Vodacom surpasses expectations, raises interim dividend payout
JOHANNESBURG – Vodacom yesterday increased its interim dividend payout for the six months to September to R7.52 billion, beating expectations and signalling it was poised for growth.
The unit of the multinational operator, Vodafone, raised its interim dividend to R3.95 cents a share from R3.90 a share in the previous period despite issuing of 114.5 million new shares for its new black empowerment structure.
The marginal dividend increase comes as Vodacom rival MTN cut its dividend in August in a bid to address its debt burden.
Cape Town-based portfolio manager Peter Takaendesa at Mergence said South African operations were weaker, but dividend growth was a positive sign.
“The market expected the dividend to be lower. Although it has grown modestly, it is a sign the company is positive about its prospects,” he said.
Headline earnings a share for the year declined 13.5 percent, dragged by the new empowerment deal. In August the company announced a black economic empowerment (BEE) deal with Royal Bafokeng Holdings and Thebe Investment Corporation worth R17.5 billion, which took the company's BEE ownership to 20 percent.
Group operating profit increased 0.8 percent to R11.1bn, with operating profit from South Africa declining 10.2 percent to R8.8bn.
Vodacom's customers grew 10.7 percent to 4.8 million across the group in the period comprising 2.5 million in South Africa and 2.3 million from international operations including Kenya. “The 2.5 million increase in customers in South Africa since March, shows that our sustained effort to deliver greater value is working across prepaid and contract and is evidence that our personalisation through Big Data is delivering results,” Vodacom Group chief executive Shameel Joosub said.
Vodacom's rival, MTN, lost 834 000 prepaid customers in South Africa from June to September of this year as consumers felt the pinch from the VAT increase and higher fuel prices.
Vodacom focused on attracting new customers who prefer cheaper products and opting for shorter validity periods for data bundles at lower prices through competitive deals.
Service revenue was 4.6 percent higher in South Africa during the six months to September.