Earnings release for the FY2003 ended March 31, 2004

VODAFONE HOLDINGS ANNOUNCES FISCAL 2003 RESULTS

TOKYO: VODAFONE HOLDINGS K.K.
("Vodafone Holdings") (TSE: 9434) today announces its results for fiscal year 2003, ended 31 March 2004. The results were broadly in line with the company's forecasts, which were adjusted on 28 January 2004 due to intensified competition in Vodafone K.K.'s operating environment and increased costs to enhance the attractiveness of its offerings.

The consolidated results marked a decline versus the prior fiscal year as Vodafone Holdings ceased to consolidate the results of its subsidiary Japan Telecom Co.,Ltd. ("Japan Telecom") from 1 October 2003, the sale of which legally completed on 14 November 2003. Consolidated operating revenues decreased 7.9% to 1,655.7 billion yen compared to the previous fiscal year, due to exclusion of the fixed line results for the second half of the fiscal year. Ordinary income totaled 181.2 billion yen, a 33.3% decrease compared to the same period one year ago owing to an increase in operating, marketing, and depreciation expenses at its mobile subsidiary Vodafone K.K. The company posted a net loss of 100.0 billion yen due to a write down of Japan Telecom shares.

Darryl E. Green, President of Vodafone Holdings and Vodafone K.K., said, "Market conditions in fiscal 2003 proved challenging, as our competitors offered increasingly competitive services and drove migration to their 3G networks. Despite these circumstances, we maintained an overall market share of 18%. We dramatically improved 3G coverage, achieving population coverage of 99%, and will focus on enhancing indoor coverage going forward. We also succeeded in enhancing operating efficiencies by consolidating four separate customer service centres into a single East Japan customer centre. To effectively address the challenges facing us, an extensive plan has also been put in place. To compete more effectively, we will deliver a wider range of 3G handsets before the end of 2004 by fully leveraging local and global synergies. We will also optimise our marketing approach and build a foundation for long-term growth by developing our people, processes and systems. Out of this programme we expect to emerge as a much stronger competitor."

Operating highlights - mobile telecommunications

As competitors accelerated their efforts to offer competitive services and price plans, Vodafone K.K.'s market share at 31 March 2004 was marginally lower at 18.4% compared to 18.5% at 31 March 2003.

Operating revenue increased 3.3% compared to the previous fiscal year to 1,509.1 billion yen. Within this total, operating telecommunications service revenue grew 4.3% to 1,206.4 billion yen. Non-voice services as a percentage of ARPU for the fiscal year averaged 22.0%, an increase of 1.7 percentage points compared to the previous fiscal year. Ordinary income declined by 24.1% compared to previous fiscal year to 181.8 billion yen, due to an increase in 3G equipment depreciation, a provision for slow moving handsets, an increase in customer retention costs and incremental costs related to operating the 3G network.

Vodafone K.K.'s operating highlights for the year ended 31 March 2004 are as follows:

• Net customer additions totaled 1,039,000, representing a 17.7% share of market net additions for the fiscal year.
• Sha-mail picture messaging and Movie Sha-mail video-clip enabled handsets continued to register strong demand. There were 11.86 million such handsets in use at the end of March 2004, representing 79.0% of the customer base. Movie Sha-mail handsets, which also have Sha-mail capability, exceeded 3.0 million in March 2004, representing 20.1% of subscribers.
• The percentage of prepaid customers at the end of March 2004 reached approximately 9% of Vodafone K.K.'s customers.
• Vodafone K.K.'s continued to introduce innovative communication devices in fiscal 2003:
  • In May 2003 the J-SH53 was released as the world's first mobile handset with a megapixel camera, and the V601SH, which features an autofocus 2 megapixel camera, was offered in December 2003.
  • In December 2003, the V601N was launched as Japan's first analogue TV tuner handset.
  • The 3G version of Vodafone live! was launched in December 2003 to let customers enjoy enriched Sha-mail, Movie Sha-mail and web browsing services both in Japan and abroad. Two compatible handsets, the V801SA and V801SH, have been available since December 2003 and April 2004 respectively.
  • In February 2004, the VRM301R remote module was marketed to industrial and business machine manufacturers to meet their needs for remote control and monitoring.
  • In February 2004, the VC701SI 3G datacard terminal was announced. The VC701SI lets customers access the internet anywhere on their PCs, PDAs or other terminals at high speeds.
• Vodafone K.K. continued its efforts to delight customers with improved services:
  • In April 2003, efficiencies and customer care were enhanced by integrating the customer service functions of centres separately located in the Hokkaido, Tohoku, Kanto and Hokuriku regions into a single East Japan customer service centre.
  • Major retention initiatives were launched in October 2003 to improve competitiveness. As a result of new discount services, increased retention payments, and attractive handset offerings, the company observed a positive impact on monthly average churn, which was 1.91% for fiscal 2003, down 0.03 percentage points compared to that of the previous period.
  • With the transition to the Vodafone brand in October 2003, shops were remodeled as Vodafone shops, featuring improved floor ambiance to suit customer tastes. To further strengthen its brand image, the flagship shops Vodafone Nagoya and Vodafone Shibuya were opened in March 2004.
  • In November 2003, Vodafone K.K. launched a service called Vodafone Biz Access to make the mobile internet easier to use for corporate customers. Under this service, a company is charged a flat rate for web packet communications traffic for industrial-use web content that it provides.
  • The company also stepped up measures against spam mail. In December 2003, a new function to limit the number of mail transmissions in a given time period was introduced and the same function was applied to the 3G network in March 2004. Furthermore, in February 2004, Vodafone K.K. established a new e-mail address for customers so they can report spam they receive from other Vodafone handsets.
  • Vodafone live! enjoyed continued popularity and subscribers accounted for 86.4% of the customer base at the end of March 2004. The 3G version of Vodafone live! launched in December 2003 provides customers with faster speeds and richer content offerings such as Chaku-utaR ringsongs.
  • Indoor and outdoor 3G service areas were expanded by introducing economical, small base stations. Accordingly, nationwide population coverage reached 99.5% with approximately 13,500 3G base stations at the end of March 2004. 3G customers could also roam on 122 GSM networks in 85 countries and regions, approximately 98% of travel destinations originating from Japan, at the end of fiscal 2003.
• Vodafone K.K. strengthened its commitment to corporate social responsibility (CSR) with the launch of a new handset recycling scheme in April 2003, whereby a total of 20 million yen in proceeds was donated to UNICEF Japan in fiscal 2003. Furthermore, to increase environmental awareness and promote the use of mobile handsets as an educational tool, the Mobile Eco School Awards programme was launched in July 2003. Last year, students from 43 high schools nationwide demonstrated science research projects on the themes of ecology, environment and science.
• As the competitive landscape intensified, Vodafone K.K.'s ARPU for fiscal 2003 fell 7.3% compared to fiscal 2002 to 6,730 yen due to a growing prepaid customer base, the impact of new price plans and certain high value customers migrating to competitors. Whilst a trend towards overall ARPU decline was expected, data ARPU was stable, partly offsetting voice ARPU decline during the period. Data and content revenues accounted for 22.0% of total service revenues for the fiscal year.
• New customer incentives fell to 32,500 yen compared to 37,600 yen in the previous fiscal year, reflecting sales commission reductions and increased sales of prepaid products.
• Vodafone K.K. recorded a decline in its EBITDA by 4.7% down to 418.0 billion yen compared to the previous fiscal year due to an increase in a provision for slow moving handsets, an increase in customer retention costs and incremental costs of operating the 3G network. Margin decline was partially offset by lower acquisition costs due to slower customer growth and an increased prepaid customer base, and improved efficiencies such as customer centre integration. EBITDA margin was 27.7%, a 2.3 percentage point decline versus the previous fiscal year. The decline was in line with expectations.

Financial highlights

Condensed Consolidated Statement of Income

Condensed Consolidated Balance Sheets

About Vodafone Holdings K.K.

Vodafone Holdings K.K., formerly JAPAN TELECOM HOLDINGS Co., Ltd., provides mobile services through its 45.1% interest in its subsidiary Vodafone K.K. Vodafone Holdings K.K. is listed on the Tokyo Stock Exchange and the Osaka Securities Exchange, with Vodafone Group Plc holding an indirect interest of 66.7% in the company. Separately from Vodafone Holdings, Vodafone Group Plc also holds an indirect 39.7% interest in Vodafone K.K., giving it a total economic interest of approximately 69.7% in Vodafone K.K. Vodafone Holdings' other significant assets are 100% stakes in Japan System Solution Co., Ltd. and Telecom Express Co., Ltd. For more information, please visit www.vodafone-holdings.co.jp

About Vodafone K.K.

Vodafone K.K., formerly J-PHONE Co., Ltd., is a leading mobile operator in Japan with over 15 million customers and a subsidiary of Vodafone Group Plc, the world's largest mobile community. The Tokyo-based company offers a wide range of sophisticated mobile voice and data services including Vodafone live!, which provides e-mail and internet access to 86% of its customers, and Sha-mail, the pioneering picture messaging service first introduced in November 2000 that now has over 11 million users. In December 2002, Vodafone K.K. launched the world's first commercial 3G W-CDMA service based on 3GPP, the international standard. Vodafone K.K.'s 3G service offers its customers fast data speeds in Japan and roaming on 127 networks in 93 countries and regions as of April 19, 2004. For more information, please visit www.vodafone.jp

Forward-Looking Statements

This press release contains certain forward-looking statements concerning the operations and strategy of Vodafone Holdings K.K., Vodafone K.K. and their subsidiaries (collectively, "Vodafone Japan Group") and its expectations concerning its financial and operating results, in particular its fiscal 2004 performance forecasts (including consolidated operating revenue, ordinary income and net income), as well as expectations for trends in the Japanese wireless telecommunications markets and capital expenditure. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.

There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: changes in economic conditions that would adversely affect demand for Vodafone Japan Group's services; greater than anticipated competitive activity; slower customer growth or reduced customer retention; the impact on capital spending from investment in network capacity and the deployment of new technologies, including 3G technology; the possibility that technologies will not perform according to expectations or that vendors' performances will not meet Vodafone Japan Group's requirements; changes in projected growth rates in the wireless telecommunications industry; the accuracy of and any changes in Vodafone Japan Group's projected revenue models; future revenue contributions of data services offered by Vodafone Japan Group; Vodafone Japan Group's ability to successfully introduce new services, in particular 3G services, and the delivery and performance of key products; changes in the regulatory framework in which Vodafone Japan Group operates; and the impact of legal or other proceedings involving Vodafone Japan Group or other companies in the telecommunications industry.

All written or verbal forward-looking statements attributable to Vodafone Japan Group or persons acting on its behalf made in this press release or subsequent hereto are expressly qualified in their entirety by the factors referred to above.