EU recovery fund opportunity. So how big is our market? The total addressable market for IoT is worth €10,000,000,000 This is a mix of connectivity, hardware and end to end solutions in Vodafone's geographic footprint. We expect this €10,000,000,000 to increase to €16,000,000,000 by financial year 2024, which means a 16% annual growth over this period. This growth is spread across all our markets.
And Germany represents the largest single market opportunity because of the strong automotive and manufacturing industry, which is rapidly transforming. We also expect Spain to grow strongly because there is a significant part in the EU recovery fund for smart cities and metres. Africa and Other, which represents all of Vodafone's other markets, will grow at 29% over the next two years, a massive opportunity. This is mainly driven by South Africa, Turkey and Egypt, where we see really strong demand and are well established. We also expect strong growth potential in both The UK and Italy.
Let's now have a closer look at the EU Recovery Fund. It aims to make Europe greener, more digital and more resilient. It will be a significant driver of IoT growth going forward. In total, there is €750,000,000,000 available over the next few years and we're already starting to see the benefits today. In Spain alone, we've already won smart city developments funded by the EU Recovery Fund in four cities.
For example, in Ibiza, we won a tender through our ability to offer not only connectivity but also end to end solutions that solve problems which these cities face. We provide lots of solutions. For example, early fire detection, measuring seawater quality and monitoring other environmental indicators, managing traffic and controlling beach capacity. Where a problem is identified, our platform alerts island officials who will then take appropriate action, for example, sending the fire squad. Furthermore, a lot of the insights are available directly for tourists and residents to access through a mobile and web app.
This is just the beginning. We expect most EU recovery fund related tenders to start from 2022 onwards. Another big part in the EU Recovery Fund will go into solutions which will help reduce greenhouse gas emissions. Over 10% of global climate change emissions result from deforestation. We've already built innovative solutions today such as our Smart Forest solution in Romania, which enables forest rangers to identify where illegal deforestation is taking place through solar powered IoT sensors placed on trees.
We see many more opportunities in the fight against climate change as companies, cities and regions take recovery funding to reduce their environmental footprint. Finally, we see the largest opportunity in e health. And we're ready for it. In Greece, we have an amazing e health solution. Greece has hundreds of remote islands, making doctor visits really expensive.
So we partnered with the Vodafone Foundation and the Greek health authorities to develop remote monitoring solutions that enable doctors to oversee patients and patient medical devices remotely, automatically flagging any adverse indicators. Today, we have conducted over 50,000 remote examinations and over 500,000 citizens are covered by our solution. Our IoT subsidiary in Greece, Innovus, who developed this solution is now our global center of competency for health care and we're deploying this leading solution to other markets. We've just seen how much the addressable market will grow in the coming years. This growth will be fastest in end to end solutions.
So let me now take some time to explain how we are building these solutions efficiently in order to capture this opportunity. As you've heard a few times in our previous briefings, we build once and deploy globally. We've done this through creating a scaled solution industrialization factory, which makes use of our leading IoT platform. Let me tell you how this factory works. We do not develop things market by market.
We develop in our five global centers of competency, which you can see at the bottom. These centers of competency have deep expertise in their area of specialization. They develop leading solutions and where we see good traction, we industrialize them. We set up a specific team which has the legal and regulatory knowledge required to execute across markets. Together with the Vodafone procurement company, we set up central procurement contracts at the group level.
We've created a software platform, which enables us to quickly deploy these solutions into our markets. We create central marketing materials and price the product centrally. And finally, we create a central team responsible for aftermarket support. When a customer needs help, they get straight through to a dedicated world class expert. We can then sell these solutions across each of our markets and an increasing number of our partner markets as well.
This gives us many times the scale of competitors who are usually only present in a single or a few markets. But we don't just industrialize our own products. We also take winning partner solutions and industrialize them in the same way and sell them in our operating companies. Let me give you an example of one of our self developed new solutions. You may have experienced it on your way into work today if you're in the office.
We've created a safe return to office solution, which is a part of our wider smart buildings solution set. A thermal camera screens people for high temperatures, a sign of infection, as they enter the office. If someone has a high temperature, it automatically sends an alert to them and reception personnel, which reduces the chance of infection spreading. This camera is integrated into our smart buildings platform, which includes other social distancing solutions such as desk booking, which employees can access via a simple and easy to use app. For property management, we have more tools such as people counting, air quality control and temperature control.
This all helps improve employee safety. Our solution set will continue to be useful post the pandemic as it saves cost, reduces environmental waste and improves employee productivity. Our safe return to office solution is now live in three markets and a further five will go live by the end of the year. We also have large well known customers already and we're deploying the solution into our own buildings. This solution is also very profitable with a strong contribution margin.
And it is high return as well as there are limited customer specific costs. On average, each new project pays for itself in under a year. These are the sort of solutions we're investing in. They have real demand and are highly scalable. Now I will hand back over to Vinod, who will take you through more of the economics.
Thanks, Eric. Hello, everyone. Good to see you again. Vodafone IoT has strong economics. Let me talk to you about how we are investing our capital in IoT and why it is an attractive economic model.
The single largest area for our CapEx is platform evolution. This investment is leveraged by the breadth of our geographic markets and some of our partner markets as well. We continue to add capabilities such as improved management portals, advanced analytics and improved ability for our portal to interface with other technologies. This means we are creating APIs enabling further and simpler integration with partner services. The next large allocation is platform capacity and maintenance.
This includes investments to meet future demand. The maintenance portion of this is mainly a fixed cost, so it provides us with attractive economics as we scale. Then we come to end to end solutions. These are the solutions such as smart buildings that Eric walked you through earlier. We build solutions once where we see real demand from customers and we know we have the capability and then we deploy them across our markets.
Given the growth opportunity, we are currently investing a lot into this segment. The next biggest area is customer led investments. These are all the investments required to service customers. And really, this is an output of our sought after capabilities driving customer growth. Finally, only a very small percentage of our CapEx goes towards IoT specific network investments.
We have a symbiotic relationship with the larger business, primarily utilizing the existing network as it is. So now I've talked to you about our investments. Let me talk to you about the revenues, margins and returns that we see. Our IoT business generates over EUR900 million in total revenues. And with its double digit revenue growth rate, we will soon be EUR 1,000,000,000 business.
It has a strong contribution margin of 75% to 85% and a high ROCE, which will only improve going forward. Connectivity is by far the largest segment, representing the majority of revenues and growing quickly. Connectivity has a very strong contribution margin, driven by leveraging Vodafone's existing mobile network and our own self developed platform. This contrasts with our competitors who pay per connection fees for platform usage. And some of our partners pay us for our platform, further improving our economics.
We also benefit from our pan European and African scale and deep partner relationships, which reduce roaming costs. Our capital intensity is medium as we continue to invest into future proofing the platform, but benefit from utilizing the pre existing investments Vodafone makes into its mobile network. Overall, we see a high return in this segment given the significant growth that we are capturing. Hardware is also growing fast. Every piece of hardware we sell then generates connectivity demand and we make a solid margin driven by leveraging Vodafone's leading global procurement scale.
And given we predominantly have a reseller model, hardware is a strong incremental driver of returns. And finally, moving to the fastest growing segment of end to end solutions. The market here is growing fast as our connectivity customers evolve to wanting more insights and real time control. This means although our revenues are small today, they are growing rapidly. This is because we are building solutions where we see real demand or are taking proven solutions, industrializing them and then deploying them across our markets and sales channels.
Contribution margin here is strong as we also benefit from our self developed platform and don't need to pay per process fees like our competitors do. Capital intensity is high at the moment as we are in the initial investment phase and have yet to realize the full revenue benefits from deploying these solutions in multiple markets. The incremental ROCE on these products is high as our strategy is to build once and deploy everywhere. We also onboard and industrialize proven partner solutions and sell them through our sales channels. Over time, this may reduce our contribution margin percentage, but it will drive strong incremental returns due to a very limited CapEx investment.
As you can see, IoT is a strong business for Vodafone, leveraging existing assets to drive competitive advantage and improve ROCE for the group. So to recap, first, we are leaders in IoT. We built and evolved our platforms over thirteen years and continue to extend our leadership. We have leading international reach. We can serve customers everywhere we want to and where others can't due to our deep regulatory and technical capabilities.
Our leadership is recognized both in our NPS and by external market research firms. And this enables us to be the largest international IoT provider with over 130,000,000 connections growing by around 2,000,000 per month. Second, the addressable market for IoT is compelling. We see the market growing by 16% compounded annual growth rate over the next few years. This growth is broad based across all our markets, but especially significant in Germany.
And we are ready for and capturing the EU recovery fund opportunities today. But this is only the beginning and these benefits are expected to flow from 2022 and onwards. Third, we are investing in a smart and capital efficient way. Build once and deploy everywhere is our mantra and that's what we are doing through our solution industrialization factory leveraging our five global centers of competency. And finally, we have highly attractive economics.
We leverage the existing mobile network investments across Vodafone's markets. We have our own platform, meaning our economics are scalable and we benefit from Vodafone's scale unlocking economics that our competitors can't. IoT is a key driver for incremental returns at Vodafone.
Digital connectivity and the Internet of Things has the potential to solve many of the world's largest problems, and one of these emerging problems is going to be agricultural production. Now farming accounts for over 90% of everything we eat, and it also employs over 25% of the global workforce. But it also consumes 70% of the freshwater resources, and increasingly, its impact on the environment is coming under scrutiny through its use of land, herbicides and pesticides. So the challenge for agriculture is twofold. One is how does it boost productivity to meet an increasing demand from a global population whilst at the same time reducing its impact on the environment.
And this is where IoT comes to the fore, by enabling you to connect a wide range of different sensors to measure things like water quality, you can measure humidity, you can measure crop growth, and by using advanced sensors, which use video and video analytics, you can even start to detect pests and disease in the crops at a very early age. So by using IoT devices within farming, not only do you get a much better view of the farm, but you can also cut the use of things like fertilizer by up to 50%. And by being able to detect disease early, it can go a long way to reducing some of the 40% of crops that are lost every year. Vodafone have brought all this together in a single platform called My Farm Web. My Farm Web brings together this range of IoT sensors with other data sources on the farm, from combines or tractors with geospatial information to create a 360 degree view of the farm.
And this enables you to monitor the production on the farm on an acre by acre basis. Now my farm web is used by over 6,000 farmers in America, New Zealand, South Africa. And together, they're using this wealth of data to optimize their crop selection, optimize their production and minimize their impact on the environment. MyFarmWeb takes agriculture into the digital age. It's going to help farms increase productivity, reduce their impact on the environment and become leaner, greener and leaner.
My name is Lawrence, and I'm here in the Carpathian Mountains in Romania to help stop the illegal logging and poaching that goes on in this area. Is the actual Guardian device. This is the device that will be recording recording the sounds of the forest and then sending it back. And this inside has the mobile device. We install the Guardians in the canopy of the forest.
This protects the Guardian from the elements, the wind, from the rain. The solar panels are designed in a really efficient way to maximize service area and plug the microphone in. Here, put some protection on. The Ranger has the ability to know where to go because each Guardian is GPS located. So when they receive their alert through their mobile phone, through the Ranger app, it will say that the alert is coming from a specific location.
Hello. My name is Claus Wulf. I'm driving the Internet of Things business at Vodafone for Germany, Austria and Switzerland. Today, I'm very, very pleased to have Werner Leverherr here with me, the Chief Executive Officer of Landis and Gear. Landis and Gear is one of our key customers, and been working with them for more than three years.
Werner, could you please give us some more background on your company?
Hi, Claus. Thanks for having me. Landes and Gear is a leader in energy management solution. And this year, we are celebrating one hundred and twenty five years of company history. So we are pretty excited about that.
In order to help manage energy better, we are working closely with utilities and other customers around the globe to provide leading smart metering, grid edge intelligence and smart infrastructure solutions. Most recently, we have also acquired companies offering EV and cybersecurity technology and are in the middle of a digital transformation. With locations in over 30 countries, we are a truly global player and are proud to say that we have over 300,000,000 devices deployed all over the world. And our services and solutions allow us, our customers, partners like you and entire communities to manage energy in a more informed and sustainable way.
For us, it's a real key market where you're operating, and it's a great story. Why did you choose Vodafone as a partner?
We are proud to partner with Vodafone. You're enabling meter and sensor communication through cellular technology and as such elevating our smart metering and grid edge intelligence portfolio. Your international presence gives our customers seamless access to more than five seventy networks in 190 countries using a single subscriber identity profile. That's a pretty big deal. This is made possible by our by your single connectivity platform, which allows us to utilize multiple technologies.
For example, the partnership delivers unprecedented low power wide area technology capabilities today with the ability to seamlessly transition to five networks are available. Combined with the long term service contract, the solution provides unprecedented coverage to ensure longevity matching the life cycle of utility assets. And let me say that I've been very impressed by the personal commitment of everyone at Vodafone, Vodafone, so thank you for that. Together, we are supporting utilities around the globe with leading connectivity solutions and scalability. Werner, if we look a little
bit more deeper into that, what are you personally most excited about this topic?
We are excited to continue to push the envelope to offer the best possible service to our customers. As part of that, we are embedding connectivity into Landes and Gear hardware, and Vodafone is supporting end to end integration, for example.
At Vodafone, we really feel the good collaboration between our two companies. How is your feeling on that?
I would say overall very positive. Vodafone is a valued partner, we appreciate the customer centric approach and global mindset that you offer. Your global partner network and the fact that you are a technology leader are key points here. And last but not least, it's, of course, also the personal relationships. That starts at the top Eric and you, Claus, and goes all the way through the technology teams.
Werner, if we look a little bit on other topics, which are very important for our world here, what's your feeling or what do you think? How can we contribute to make the world a little bit more livable?
Managing energy better is certainly a big part of creating a more sustainable future for all, and that's exactly what our products do and where your connectivity solutions come into play. Also, impact is one of our company values, and this is what we look for in partners as well, to support sustainable impact in everything we do.
Thanks, Werner. We have here the absolutely same spirit. Thank you so much for partnering with us and for your time here in this interview. See you then. Bye bye, Werner.
Claus, I feel the same way. I thank you very much for discussion. I wish you a very good day and look forward to seeing you very soon. Thanks a lot. Bye bye.