Vodacom, South Africa’s largest telecommunications operator, faced a 4.2% decline in half-year earnings for the period ending on September 30. This downturn was attributed to start-up losses in Ethiopia, increased interest rates, and the recognition of a deferred tax asset in Tanzania from the previous year.
The company disclosed that headline earnings per share (HEPS), considered South Africa’s true profit indicator, fell to 438 cents during the six months compared to 457 cents in the same quarter a year earlier.
Vodafone Egypt contributed 16 cents to HEPS.
Despite the challenges, Vodacom reported a substantial increase in revenue for the quarter, reaching R72.8 billion, a 35.5% surge. This boost was primarily driven by the acquisition of Vodafone Egypt, which marked the largest in Vodacom Group’s history.
Vodafone Egypt, despite facing challenging macroeconomic conditions, contributed significantly, generating service revenue of R14.3 billion and constituting 24.1% of the group’s service revenue.
The success was attributed to robust growth in data revenue, customer engagement, and content integration. Vodafone Egypt concluded the period with 47 million customers, a 5.5% increase, bolstered by its clear NPS leadership and strong data metrics. Financial services revenue also doubled to R804 million, comprising 5.6% of Vodafone Egypt’s service revenue.
Shameel Joosub, Vodacom Group CEO, expressed satisfaction that Vodafone Egypt contributed to group earnings per share, despite the devaluation of the Egyptian pound since the acquisition announcement in November 2021.
Overall, the group’s service revenue witnessed a notable growth of 42.2% to nearly R59.4 billion over the six months, primarily influenced by the acquisition of Vodafone Egypt and a 12% rand depreciation against the international currency basket. Excluding Vodafone Egypt’s contribution, the group’s service revenue grew by 7.9%, or 4.1% on a normalized basis, supported by a resilient performance in South Africa.
In South Africa, service revenue grew by 4% to R30.7 billion, a commendable result considering ongoing macroeconomic challenges. The growth was driven by new services such as financial and digital services, fixed, and IoT, which increased by 18.1%, contributing R5.1 billion, or 16.6% of South Africa’s service revenue.
Vodacom’s international business segment, including the Democratic Republic of Congo, Lesotho, Mozambique, and Tanzania, reported a service revenue increase of 16.6% to R14.7 billion, with a 22.3% rise in customers. Strong growth in data revenue (34.9%) and M-Pesa revenue (26.8%) was somewhat offset by challenges related to Mozambique’s price transformation program.
As a consequence of these financial dynamics, the board declared an interim dividend per share of 305 cents, representing a 10.3% decrease.