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Vodacom adds 6.2m customers across the group

Of which around 1.1m were new data customers in home-base South Africa.
Image: Waldo Swiegers, Bloomberg

Vodacom Group – the JSE-listed telecommunications (telco) giant that is looking to transform into a tech company (techco) – revealed in its latest results published on Monday that it added 6.2 million customers during the half-year ending September 30, 2021.

This is for the group’s entire operations across Africa, including Safaricom on a 100% basis.

The increase takes Vodacom’s combined customer based to 129.9 million and within striking distance of the 130-million milestone, which is likely to be surpassed during the current financial year.

South Africa’s largest mobile network operator also noted in the results that it had secured an additional 1.1 million data customers in the country (part of the overall 6.2 million growth in its customer-based).

Vodacom reported group revenue of R49.9 billion, up 4.2%, for the half year. It noted that strong normalised growth of 7.9% was partially offset by rand appreciation.

Normalised growth presents performance on a comparable basis. This excludes tax related adjustment where applicable and adjusting for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using the current year as base) to show a like-for-like comparison of results.

“Normalised group service revenue and group operating profit growth of 5.4% and 5.7% respectively, is in line with our medium-term targets,” Vodacom said in its results statement.

Listen to Vodacom CEO Shameel Joosub speaking about the group’s latest planned acquisitions (or read the transcript): 

“Net profit from associate and joint ventures declined 36.1% [+11.9% on a normalised basis] to R1.6 billion, negatively impacted by an R805 million one-off deferred tax rate adjustment in the prior period and foreign exchange translation headwinds,” the group added.

“The adjustment related to the decrease of the corporate tax rate in Kenya, which fell from 30% to 25%. At a net income level, and after the impact of non-controlling interests, the adjustment was R705 million,” Vodacom pointed out in a footnote.

Vodacom posted a headline earnings per share (Heps) decline of 5.1% for the half-year. However, it clarified that when this is “adjusted for the one-off deferred tax rate adjustment” in the prior period, Heps grew 3%.

The group declared an interim dividend of 420 cents per share, which was up 1.2% on the corresponding half-year.

Vodacom, which announced two major and strategic acquisitions just last week, said that the two “material M&A transactions” would accelerate its growth and returns profile.

Read:
Vodacom to buy Egypt unit from parent in R40.86bn deal
Vodacom to buy into Vumatel, Dark Fibre Africa in R13.2bn deal

Commenting on the latest results, Vodacom Group CEO Shameel Joosub said that the group’s decision to diversify its geographic exposure continues to pay dividends.

“Our strategic investment in Kenya’s Safaricom in 2017 has proven to be value accretive, generating an annual total shareholder return of 26%….

“Significantly, we recently announced two transformative acquisitions to further enhance the group’s growth and return profile,” he noted.

“In Egypt, we intend to acquire a controlling share in Vodafone Egypt, a clear market leader with a track record of strong growth and attractive returns. Vodafone Egypt’s growth outlook is supported by a network and spectrum advantage versus peers, market leadership in both the consumer and enterprise segments and a brand synonymous with technology leadership…”

“Separately, in South Africa, Vodacom announced the acquisition of 30% of Community Investment Ventures Holdings (Pty) Limited’s (CIVH) market leading fibre subsidiaries, with an option to increase the stake to 40%. This transaction marks a major step forward in diversifying our connectivity offering, optimising our assets through sharing costs and accelerating fibre reach in South Africa to help bridge the digital divide,” he added.

On the financial performance side, Joosub said that in South Africa, Vodacom “delivered service revenue growth of 3.6% driven by connectivity demand, an additional 1.1 million data customers, incremental wholesale revenue and growth in new services”.

“This was an impressive result given the demanding comparative associated with lockdowns in the prior period. Vodacom Business delivered another strong performance in the period under review, with service revenue increasing by 11.5% to R8.5 billion while revenue generated from financial services in South Africa increased by 15% to R1.3 billion,” he pointed out.

Read: Telkom burning through cash as warning signs pile up

“In the current financial year, we will invest more than R10.5 billion into our world-class network, in addition to the R47 billion we spent over the past five years alone. This is particularly relevant at a time when many of our customers continued to work, entertain, and educate from home,” he added.

“Looking ahead, we are focused on the development of our diverse service offerings and M&A deal completion as we continue our exciting evolution from a telco to a techco,” said Joosub.

Vodacom’s share price closed just over 1.2% weaker on Monday at R138.32.

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