FILE PHOTO: A Vodacom branch in Cape Town, South Africa
FILE PHOTO: A Vodacom branch in Cape Town, South Africa

Vodacom ends March with better-than-expected revenue

By Dineo Faku Time of article published May 12, 2020

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JOHANNESBURG - Vodacom ended March with a better-than-expected revenue and declared a dividend driven by the solid performance from its international operations, demonstrating resilience in the face of Covid-19.

Shareholders were rewarded with a R7.43billion final dividend.

Group revenue for the period under review jumped 4.8percent to R90.7bn, up from R86.6bn a year earlier, supported by the 5percent growth in service revenue to R73.5bn.

Headline earnings a share jumped 9percent to R9.45 a share, boosted by the special dividend received from Safaricom and the non-recurrence of the once-off black empowerment charge included in the previous year. The group’s investment in Kenya’s Safaricom delivered a 30.4percent boost in profits with growth bolstered by currency factors and the inclusion of the new M-Pesa joint venture.

Vodacom also temporarily suspended its guidance due to Covid-19 uncertainty and consumer spend pressure as a result of the pandemic.

The mobile phone firm added 5.9million customers and reached 116million across the group. Group chief executive Shameel Joosub said that group customer growth was in a healthy shape.

“The past year has been characterised by strong customer growth. We now connect 116 million customers across the group, including Safaricom - and the benefits of prudent portfolio diversification,” Joosub said.

In South Africa, data customers increased by 9.7percent during the year ended 2019 as out-of-bundle data rates announced in the first quarter led to a steady increase in data traffic.

“While it is still early days, the trend of increased data usage has continued into the current financial year, following reductions in 30-day data bundle tariffs of up to 40percent from April 1, 2020, and the launch of our ConnectU platform, which provides easy access to numerous zero-rated essential service websites,” said Joosub.

The company also reported that its financial services business in South Africa had jumped by 21.5percent to R2bn on the back of its popular Airtime Advance, insurance and VodaPay services.

The digital services business contributed R1.5bn in revenues on increasing purchases of video-on-demand offering music, sports, gaming and other video services.

Peter Takaendesa, the head of equities at Mergence Investment Managers, said that the growth in financial services was an encouraging development, given the company's strategy to diversify revenue, but that its revenue stream only contributed about 4percent to Vodacom’s South Africa’s service revenue.

“What will be more important to watch over the medium term is how data revenue growth will help to offset the pressure on traditional voice revenue, particularly in a tough consumer spend environment at home as well as in a number of other African countries,” said Takaendesa.

Vodacom shares closed 3.43percent higher at R127.69 on the JSZE yesterday.

BUSINESS REPORT 

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