Tuesday, 21 November, 2017

Vodacom records H1 uptick in headline earnings

Logo of Vodafone Logo of Vodafone
Kristine Garrett | 13 November, 2017, 20:26

Vodacom's results for the six months ended 30 September 2017 show that its earnings before interest and tax (EBIT) margin in South Africa has declined.

Capital expenditure was ZAR 5.4 billion, representing 12.8 percent of revenue, and headline earnings per share (HEPS) was up 1.1 percent to ZAR 4.45 per share. 4G customers on its network increased 62.8% to 6.0 million, while the average monthly data usage on smart devices increased 19.5% to 776MB.

In addition to increasing data network speeds and improving data coverage, the group said it retained a strong focus on providing customers with access to better, low-priced smart devices, by promoting Vodacom-branded devices.

The group added 4.3 million customers during the first half, 2.9 million in South Africa and 1.4 million in its global operations, to reach just over 71 million customers, up 11.8 percent.

Data bundle sales grew by 55.5% to 347 million, and the group said it has introduced new initiatives to improve the customer experience on out-of-bundle-data spend, and is "driving data-usage education to give customers more control".

According to the group, the biggest stumbling block behind high data prices remained the limited spectrum available to it.

Vodacom said Tanzania remains the leader in global operations with 61.7% of customers using M-Pesa. "On October 1, 2017, we further reduced out-of-bundle prices by up to 50%", he said. Service revenue declined by 4.8 percent to ZAR 8.3 billion in the first half; normalised for currency translation effects, growth was 5.5 percent.

"Without new spectrum we are forced to build more base stations to meet data growth demand".

Vodacom invested R3.9bn in its network and IT systems in South Africa in the six-month period.

Vodacom South Africa added 356 000 data customers to 19.9m, up 9.6% and now making up half the customer base.

"Additional spectrum will allow us to invest more efficiently and accelerate our rural coverage programme".

Customer growth for this service remains strong with 56% of customers using the service in Mozambique, 35.3% in Lesotho and 22.2% in the DRC. Exchange rate volatility continues to dent reported growth in worldwide operations. M-Pesa revenue grew 14%.

The telco added that its revenues from M-Pesa rose 14%. "Tanzania remains the leader in global operations with 61.7% of customers using M-Pesa", the report read.

Vodacom expected the Safaricom transaction to further drive M-Pesa development and penetration outside of South Africa.

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