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Vodacom reports H1 decline in earnings, rise in customers

Vodacom Group CEO Shameel Joosub’s views on the company’s strong results for the half-year ended September 30, 2021.

15th November 2021

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Telecommunications giant Vodacom posted a decline in profit, headline earnings per share (HEPS) and earnings per share (EPS) for the six months ended September 30, 2021, on a reported basis, while group revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) increased.

The company on November 15 reported a 5.1% decline in HEPS to 505c; however, when adjusted for the R805-million one-off deferred tax rate adjustment in the prior period, HEPS increased 3%.

EPS declined 5.4% on a reported basis to 504c during the six months under review.

Net profit from associates and joint ventures declined 36.1% to R1.6-billion, negatively impacted by the one-off deferred tax rate adjustment in the prior corresponding period and foreign exchange translation headwinds; however, on a normalised basis, this grew 11.9%.

Operating profit for the six months ended September 30, 2021, contracted 2.8% to R14.05-billion, representing an increase of 5.7% on a normalised basis.

Ebitda expanded 3.3% on a reported – 5.7% on a normalised – basis to R20.07-billion during the period under review.

Meanwhile, group revenue of R49.9-billion was up 4.2%, as strong normalised growth of 7.9% was partially offset by rand appreciation, while group service revenue increased 1% on a reported basis and 5.4% on a normalised basis to R38.91-billion.

“We now service 129.9-million customers across the group, including Safaricom on 100% basis, a gain of 6.2-million customers in the period,” said Vodacom Group CEO Shameel Joosub.

“Our new service offerings continue to grow, contributing to increasingly diverse revenue streams, while at the same time delivering innovative new products to our customer base.

He cited the growth of new services, which encompass financial and digital services, the Internet of Things and fixed, which accounted for 17.6% of group service revenue having generated R6.9-billion in the six-month period.

Financial services revenue, the largest component of new services, was up 10.9% to R3.7-billion. However, growth was impacted by the strong rand, and on a normalised basis, growth was up 22.7%.

“Financial services is a clear strategic differentiator for the group and is integral to our purpose-led business model,” he said.

In South Africa, Vodacom reported service revenue growth of 3.6% driven by connectivity demand, an additional 1.1-million data customers, incremental wholesale revenue and growth in its new services.

“This was an impressive result given the demanding comparative associated with lockdowns in the prior period,” Joosub noted.

Vodacom Business delivered a strong performance during the six months to September, with service revenue increasing by 11.5% to R8.5-billion while revenue generated from financial services in South Africa increased by 15% to R1.3-billion.

“In the current financial year, we will invest more than R10.5-billion into our world-class network, in addition to the R47-billion we spent over the past five years alone. This is particularly relevant at a time when many of our customers continued to work, entertain, and educate from home,” he continued.

In the international operations, Vodacom achieved a strong recovery, with normalised service revenue growth up 9%, underpinned by a return to charging for M-Pesa transactions and strong data demand.

“Reported service revenue of R10.7-billion was down 6.1%, negatively impacted by the rand’s recovery.”

Safaricom delivered service revenue growth of 16.9% in the period, with M-Pesa’s contribution reaching 37.8% of service revenue.

“M-Pesa revenue was up 45.8% driven by strong platform growth, product adoption and greater value through updated peer-to-peer pricing from January 1, 2021. Safaricom’s new M-Pesa app has already attracted over two-million monthly active users since its launch in June 2021,” Joosub concluded.

Edited by Creamer Media Reporter

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