Vodacom Group Limited, one of South Africa’s leading telecommunications companies, has released its interim financial results for the six months ending September 30, 2023. The company reported impressive growth in various key metrics and declared an interim dividend for its shareholders. In this article, we delve into the details of the company’s performance, highlighting key financial figures and strategic initiatives.
Vodacom Group recorded a substantial increase in its group revenue, reaching R72.8 billion. This represents a remarkable 35.5% growth, largely driven by the recent acquisition of Vodafone Egypt. This acquisition has had a substantial positive impact on the company’s top-line growth.
The company’s service revenue also experienced robust growth, expanding by 42.2% during the reporting period, with a 7.9% growth rate when excluding the contribution from Vodafone Egypt. Even more impressively, when looking at pro-forma results, which adjust for merger, acquisition, and disposal activities as if they had occurred earlier, the group’s service revenue growth stood at a commendable 9.0%. This is at the higher end of the company’s medium-term target, demonstrating a commitment to delivering strong results.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 35.1% or 5.5% on a pro-forma basis, indicating that the company has been able to maintain strong profitability as it expands and takes on new ventures.
Vodacom Group continues to serve an impressive number of customers, with a combined total of 196.2 million customers across all its markets, including Safaricom. This customer base is a testament to the company’s ability to provide services that meet the needs of a diverse range of users.
Financial services have been a focal point of Vodacom’s strategy, and the results show that this approach is paying off. The company’s financial services customer base, including Safaricom, has reached 73.5 million, and these customers are transacting an astounding US$1 billion per day. Financial services revenue has increased by 39.9% to R6.2 billion, contributing 10.5% to the group’s service revenue. This success indicates the increasing demand for mobile financial services in the regions where Vodacom operates.
Let’s take a detailed look at Vodacom Group’s financial performance, with key figures for the six months ended September 30, 2023, compared to the same period in 2022.
Group Statutory Performance Measures
| Metric | 2023 (Rm) | 2022 (Rm) | % Change |
|---|---|---|---|
| Revenue | 72,798 | 53,713 | 35.5 |
| Service Revenue | 59,350 | 41,729 | 42.2 |
| Net Profit from Associates and JVs | 1,348 | 1,466 | -8.0 |
| Operating Profit | 17,013 | 13,268 | 28.2 |
| Net Profit | 9,968 | 8,072 | 23.5 |
| Earnings per Share (cents) | 434 | 457 | -5.0 |
| Headline Earnings per Share (cents) | 438 | 457 | -4.2 |
| Interim Dividend per Share (cents) | 305 | 340 | -10.3 |
Group Additional Performance Measures
| Metric | 2023 (Rm) | 2022 (Rm) | % Change |
|---|---|---|---|
| EBITDA | 27,286 | 20,200 | 35.1 |
| EBITDA Margin (%) | 37.5 | 37.6 | -0.1ppt |
| Capital Expenditure | 9,542 | 7,599 | 25.6 |
| Capital Intensity (%) | 13.1 | 14.1 | -1.0ppt |
| Operating Free Cash Flow | 7,168 | 4,806 | 49.1 |
| Free Cash Flow | -181 | 2,028 | -108.9 |
| Financial Services Revenue | 6,176 | 4,414 | 39.9 |
Vodacom Group has declared an interim dividend of 305 cents per ordinary share in respect of the six months ending September 30, 2023. This dividend will be payable on Monday, December 4, 2023, to shareholders recorded in the register at the close of business on Friday, December 1, 2023. The dividend will be subject to a local dividend withholding tax rate of 20%, resulting in a net ordinary dividend of 244 cents per ordinary share for shareholders not exempt from paying dividend withholding tax.
Vodacom’s CEO, Shameel Joosub, expressed his satisfaction with the company’s performance, highlighting the encouraging revenue trend in the first three months of the financial year. He acknowledged the impact of higher interest rates, elevated inflation levels, and currency volatility across their markets, which had an effect on the company’s earnings. Joosub reaffirmed Vodacom’s commitment to its purpose-led strategy, emphasizing their aim to enhance societal value and deliver value to their customers.
Joosub shared the company’s focus on creating a digital society and ensuring inclusion for all while being mindful of their environmental impact. He noted recent accolades, such as winning the Ask Afrika Orange Index Award for exceptional customer service and being named the country’s ‘Most Reliable Network’ and ‘Best In Test’ by independent benchmarking organization ‘Umlaut’. ‘Umlaut’ has also ranked Vodafone Egypt, Vodacom Mozambique, and Safaricom as ‘Best In Test’, while customers across their markets have ranked Vodacom first in network Net Promoter Scores (NPS).
In terms of Vodacom’s purpose-led initiatives, education is a critical area in which the company continues to make significant strides. Vodacom is actively working with regulators, governments, and industry stakeholders to ensure that digital education enables all learners and teachers, regardless of their circumstances, to access quality education and participate in the global digital economy. The company’s education solutions have reached 2.3 million learners across their markets.
Vodacom’s investments in network resilience have also been crucial, with a commitment to making a positive impact on the country’s power grid and renewable energy mix. The agreement with Eskom to drive private sector investment into new energy generation serves as a blueprint for other corporates to adopt.
Joosub expressed his pleasure with the accelerated growth of Vodacom’s financial services portfolio, driven by an expanding mobile money ecosystem, Vodafone Egypt’s performance, and the resilience of Vodacom South Africa. These elements have significantly contributed to the 35.5% increase in Group revenue, with Vodafone Egypt providing the biggest boost to growth due to its recent inclusion in the Vodacom Group. Revenue from new services such as financial and digital services, fixed, and IoT has contributed almost one-fifth of the Group’s total revenue, aligning well with their medium-term targets.
Joosub noted the company’s R4.5 billion investment over four and a half years to mitigate the impacts of load shedding, which has already resulted in industry-leading network availability during power outages. Vodacom has also committed to spending R60 billion in five years, supporting its investment into network resilience and growth.
The CEO expressed his satisfaction with the performance of Vodafone Egypt, the largest acquisition in Vodacom Group’s history, which delivered significant service revenue and contributed to Group earnings per share. Despite the devaluation of the Egyptian pound, Vodafone Egypt has shown its potential for growth.
Vodacom’s International business segment, comprising the DRC, Lesotho, Mozambique, and Tanzania, reported strong growth in service revenue, driven by data revenue and M-Pesa. The company’s commitment to financial inclusion has paid off, with robust growth in M-Pesa revenue and data revenue, fueled by increased smartphone adoption and the expansion of the 4G network.
Safaricom, the Kenyan subsidiary, delivered excellent results, with service revenue accelerating to 8.5%, supported by growth in the fixed business and improved M-Pesa revenue performance. The Ethiopian business, Safaricom Ethiopia, has made remarkable progress since its commercial launch and is poised to drive financial inclusion and economic growth in the country.
In light of recent developments in mergers and acquisitions, Vodacom is hopeful that the Competition Tribunal process will yield a different result in its proposed purchase of the 30% stake in MAZIV. The company believes this transaction has the potential to foster economic development and bridge South Africa’s digital divide.
Vodacom Group’s strong financial performance and strategic initiatives are positioning the company for continued growth and impact in the markets it serves. The company’s commitment to enhancing societal value, promoting digital education, and expanding financial services are central to its future plans.
As Vodacom focuses on delivering value to its customers and creating a digital society, the company’s investments and acquisitions are expected to fuel further growth, bringing essential services and connectivity to an even broader audience. By providing access to smartphones, financial services, healthcare, and education to individuals across their markets, Vodacom is poised to fulfill its purpose and contribute to addressing inequality.
This website uses cookies.
