Telecom giant Vodacom experienced a dip in profit and lowered its interim dividend as the start-up costs of the recent launch of a national network in Ethiopia hit its results.
The net profit of the company, valued at R236.57bn on the JSE, decreased 9% to R8.07bn in the six months end-September. It declared an interim dividend of 340c per share, 19% lower year on year.
Vodacom-affiliate Safaricom is starting the network in Ethiopia that is now available in 16 cities with plans to extend it to 25 by April 2023.
“Encouragingly, the fact that it was recently announced that Safaricom Ethiopia will be awarded a financial services licence is expected to accelerate our ambition to transform lives in Africa’s second most populous country,” Vodacom Group CEO Shameel Joosub said.
In terms of financials, headline earnings per share (Heps), a widely used measure of profit that strips out impairments and one-off items, dropped 9.5% to 457c, affected by the start-up losses in Ethiopia and higher finance costs as interest rates normalised to prepandemic levels.
Joosub noted the effect of high inflation, largely because of the war in Ukraine, on its business as customers faced higher living costs after the Covid-19 pandemic.
“Vodacom has attempted to absorb considerable inflationary costs from the dramatic increase in energy costs as far as possible and, as a purpose-led organisation, has sought to accelerate various initiatives to deliver even greater value to financially strained customers,” he said.
Group revenue increased 7.7% year on year to R53.7bn and service revenue rose 7.2% to R41.7bn. Three-quarters of group revenue was generated in SA.
The number of customers grew 2.1% to 132.6-million. Most of the total customers are in SA (34.31%), followed by international (33.11%) and Safaricom making up the rest. The average user in SA used 124 minutes and brought in R91 in revenue per month.
The financial services customer base jumped by just over one-tenth to 63.1-million. These services include point-of-sales, legal cover, payment solutions and device cover.
Vodacom invested R5.8bn in its SA network to improve customer experience and has spent R2bn on batteries over the past two years to ensure customers remain connected during load-shedding.
“We continue to work closely with Eskom to find a renewable energy solution for the benefit of our planet and customers, having announced in September 2022 an in-principle agreement with SA’s energy utility to pilot a programme that would see Vodacom SA source its electricity from renewable independent power producers and contribute this into the national grid,” Joosub said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.