Vodacom has reported group revenue of R72,8-billion for the six months ended 30 September, up 35,5% compared to the same period last year and positively impacted by the acquisition of Vodacom Egypt.
Group service revenue saw growth of 42,2%, or 7,9% if Vodafone Egypt is excluded. Group service revenue growth including Vodafone Egypt on a pro-forma basis was 9%, at the higher-end of our medium-term target.
The group reported EBITDA growth of 35,1% or 5,5% on a pro-forma basis.
Vodacom currently serves 196,2-million customers across the group, including Safaricom on a 100% basis.
It has 73,5-million financial services customers, transacting $1-billion per day. Financial services revenue increased 39,9% to R6,2-billion contributing 10,5% to group service revenue.
Shameel Joosub, Vodacom Group CEO, comments: “The encouraging revenue trend highlighted in the Vodacom Group’s performance in the first three months of the financial year continued into the second quarter – highlighting a strong operating performance. However, higher interest rates, elevated levels of inflation and currency volatility across our markets had an impact on the Group’s earnings. We remain committed to delivering on our purpose-led strategy that aims to enhance societal value and deliver value to our customers. ”
He points out that, in South Africa, Vodacom not only responded to the country’s power crisis with an increased investment in network resilience but has also recently concluded a Virtual Wheeling Platform that aims to drive private sector investment into new energy generation.
“Given our commitment to making a positive impact on the country’s power grid and renewable energy mix, our agreement with Eskom serves as a blueprint for other corporates to adopt,” Joosub says.
“Our R4,5-billion investment over four and a half years to mitigate the impacts of loadshedding continues to show a return in South Africa, where we also committed, at the South Africa Investment Conference, to spend R60-billion in five years. These investments have already resulted in industry leading network availability during elevated levels of power outages and ultimately contributed to the 4% increase in service revenue in our largest market.
“Revenue growth in South Africa was supported by our consumer contract segment, excellent growth in fixed and financial services and a resilient performance in the prepaid segment, despite ongoing macroeconomic challenges associated with inflation and loadshedding. Supported by our investment into network resilience, data traffic growth accelerated to 45,2% in the period.”
New services in South Africa such as financial and digital services, fixed and IoT were up 18,1% and contributed R5,1-billion to revenue. Revenue from financial services grew 10,8% to R1,6-billion due to a strong performance from our insurance business. VodaPay continues to gain traction with more than 7,6-million downloads and 4,1-million registered users.
Vodafone Egypt, the largest acquisition in Vodacom Group’s history, delivered service revenue of R14,3-billion and contributed 24,1% of Group service revenue, despite challenging macroeconomics. The performance was supported by strong growth in data revenue, customer engagement and content integration. Vodafone Egypt ended the period with 47-million customers, up 5,5%, aided by its clear NPS leadership and strong data metrics.
Financial services revenue doubled to R804-million or 5.6% of Vodafone Egypt’s service revenue. Pleasingly, Vodafone Egypt contributed to Group earnings per share in the period, despite a devaluation of the Egyptian pound since the acquisition was announced in November 2021.
“Our International business segment, which comprises the DRC, Lesotho, Mozambique and Tanzania reported service revenue up 16,6% to R14,7-billion, with customers up 22,3%,” Joosub adds. “Strong growth of data revenue and M-Pesa revenue, which were up 34,9% and 26,8% respectively, was offset somewhat by pressure associated with Mozambique’s price transformation programme. M-Pesa revenue growth was driven by continued customer and service adoption, consistent with our commitment to financial inclusion. The strong performance in data revenue was underpinned by increased smartphone adoption and accelerating our 4G network roll-out.”
The recently-launched Ethiopian business, Safaricom Ethiopia, has made good progress since its commercial launch in October 2022, reaching 4,1-million customers. “More recently we launched M-Pesa, which will no doubt be a game-changer in boosting financial inclusion and economic growth in Africa’s second most populous country,” Joosub says.
“At a Vodacom Group level, Safaricom contributed R1,5-billion to operating profit, declining marginally at 1,1%. This was an encouraging outcome, given that we expect Safaricom Ethiopia EBITDA losses to peak in the current financial year.”
From a mergers and acquisitions perspective, the Competition Commission recently announced its recommendation to the Competition Tribunal to not recommend Vodacom’s proposed purchase of the 30% stake in MAZIV. “We are hopeful that the next step in the process, namely the Competition Tribunal process, will yield a different result,” Joosub says. “I firmly believe that the transaction will foster economic development and help bridge South Africa’s digital divide in some of the most vulnerable parts of its society.”