Nicola Mawson
South Africa’s largest mobile operator, Vodacom, has announced a dividend of 285 cents per share for the six months ending 30 September, marking a 6.6% decrease from the previous period.
This comes as the company reports a significant decline in headline earnings per share (HEPS), which saw a drop of 19.4%, coming in at 353c per share.
Vodacom’s dividend policy is to pay at least 75% of group headline earnings to shareholders in the form of dividends.
“Given the expected phasing impact of the currency deprecation in Ethiopia on headline earnings for the full financial year, the board declared an interim dividend of 285 cents per share equating to an 86% pay-out,” it said.
Yet, Vodacom continues to invest.
“Despite the pressures associated with this economic cycle, we will continue to invest in and execute on our strategy,” said CEO Shameel Joosub in a statement.
Commenting in the results booklet, Joosub stated that Vodacom remained on track to invest 13% to 14.5% of revenue into capital expenditure, which is in line with its medium-term targets.
For the period under review, revenue was 1% higher year-on-year at R73.5 billion. On a normalised basis, revenue was up 10.4%.
Vodacom was recently prevented by the Competition Tribunal, which has yet to provide reasons for blocking the deal, from merging with fibre network company Maziv through a cash infusion of R6bn alongside investment in infrastructure worth R4.2bn in return for a 30% stake, which would have created South Africa’s largest fibre company.
“We await the Competition Tribunal’s detailed reasons for prohibiting the transaction before considering all options available to Vodacom, which may include an appeal in the Competition Appeal Court,” said Joosub.
In the past five years, Vodacom has invested R80bn across its markets, which include Tanzania, the Democratic Republic of Congo, Mozambique, and Lesotho. This, it said, resulted in it adding an additional 10.9 million customers to its networks over the past year. It also now provides financial services to 83 million customers.
Financial services revenue increased 7.8%, or 17.6% on a normalised basis, to R6.7bn, contributing 11.4% to group service revenue.
Joosub said its mobile money platforms, including Safaricom, processed $421.3bn in transaction value over the last twelve months, “cementing our leadership as an African fintech company”.
As the use of voice minutes continues to decline, Vodacom’s plan is to manage this slowdown, while pushing prepaid data through expanding 4G and 5G networks, as well as boosting its fibre footprint, scaling its Internet of Things offerings in partnership with Vodafone as well as expanding its dual-sided financial services ecosystem.
The company, which celebrated its 30th birthday during the half year as it reached more than 200 million customers, said that earnings before interest, taxes, depreciation, and amortisation (Ebitda) declined 1.2% to R58.6bn, due to currency headwinds and once-off costs.
Stripping out the effects of currency fluctuations, Ebitda grew 8.5%.
Vodacom’s recent foray into Egypt after it bought a 55% interest in Vodafone Egypt in December 2022 for R10.8bn resulted in R13bn in service revenue, underpinned by a 44.1% growth in local currency.
“This was supported by strong customer engagement in connectivity and excellent growth in Vodafone Cash and contributed to a 5.9% increase in customers to 48.3 million in Egypt,” it said in a statement.
Joosub said it was pleasing that Vodacom’s markets continued to deliver strong operational momentum, despite the material currency devaluations in Egypt and Ethiopia.
“While we remain mindful of an evolving macro-economic environment across our footprint, including foreign exchange rate risk, I believe that the Group is well positioned to capitalise on opportunities once the global economy shifts from its current cautious optimism to sustainable growth,” Joosub said.
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