Growth in Egypt and stable SA operations boost Vodacom’s first-half earnings

Vodacom has reported a strong first half, increasing headline earnings per share (HEPS) by a third, boosted by increased subscribers and a stellar performance from Egypt.

Normalised revenue for the six months ended September was up 13.6% to R65.8bn, which is tracking above the group’s medium-term target of double-digit growth.

HEPS grew 32.3% to 467c and the board declared an interim dividend of 330c per share, consistent with the group’s dividend policy of paying at least 75% of headline earnings.

Financial services revenue increased 20.3% to R8bn, contributing 12.2% to group service revenue. Service revenue grew 12.2% in rand terms and by 13.6% on a normalised basis.

Earnings before interest, tax, depreciation and amortisation (ebitda) were 14.7% higher at R30.5bn, and 14.8% on a normalised basis.

Watch: Vodacom CEO Shameel Joosub

Normalised growth adjusts for foreign currency fluctuation, hyperinflation accounting and excludes the impact of merger, acquisition and disposal activities.

CEO Shameel Joosub said the encouraging revenue trend highlighted in the group’s performance in the first three months of the financial year continued into the second quarter.

“This has contributed to a strong set of interim results while at the same time underscoring the resilience and agility of our business. In terms of delivering on our bold Vision 2030 ambitions, it means that we’re off to an ideal start in a half-year period characterised by a more stable macroeconomic and currency backdrop,” he said.

Vodacom’s ambition is to grow its customer base to over 260-million and its financial services customers to 120-million by financial year 2030, while delivering double-digit ebitda growth.

“The fact that we’ve expanded our customer base to 223.2-million and now serve 93.7-million financial services customers, shows that we are well on track to deliver on targets that reflect our relentless focus on digital and financial inclusion,” said Joosub.

In the first half Vodacom invested R9.4bn into technology and its networks, and plans to spend R23bn across its markets in the current financial year.

Including Safaricom, it has added 1,881 4G and 3,524 5G sites year-to-date.

Regional highlights for this period include Egypt’s 42.3% local currency service revenue growth, a stable performance in SA and a strong recovery from its international business, Joosub said.

Safaricom delivered an excellent performance on the back of another strong performance in Kenya and is continuing to scale in Ethiopia, he added.

“As we look ahead, while mindful of the global economic volatility, I am confident that our diversified portfolio, best-in-class digital and financial ecosystem, and purpose-led approach positions us well to capture the structural growth opportunity that Africa represents,” Joosub said.

Last week Vodacom settled its long-running Please Call Me matter with erstwhile employee Nkosana Makate through an arrangement out of court. This followed a protracted legal battle going back 17 years.