Vodacom Group has reported revenue of R49,9-billion for the six months ended 30 September 2021, up 4,2%, as strong normalised growth of 7,9% was partially offset by rand appreciation.
The group added 6,2-million customers to bring its total to 129,9-million across the group, including Safaricom.
Normalised group service revenue and group operating profit growth were 5,4% and 5,7% respectively, in line with the group’s medium-term targets.
Net profit from associate and joint ventures declined 36,1% (+11,9%*) 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 M-Pesa platform, including Safaricom, processed $301,9-billion in transaction value over the last 12 months, with transaction value up 31,2% in the second quarter.
Headline earnings per share declined 5,1%, but when adjusted for the one-off deferred tax rate adjustment in the prior period, grew 3%.
The group has announced an interim dividend of 420cps, up 1,2%.
Shameel Joosub, Vodacom Group CEO comments: “I am extremely proud of the way Vodacom has held steadfast to its purpose of connecting people for a better future throughout the global health crisis.
“Cognisant of our ongoing duty to step up and make a societal difference, we assisted governments and communities in Africa through the deployment of a wide range of ‘tech for good’ solutions that help mitigate the effects of the pandemic and bridge the digital divide.
“One of the most impactful of these initiatives is our partnership with the African Union Development Agency to accelerate the Covid-19 vaccine roll-out across the continent through our mVacciNation technology platform,” Joosub adds. “Additionally, we are providing cold chain technology and logistical support to our markets to ensure the safe delivery of Covid-19 vaccines.
“Outside of the pandemic, Vodacom and the Vodafone Foundation launched a fund to support communities in the DRC devastated by the volcanic eruption of Mount Nyiragongo. In South Africa, we assisted communities that were affected by the social unrest in July 2021 and have accelerated efforts to assist impacted SMEs.”
He says that Vodacom’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.
“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.
“In addition, Vodacom sees scope to create significant value by scaling the Group’s multi-product strategy called the System of Advantage into Egypt. A key element of our System of Advantage is financial services and with more than 80% of Egypt’s 100-million population unbanked, Vodacom sees a compelling opportunity to leverage our financial services platforms into Egypt,” says Joosub.
“Separately, in South Africa, Vodacom announced the acquisition of 30% of Community Investment Ventures Holdings’ (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 adds that delivering on its strategy and medium-term targets while continuing to deal with the widespread effects of the Covid-19 pandemic bears testament to the depth and strength of talent in the Vodacom business.
“Last month we commercially launched our highly anticipated VodaPay super-app in support of greater digital and financial inclusion, and together with our M-Pesa app roll-out, we have cemented our position as Africa’s largest fintech platform by subscribers.
“From a financial perspective, the Group’s service revenue increased 5,4% while operating profit increased 5.7%*, both on a normalised basis. Our dividend per share was 420 cents, up 1,2%. We now service 129,9-million customers across the Group, including Safaricom on 100% basis, a gain of 6,2-million customers in the period.”
The Vodacom service offerings continue to grow, contributing to increasingly diverse revenue streams. Collectively, new services, which encompass financial and digital services, the Internet of Things (IoT) and fixed, accounted for 17,6% of Group service revenue having generated R6,9-billion in the six-month period.
Financial services revenue, the largest component of new services, was up 10,9% to R3,7-billion. Growth was impacted by the strong rand, and on a normalised basis, growth was up 22,7%.
“In South Africa, we delivered service revenue growth of 3,6% driven by connectivity demand, an additional 1,1-million data customers, incremental wholesale revenue and growth in our new services,” Joosub says.
“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.
“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,” he adds.
“This is particularly relevant at a time when many of our customers continued to work, entertain, and educate from home.”
International operations delivered a strong recovery, with normalised service revenue growth up 9%, underpinned by a return to charging for M-Pesa transactions and strong data demand. Reported service revenue of R10,7-billion was down 6,1%, negatively impacted by the rand’s recovery.
Safaricom delivered service revenue growth of 16,9% in the period, with M-Pesa’s contribution reaching 37,8% of service revenue. M-Pesa revenue was up 45,8% driven by strong platform growth, product adoption and greater value through updated peer-to-peer pricing from 1 January 2021. Safaricom’s new M-Pesa app has already attracted over 2-million monthly active users since its launch in June 2021.