South Africa's Vodacom half-year earnings inch up 1 percent

Olive Hawkins
November 13, 2017

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.

Headline earnings per share was up 1.1% to 445c and an interim dividend of 390c per share was declared.

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. 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.

The South African operations posted revenue growth of 7.7% on the back of stronger device sales, with service revenue rising 4.7% to R26.7-billion.

The group added 4.3 million customers during the first half, 2.9 million in South Africa and 1.4 million in its worldwide operations, to reach just over 71 million customers, up 11.8 percent. It continues to focus on improving data monetisation in all markets as demand grows rapidly.

Joosub added that the group had delivered on its promises to reduce data prices and addressing out-of-bundle prices.

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

In worldwide operations, the group said it normalised growth trends. Improved in-bundle usage has resulted in a 24.2% reduction in the effective price per megabyte, it said. "On October 1, 2017, we further reduced out-of-bundle prices by up to 50%", he said. "Over the six month period, we invested R3.9 billion to maintain our network lead and enhance our IT systems". Migration to the new "more data" contracts, which have a larger data allocation, accelerated to 25% of the base. Taking out exchange rate volatility growth would have been 5.5%. M-Pesa added 1.1 million customers in the first half of the year, reaching 14.8 million.

Data revenue in South Africa grew by 15% to R11.4bn, contributing 42.6% of service revenue, surpassing the contribution from voice for the first time, Vodacom said. M-Pesa revenue grew 14%. This was driven by both data and M-Pesa revenue. "Tanzania remains the leader in global operations with 61.7% of customers using M-Pesa", the report read.

"We will be driving further development of M-Pesa across all markets", added Vodacom.

The group's capital expenditure of R1.5bn was directed towards strengthening network and service differentiation and to support wider voice coverage and data growth.

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