Vodacom Group, the JSE-listed telecommunications giant (telco) seeking to transform itself into a technology company (techco), revealed in its latest results published on Monday that it has added 6.2 million customers during the semester ending on September 30, 2021.
This is for all of the group’s operations in Africa, including 100% Safaricom.
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The increase brings Vodacom’s combined customer base to 129.9 million and a surprising distance from the 130,000 milestone, which is likely to be exceeded during the current financial year.
South Africa’s largest mobile network operator also noted in the results that it had secured 1.1 million additional data customers in the country (part of the overall 6.2 million growth in its customer base).
Vodacom reported group revenue of R49.9 billion, up 4.2%, during the half. He noted that the strong normalized growth of 7.9% was partially offset by the appreciation of the rand.
Normalized growth shows a return on a comparable basis. This excludes the tax related adjustment where applicable and the adjustment for foreign exchange trading, the fluctuation of the foreign currency on a constant currency basis (using the current year as the basis) to show a comparable comparison of results.
“The normalized group service revenue and the group’s operating profit growth of 5.4% and 5.7% respectively, are in line with our medium-term objectives,” Vodacom said in its earnings statement.
Hear Vodacom CEO Shameel Joosub discussing the group’s latest planned acquisitions (or read the transcript):
“The net income of associates and joint ventures decreased 36.1% [+11.9% on a normalised basis] to R1.6 billion, negatively impacted by a one-time adjustment to the deferred tax rate of R805 million in the prior period and the headwinds of currency conversion, ”added the group.
“The adjustment was related to the decrease in the corporate tax rate in Kenya, which fell from 30% to 25%. At the level of net profit, and after the impact of minority interests, the adjustment was R705 million, ”Vodacom pointed out in a footnote.
Vodacom posted an overall decline in earnings per share (Heps) of 5.1% during the half. However, he clarified that when “adjusted for the one-time adjustment of the deferred tax rate” in the previous period, Heps grew 3%.
The group declared an interim dividend of 420 cents per share, which increased 1.2% in the corresponding semester.
Vodacom, which announced two major and strategic acquisitions last week, said the two “major M&A transactions” would accelerate its growth and profitability profile.
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Commenting on the latest results, Vodacom Group CEO Shameel Joosub said the group’s decision to diversify its geographic exposure continues to pay dividends.
“Our strategic investment in Safaricom Kenya in 2017 has proven to be an added value, generating a total annual return for shareholders of 26% …
“Significantly, we recently announced two transformative acquisitions to further enhance the group’s growth and performance profile,” he said.
“In Egypt, we intend to acquire a controlling stake in Vodafone Egypt, a clear market leader with a history of strong growth and attractive returns. Vodafone Egypt’s growth prospect is supported by a network and spectrum advantage over its peers, market leadership in the consumer and enterprise segments, and a brand synonymous with technology leadership … ”
“Separately, in South Africa, Vodacom announced the acquisition of 30% of the market-leading fiber subsidiaries of Community Investment Ventures Holdings (Pty) Limited (CIVH), with the option to increase the stake to 40%. This transaction marks a major step forward in diversifying our connectivity offering, optimizing our assets through cost-sharing and accelerating the reach of fiber in South Africa to help bridge the digital divide, ”he added.
From a financial performance standpoint, Joosub said that in South Africa, Vodacom “delivered 3.6% service revenue growth driven by connectivity demand, 1.1 million additional data customers, incremental wholesale revenue. and growth in new services ”.
“This was an impressive result given the demanding comparison associated with the closures in the prior period. Vodacom Business posted another strong performance in the reporting period, with service revenue increasing 11.5% to R8.5 billion, while financial services revenue in South Africa increased 15% to R1.3 billion. rand, ”he noted.
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“In the current financial year, we will invest more than R10.5 billion in our world-class network, in addition to the R47 billion that we spent in the last five years alone. This is particularly relevant at a time when many of our clients continued to work, entertain and educate from home, ”he added.
“Looking ahead, we are focused on developing our various service offerings and finalizing M&A deals as we continue our exciting evolution from a telecommunications company to a technology company,” said Joosub.