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Telecoms & Networks South Africa

Vodacom reports strong revenue increase on back of VodaPay and acquisitions

Vodacom announced a significant 26.4% increase in group revenue to R151bn for the fiscal year ending 31 March 2024. This growth was primarily driven by the company's strategic acquisition of Egypt and a resilient performance in South Africa, offsetting a challenging economic environment.
Shameel Joosub, Vodacom Group CEO
Shameel Joosub, Vodacom Group CEO

The telco reported a significant increase in its group service revenue, with a growth of 29,1%. This figure adjusts to 9,2% when considering it on a pro-forma basis, which includes the company’s operations in Egypt, indicating a strong performance and expansion of the company’s services.

In terms of Ebitda, the company has seen a growth of 24,3%, or 7,8% on a pro-forma basis. This is coupled with a robust free cash flow generation of R18,2bn. These financial figures have supported a lower leverage ratio of 0,9x net debt to Ebitda, which is a healthy financial position.

Financial services has seen the biggest increase of 32,2% to R13bn, contributing 10,8% to the group service revenue.

Local is not so lekker

“New services in South Africa were up 11.2% and contributed R10.2 billion, or 16.6% of service revenue. The 7.9% service revenue increase from financial services to R3.2bn was largely driven by our insurance business and payments, while Airtime Advance remained an important enabler of digital inclusion,” CEO Shameel Joosub explained in his shareholder statement.

He outlined that service revenue growth of 2.6% in South Africa was primarily due to new services, the consumer contract segment, and prepaid mobile data.

However, he also noted that this was somewhat counterbalanced by pressure in Vodacom Business. This was a result of corporate customers adjusting their spending as a response to the shift away from 'Work From Home' policies.

“The traction and transaction volume growth that our VodaPay super-app continues to attract is particularly pleasing having ended the period with 10.4 million downloads and 5.8 million registered users, reflecting an increase of 83.0% and 79.4%, respectively.”

Infrastructure play

From an infrastructure investment perspective, Vodacom spent R11.1bn to bolster network resilience, take advantage of their new spectrum assets, and improve their IT platforms.

This was all part of their strategy to maintain their competitive edge and continue being the most reliable network in South Africa.

The company also mentioned their proposed acquisition of a stake in the South African fibre company, Maziv, as part of a joint venture.

With this move is expected to provide affordable connectivity access in some of the country’s most vulnerable areas through an ambitious fibre roll-out programme, thereby helping to bridge the country’s digital divide.

However, this transaction is currently under review by the Competition Tribunal, with hearings set to begin on 20 May 2024.

During these hearings, Vodacom plans to highlight the strong public interest and the pro-competitive benefits that the transaction would bring to the fibre market and the country as a whole.

Three decades of experience

Vodacom celebrated its 30th anniversary by surpassing the 200 million customer milestone, highlighting its extensive reach across Africa.

Despite the positive results, Vodacom faced challenges such as start-up losses in Ethiopia, increased finance and energy costs, inflationary pressures, and weaker exchange rates.

These factors contributed to a 10.8% decline in headline earnings per share

Looking ahead, Vodacom says it remains optimistic about its growth prospects. The company plans to focus on its Vision 2025 targets, further develop its transition, and accelerate growth in mobile and fixed connectivity, handset financing, and digital and financial services.

"Our efforts to diversify the group's footprint and product mix will unlock strong returns over the medium term,” said Joosub.

“Despite the economic backdrop, we remain committed to investing in technology and network infrastructure to enhance customer experience."

About Lindsey Schutters

Lindsey is the editor for ICT, Construction&Engineering and Energy&Mining at Bizcommunity
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