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

Reuters

Reuters

Normalised growth, excluding currency translation effects, was 6.9%, while group service revenue grew 2.0% to R34.7 billion.

The Safaricom acquisition contributed R349m to profit for the first two months, the report read.

Regarding its operations in South Africa, the group's service revenue increased 4.7% to R26.7bn, boosted by "stronger customer gains" and growth in its data and enterprise services.

Headline earnings per share (HEPS) up 1.1% to 445 cents per share, and the company declared an interim dividend per share of 390 cents.

The company said it maintains its target of mid-single digit service revenue growth, as well as earnings before interest and tax growth in the mid-to-high single digits over the next three years.

"These are promises that we have delivered on, with effective data prices decreased by 24.2% during the six-month period".

Net profit increased 7.0% to R6.712 billion, boosted by the Safaricom acquisition, Vodacom said.

Meanwhile, Vodacom added 4.3-million customers during the first half of the year, increasing its customers to more than 71-million. On 1 October 2017 we further reduced out-of-bundle prices by up to 50%.

Regarding its worldwide operations, exchange rate volatility negatively impacted growth. Migration to the new "more data" contracts, which have a larger data allocation, accelerated to 25% of the base.

Vodacom invested R3.9bn in its network and IT systems in South Africa in the six-month period.

"Additional spectrum will allow us to invest more efficiently and accelerate our rural coverage programme". 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. Exchange rate volatility continues to dent reported growth in worldwide operations. Normalised revenue growth was 4.6%.

Vodacom South Africa added 356 000 data customers to 19.9m, up 9.6% and now making up half the customer base.

The company battled unfavourable currency headwinds, which took some shine off its global operations, with revenue and service revenue declining 5.2% and 4.8%, respectively.

It added that customer growth in all markets remained strong, with 56% of customers now using this service in Mozambique, 35.3% in Lesotho and 22.2% in the DRC. M-Pesa revenue grew by 14.0 percent, with normalised growth of 27.2 percent.

"We expect that the Safaricom transaction will further drive M-Pesa development and penetration outside of South Africa".

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