Safaricom acquisition helps Vodacom buck low growth trend

Doris Richards
November 13, 2017

In the six months ended September 30, group earnings before interest and taxes contracted by 0.2% to R10.8-billion, as a result of higher growth in depreciation and amortisation charges.

Vodacom, which is still being investigated by the Competition Commission for suspected market dominance, declared an interim dividend per share of 390 cents, slight lower than the previous year.

Vodafone consolidated two of its African interests in May with the transfer of a 35 percent stake in Kenya's Safaricom to majority-owned South African subsidiary Vodacom.

Revenue growth was up 7.7% to R33.9bn. Tanzania is delivering its turnaround strategy, accelerating revenue and customer growth, while Mozambique and Lesotho have executed a number of commercial actions, driving strong growth momentum. Data bundle sales grew by 55.5% to 347m.

Contract customers increased by 107,000 in the time period, up to 5.2 million. Data revenue declined by 2.7 percent, with normalised growth of 6.6 percent, supported by an increase of 1.8 million data customers, to 14.8 million, up 23.3 percent.

Data revenue grew 15.0% to R11.4 billion, contributing 42.6% of service revenue surpassing the contribution of voice revenue.

The capital expenditure of R3.9bn was directed to maintaining its network lead, supporting the widest coverage and fastest internet and to enhance the group's IT systems. It now claims to have 76.7% 4G and 99.3% 3G population coverage, compared to 68.7% 4G coverage a year ago.

Group revenue grew by 4.6% to R42bn, while normalised growth, excluding currency translation effects, was 6.9%. Service revenue declined by 4.8% to R8.3bn. Exchange rate volatility continues to dent reported growth in global operations. This was driven by both data and M-Pesa revenue.

Revenue for global operations declined 5.2% and service revenue declined 4.8%; however, on a normalised basis, revenue and service revenue grew 5% and 5.5% respectively. M-Pesa revenue grew 14%.

The company added 356,000 data customers in South Africa to 19.9 million, up 9.6% - or half of the mobile customer base. "Tanzania remains the leader in worldwide operations with 61.7% of customers using M-Pesa", the report read. "We expect that the Safaricom transaction will further drive M-Pesa development and penetration outside of South Africa", it said.

Other reports by Iphone Fresh

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