Vodacom sheds 4% on JSE after it reports lower headline earnings

The Vodacom shop at N1 City in Goodwood. Vodacom CEO Shameel Joosub looked to the company’s revenue for some positives. Picture Ian Landsberg, Independent Newspapers.

The Vodacom shop at N1 City in Goodwood. Vodacom CEO Shameel Joosub looked to the company’s revenue for some positives. Picture Ian Landsberg, Independent Newspapers.

Published Nov 14, 2023


A stronger performance in South Africa and the newly acquired Egyptian operation failed to unshackle Vodacom from the impacts of regional volatility and higher costs of starting up in Ethiopia, and the JSE-listed mobile operator’s headline earnings per share fell 4.2% for the six-month period to September 30.

South African companies with operations across Africa such as MTN and MultiChoice among others have been battling regional currency and exchange rate woes. Vodacom, which has operations in countries such as Kenya, Egypt and the Democratic Republic of Congo, yesterday reported that headline earnings per share for the September 2023 interim period had slowed down by 4.2% to 438 cents.

Investors in the company on the JSE responded negatively, with the share price shedding as much as 4.16% on Monday to R103.10. In the year-to-date comparative, Vodacom is down by 12.31%.

Vodacom CEO Shameel Joosub looked to the company’s revenue for some positives.

He described the 35.5% uplift in revenue to R72.8 billion as “encouraging”, especially as the performance in the quarter to June had carried over into the quarter to September.

“However, higher interest rates, elevated levels of inflation and currency volatility across our markets had an impact on the group’s earnings. We remain committed to delivering on our purpose-led strategy that aims to enhance societal value and deliver value to our customers,” Joosub said.

Regional volatility, high interest rates and bigger spending on starting up in Ethiopia and high interest rates were drawbacks on the company.

Nonetheless, in South Africa, revenue growth was supported by the consumer contract segment, while there was also “excellent growth in fixed and financial services” as well as a “resilient performance in the prepaid” segment.

“Supported by our investment into network resilience, data traffic growth accelerated to 45.2% in the period. New services in South Africa such as financial and digital services, fixed and IoT were up 18.1% and contributed R5.1bn to revenue,” added Joosub.

The recently acquired Vodafone Egypt returned a service revenue of R14.3bn during the half year and contributed 24.1% to overall service revenues, in spite of “challenging” macroeconomics in the country.

Performance was strong in the data category, customer engagement and content integration. The financial services category doubled revenues to R804m.

Vodacom’s operations in the DRC, Lesotho, Mozambique and Tanzania, which it classifies as international segment, raised revenues 16.6% to R14.7bn, with customers increasing by 22.3%.

However, strong data and mobile money revenue under MPESA in the region was offset by headwinds relating to “Mozambique’s price transformation” programme.

With its strong revenue generation, Vodacom paid a 305 cents per share dividend for the interim period under review. Across its markets, Vodacom saw 10.4 million new customers join its network in the past 12 months, yielding a total subscriber base of 196.2 million.

The company undertook capital expenditure of R9.5bn, which is about 25.6% more compared to the prior year. Vodacom expected its investments “to continue to fuel our growth into an addressable market of more than 500 million” people across the continent.

Vodacom recently forayed into Ethiopia through its Kenyan subsidiary, Safaricom, which also recently launched MPESA mobile money services in the populous East African country.

It said the Ethiopian business had made “good progress since commercial launch in October 2022” as it has reached 4.1 million network users despite high costs starting up the operation.

“At a Vodacom group level, Safaricom contributed R1.5bn to operating profit, declining marginally at 1.1%. This was an encouraging outcome, given that we expect Safaricom Ethiopia EBITDA losses to peak in the current financial year,” said Joosub.