Vodacom reports full-year profit decline, but rise in service revenue

13th May 2019 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

Vodacom reports full-year profit decline, but rise in service revenue

JSE-listed Vodacom on Monday posted muted growth in earnings and a rise in service revenue for the financial year ended March 31.

The telecommunications giant reported earnings a share of 867c for the 12 months under review, an 8.7% decline on the prior year, along with a 6.6% year-on-year contraction in headline earnings per share (HEPS) to 862c.

“The financial impacts of delivering on our promise of further reducing the cost to communicate in South Africa, combined with costs associated with concluding our new R16.4-billion black economic empowerment (BEE) ownership deal, is evident in the subdued increase in our operating profit,” said Vodacom Group CEO Shameel Joosub.

“This masks an otherwise solid operational performance for the group, where service revenue grew by 5%, led by a strong performance in our international portfolio. Excluding one-off BEE costs, group HEPS rose by 4.2%,” he added in a statement prior to the group’s results presentation.

Group service revenue expanded to R74.2-billion, with the South African operations achieving a 2.1% increase to R55.7-billion and the international operations a 15.6% increase to R19.4-billion.

Group revenue increased by 4.3% to R90.1-billion.

Kenya’s Safaricom, in which Vodacom holds an interest of nearly 35%, reported a net profit of 14.7%, contributing R2.8-billion to Vodacom’s net profit, net of the amortisation of fair valued assets and before minority interest.

During the year to March 31, Vodacom reported an operating profit of R24.5-billion, up 1.1% year-on-year or 7.4% excluding a one-off noncash International Finance Reporting Standard 2 charge of R1.4-billion, and transaction costs of R124-million relating to the BEE deal.

The operations outside of South Africa contributed 23% to operating profit, up from 14% in 2018.

Meanwhile, Vodacom increased its subscriber base by 5.8% to 110-million across the group.

“We connected an additional six-million customers to the Vodacom and Safaricom networks, a 5.8% increase to 110-million in total. At the same time, we invested close on R13-billion in network and information technology infrastructure to ensure all customers benefit from superior service and network experience across our footprint,” Joosub said.