Vodacom earnings take a hit

Mobile operator Vodacom has reported a decline in headline earnings for the six months ended 30 September 2023, citing higher interest rates, elevated levels of inflation and currency volatility as the cause.

The group reported a huge jump in revenue for the period at R72.8 billion, up 35.5% from the comparable period in 2022. Revenue was boosted by the acquisition of Vodafone Egypt.

Service revenue grew by 42.2%, or 7.9% when excluding the Vodafone Egypt acquisition.

Vodafone Egypt was the largest acquisition in Vodacom’s history and delivered service revenue of R14.3 billion, contributing 24.1% of group service revenue despite challenging macroeconomics, the company said. 

This performance was supported by strong growth in data revenue, customer engagement and content integration. Vodafone Egypt ended the period with 47.0 million customers, up 5.5%.

Vodacom’s EBITDA increased by 35.1%, or 5.5% on a pro-forma basis, but the company’s EBITDA margin shrunk by 0.1 percentage points.

The group declared an interim dividend of 305 cents per ordinary share, down from 340 cents per share the year prior.

However, despite the big jump in earnings, the company’s earnings per share declined by 5% to 434 cents per share, while headline earnings per share shrunk by 4.2% to 438 cents.

Vodacom CEO Shameel Joosub said that higher interest rates, elevated levels of inflation and currency volatility across markets had an impact on the group’s earnings.

South Africa

Vodacom South Africa service revenue grew 4% to R30.7 billion, which the group noted was “credible” given the tough macroeconomic environment.

Mobile customer revenue was up 4.1% to R11.7 billion, which benefitted from contract price increases coupled with additional data allocation.

Mobile contract ARPU was up 1.7% to R302. Prepaid ARPU was up 3.6% to R58, it said.

The group added 3 million new customers in South Africa (100,000 contract, 2.9 million prepaid) to take its total to 40.5 million customers in the country.

Vodacom said it invested R4.8 billion in its South African network over the period to support network resilience and leverage its new spectrum assets – however, this was down from the capex in the same period last year.

This is going to change, however.

“The year-on-year decline in capital expenditure reflects accelerated energy resilience spend in the first half of the prior year period, ahead of load shedding. Looking ahead, we expect to spend around R11.0 billion on capital expenditure in the current financial year, with increased spend in the second half of the year,” it said.

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