The Vodacom group reports that revenue of R53,7 billion for the six months ended 30 September 2022 was up 7,7%, supported by normalised growth of 5% and rand depreciation against a basket of international currencies.

Group service revenue growth was 7,2% in the period, with normalised growth accelerating to 4,9% in the second quarter.

Muted EBITDA growth of 0,6% (-1,8%) to R20,2-billion impacted by one-off factors and higher energy and network costs.

Financial services customers were up 10,2% to 63,1 million, including Safaricom on a 100% basis.

Headline earnings per share declined 9,5%, impacted by start-up losses in Ethiopia and higher finance costs as interest rates normalised to pre-Covid levels.

Net debt to EBITDA at 1.1 times reflects spectrum acquisition in South Africa and elevated network investment.

Shameel Joosub, group CEO of Vodacom, comments: “Despite ongoing financial market volatility and weaker prospects for the global economy, Vodacom Group’s resilient
revenue performance in the first quarter continued into the second quarter, evidenced by the 7,7% increase in group revenue to R53,7-billion in the first half of the current financial year.

“The war in Ukraine, which followed hard on the heels of a global health crisis, continues to result in increased inflationary pressures and elevated living costs in many countries across the world, including markets where Vodacom operates.

“Vodacom has attempted to absorb considerable inflationary costs from the dramatic increase in energy costs as far as possible and, as a purpose-led organisation, has sought to accelerate various initiatives to deliver even greater value to financially strained customers.

“These efforts, coupled with expected start-up costs associated with the recent launch in Ethiopia of a national telecommunications network through Safaricom Ethiopia, in which Vodacom holds a minority and which is accounted for as an associate, contributed to a 9,3% decline in earnings per share,” Joosub says.

“Encouragingly, the fact that it was recently announced that Safaricom Ethiopia will be awarded a financial services licence is expected to accelerate our ambition to transform lives in Africa’s second most populous country. We have already launched our network in 16 cities in Ethiopia with plans to expand services to 25 cities by April 2023, to reach our first milestone of 25% population coverage.

“We continue to transform lives in South Africa where we were recognised as a level one Broad-Based Black Economic Empowerment (B-BBEE) contributor for a fourth consecutive year and remain one of the JSE’s most transformed companies,” Joosub adds. “As Vodacom Group, we continue to make good progress in addressing climate change. In our role as a partner of the COP27 UN Climate Change Conference hosted in Egypt earlier this month, we reaffirmed our pledge of halving the Group’s environmental impact by 2025.

“One of our many purpose-led initiatives which I am particularly proud of is our mobile healthcare programme in Tanzania called ‘m-mama’, a service that provides emergency transport for pregnant and post-partum women,” he says. “Tanzania has one of the highest maternal mortality rates in the world, many of which could be prevented by reducing delays in receiving care. ‘M-mama’ is expected to save the lives of around 9 000 mothers and babies over the next five years. It is estimated that the service has already helped reduce the maternal mortality rate by 30% in the Lake Zone region in Tanzania, showcasing what the right partnerships and digital solutions can achieve.”

During the six months, Vodacom attracted an additional 3 million customers, bringing the total to a 132,6-million.

Our efforts to deepen financial inclusion continue to thrive, supported by the double-digit increase in financial services customers to 63,1-million (including Safaricom on a 100% basis),” Joosub says. “We are Africa’s leading fintech player measured by a processed transaction value of $355,2-billion over the last 12 months, up 17,6%.”

Accelerated growth of 39,3% in the second quarter saw M-Pesa revenue end the six-month period 25,2% higher at R3 billion, accounting for nearly a quarter of Vodacom’s International service revenues. In addition to M-Pesa’s recovery, strong data growth and foreign exchange tailwinds largely contributed to the 17,9% growth in service revenue from International operations to R12,6 billion.

“In South Africa, we invested R5,8-billion in our network – the most in a six-month period – to further enhance the customer experience at a time when the country experienced record levels of power outages,” says Joosub. “In the past two years, we invested over R2 billion in batteries alone to enhance the resilience of our network so that we keep customers connected during extended periods of load-shedding.

“At the same time, we continue to work closely with Eskom to find a renewable energy solution for the benefit of our planet and customers, having announced in September 2022 an in-principle agreement with South Africa’s energy utility to pilot a programme that would see Vodacom South Africa source its electricity from renewable independent power producers and contribute this into the national grid.”