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Vodacom’s profits rise as it grows customer base in South Africa

Staff Writer 11 November 2019

Vodacom on Monday (11 November), reported an 18.9% increase in headline earnings per share for the six months ended September 2019 – to 460 cents per share – amid strong customer growth.

“We added 2.7 million customers in South Africa and our international operations, and 2.7 million in Safaricom during the period, to serve a combined 115 million customers across the group,” said Vodacom Group chief executive officer, Shameel Joosub.

Group revenue was up 3.9% to R44.4 billion, supported by group service revenue growth of 4.2%, to R36 billion.

“South Africa service revenue grew 0.3%, supported by the turnaround to growth in the second quarter, as the reduction in out-of-bundle revenue was offset by improved data elasticity and the completion of the full onboarding of our new roaming partner,” Joosub said.

International operations continue to perform well, delivering service revenue growth of 15.5% with foreign currency translations boosting reported group growth, the operator said.

Earnings per share were up 19.4% and headline earnings per share were up 18.9%, due to the one-off BEE costs of R1.5 billion (including transaction costs) included in the prior period.

Vodacom declared an interim dividend of 380 cents per share and a special dividend of 60 cents per share.

Other key highlights include improved second-quarter performance in South Africa and the sustained growth of our international businesses, said Joosub.

“In South Africa, an increase in data usage, following sustained efforts to reduce data prices and the onboarding of our new roaming partner in the second quarter, more than offset the service revenue decline reported in the first three months of the financial year.

“On a like-for-like basis, this resulted in service revenue growth of 1.5% during the half-year, despite ongoing economic pressures and the implementation of the End-User and Subscriber Service Charter regulations,” the chief executive said.

Ongoing initiatives to enhance customer experience through pricing transformation, modernisation of IT systems and sustained investment in network infrastructure, continue to pay dividends, he said.

“This is evidenced by the additional 691,000 customers who joined Vodacom in the period,” Joosub said, taking South Africa’s customer base to 43.9 million.”

Measures to introduce ‘one more service’ to customers, as part of its strategy to build diverse revenue streams, are quickly gathering momentum.

Revenue from its financial services business jumped by 37.1% to almost R1 billion, as airtime advance, insurance and our recently launched VodaPay service all gained in popularity, Vodacom said.

“More than one million people have made video-on-demand purchases, while our music, sports, games and other video services – all in their infancy phase – are contributing to solid growth in our digital services business,” Joosub said.

Vodacom said that its international portfolio remains a star performer, growing service revenue by 15.5% in a period characterised by macro and political stability and high demand for data and M-Pesa services in each operation. ”

We connected an additional 2 million customers, boosting the total to 36.6 million customers outside South Africa and Safaricom,” Joosub said.

Looking ahead, Joosub said: “We expect the benefits from our acquisition of a strategic stake in IoT.nxt[2] will become increasingly evident in both our Consumer and Enterprise businesses. The same can be said for the other partnerships we have put in place in recent times, including our agreement with Amazon Web Services (AWS), to ensure we bring best-in-class services and products to customers right across the group”.

Read more: BusinessTech

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