Vodacom Group has reported group revenue up 8,3% to R98,3-billion, supported by service revenue growth of 5,8%, in its preliminary results for the year ended 31 March 2021.
South Africa service revenue grew 7%, with consistent growth through the financial year.
Vodacom added 8,2-million customers during the year, and now serves a combined 123,7-million customers across the group, including Safaricom.
The number of financial services customers, including Safaricom, up 12,9%, or 6,6-million new subscribers, to 57,7-million.
The group has posted that earnings per share are up 4,2% and headline earnings per share are up 3,7%,, and it has declared a final dividend of 410cps.
Shameel Joosub, Vodacom Group CEO, comments: “In a year unavoidably shaped by the devastating impacts of the global health crisis, Vodacom Group accelerated the delivery of our social contract with stakeholders to ensure we made meaningful contributions in markets where we operate.
“Vodacom Group has been at the forefront of helping governments curb the spread of Covid-19 where we operate, having swiftly responded earlier this year through strategic partnerships with the likes of Discovery Health and Microsoft, and a wide range of initiatives including free devices and airtime for healthcare workers, accelerating support to governments via donations of handsets, connectivity and medical equipment, and making contactless payments more accessible through zero-rated services and an expanded M-Pesa ecosystem to address social distancing challenges.
“Alongside the Vodafone Foundation, we recently announced a R74 million financial pledge to support the roll-out of cold-chain technology and provide logistics support to ensure the safe delivery of Covid-19 vaccines to vulnerable and hard-to-reach communities in South Africa, DRC, Mozambique, Ghana and Tanzania.
“We also made a R13-million donation to Lesotho to assist with securing vaccines for the Basotho people. We have partnered with AUDA – NEPAD to build digital infrastructure to manage the distribution of Covid-19 vaccinations in up to 55 countries, following successful deployments in South Africa, leveraging our mVacciNation platform.
These latest initiatives are over and above the R2-billion service revenue impact of zero-rating peer-to-peer (P2P) M-Pesa transactions in our International markets, a R3-billion service revenue impact of lowering data pricing in South Africa and the R176-million cash and in-kind donations made by the Vodacom and Vodafone Group Foundations in response to the Pandemic,” he adds.
“We are proud to be standing shoulder to shoulder with the African Union and national governments to provide practical support for what is an enormous logistical challenge for resource-limited African countries with significant rural populations.
Given the sudden shifts in customer behaviour patterns, we invested heavily in the resilience of our networks to cope with significant increases in mobile data traffic volumes to keep families connected, enable businesses to operate, facilitate online learning and assist governments in providing critical services. We invested R13,3-billion in network infrastructure during the year, including R10,1-billion in South Africa, and as a Group we have invested R62,4-billion into our networks over the past five years.
“Customers in South Africa have also taken advantage of ConnectU, which provides zero-rated access to a wide range of websites, including job portals and online learning platforms and discounted offers for poor communities, as well as the significant data price cuts implemented on 1 April 2020 and the recently announced 14% decline in our headline monthly data price to R85 per Gigabyte as part of our ongoing commitment to reduce the cost to communicate.”
Joosub adds: Underpinned by the recovery in our International portfolio in the second half of the year and strong growth from our prepaid and Enterprise segments, Financial Services and other new services in South Africa, the Vodacom Group reported a 5,8% increase in service revenue and an 825 cents per share total ordinary dividend per share. This is particularly pleasing in a difficult trading environment and is testament to the rapid manner in which the company and its employees adapted to the crisis.
“In South Africa, service revenue grew by 7% on the back of increased data usage, our highly successful summer campaign and demand for financial services – collectively helping to offset numerous initiatives aimed at delivering greater value to customers, including tariff reductions of up to 40% at the beginning of the financial year and the successful launch of Vodabucks, our behavioural loyalty programme.”
The group’s International operations reported muted service revenue growth of 1,6% in the year, with a stronger second half helping offset the significant impacts of COVID-19 earlier in the year.
“This performance was characterised by disruption to our commercial activities as a result of the informal structure of the economies in which we operate, currency volatility, increased pressure on consumer spend, free M-Pesa P2P transactions and the impact of service barring in Tanzania due to biometric registration compliance,” says Joosub.
“Zero-rating P2P M-Pesa transactions for the majority of the financial year was the right thing to do for our customers and facilitated economic activity. This initiative introduced the M-Pesa ecosystem to a significantly broader base and continues to support accelerated platform growth and customer adoption of digital channels.
“Through M-Pesa, we now process $24,5-billion (R366,4-billion) a month in transaction value across our International markets, including Safaricom, up 63,5%. We serve 57,7-million financial services customers, including Safaricom, generating revenue of R19,3-billion in the year.
“From January 2021, all our markets, including Safaricom, re-implemented P2P charging. Our strategic investment in Safaricom comprised almost 13% of our operating profit in the year. Safaricom’s local currency results reflected the impact of depressed economic activity and free M-Pesa P2P transfers, related to the Covid-19 pandemic.
“Positively, Safaricom’s commitment to its strategic goals, supported strong platform growth for M-Pesa and higher connectivity usage. This supported a notable recovery in service revenue growth through the financial year, with fourth quarter growth at 6,4%.”
Looking forward, while being cognisant that disposable income will remain under pressure, Vodacom is increasingly optimistic about improved growth prospects for its International operations, Joosub says. “In South Africa, the allocation of temporary spectrum has supported network capacity and highlights the urgent need for high demand spectrum to be allocated through ICASA’s ITA process. We continue to see the assignment of high demand spectrum as instrumental to data pricing.”