Vodacom Group announces interim results for the 6 months ended 30 September 2020

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The Vodacom Group has declared an interim dividend of 415cps, up 9.2%. This was supported by headline earnings growth from our consolidated companies and the Safaricom dividend receipt, the group said.

In the results announcement released recently, the group said its revenue is up 7.8% to R47.8 billion, underpinned by service revenue growth of 7.0%. Earnings per share up 15.6% and headline earnings per share up 15.7%, boosted by a one-off deferred tax rate adjustment of R0.7 billion in the period, they said.

Free cash flow was up 92.1% to R5.3 billion and reflects growth in cash generated from operations and the timing of the Safaricom dividend receipt, the group said.

“Our strategic investment in Safaricom delivered a 52.2% boost in our operating profit, buoyed by currency factors and a one-off deferred tax rate adjustment of R0.8 billion. Safaricom’s local currency results reflect the impact of depressed economic activity and lower M-Pesa P2P monetisation, related to the COVID-19 pandemic. Safaricom accelerated capital expenditure by 25.5%, supporting platform growth and a notable financial improvement into the second quarter compared with the first quarter,” said  Vodacom CEO Shameel Joosub.

The group, which has operations in Tanzania, the DRC, Mozambique, Lesotho and Kenya, noted that they added 4.1 million customers, to serve a combined 120 million customers, including Safaricom customers.

Total financial services customers, including Safaricom were up 13.9%  from 6.7 million to 54.8 million, the group said. South Africa service revenue grew 7.1%, driven by an acceleration in customer service revenue in the second quarter, they said.

Delivering on the social contract

“Through a wide range of initiatives, including free devices and airtime for healthcare workers, cash donations and strategic partnerships, we continue to deliver on our social contract with stakeholders to contribute positively to a number of pressing societal challenges,” said Joosub.

Joosub added that the group prioritised the resilience of their  networks, accelerated support to governments via donations of handsets, connectivity and medical equipment and made contactless payments more accessible through zero-rated services and an expanded M-Pesa ecosystem to address social distancing challenges.

“In addition, and given that collaboration is instrumental to the economic recovery, we remain committed to establishing innovative partnerships with an emphasis on health, education, free public benefit services, big data analytics and financial services to complement those already concluded in recent times with Alipay, Discovery Health and Microsoft,” he said.

To help cope with sharp increases in data traffic and shifts in customer behaviour patterns, we accelerated network infrastructure spend over the six-month period to R6.6 billion, including R5.0 billion in South Africa, keeping families connected, enabling businesses to operate, facilitating online learning and assisting governments in providing critical services, Joosub said.

“In South Africa, data usage surged +86%, as connectivity demands changed with a need to work, entertain and educate from home, and as we made substantial reductions in monthly data bundle tariffs,” he said.

Also, the launch of ConnectU, which provides zero-rated access to a wide range of websites, including jobs portals and online learning platforms and discounted offers for poor communities, supported higher usage, he said.

“Considering the magnitude of challenges arising from the pandemic in the past six months, it is particularly pleasing that we recorded a solid financial performance at Group level, where service revenue increased 7.0%. This was underpinned by strong growth from our Consumer and Enterprise businesses in South Africa, where service revenue rose 7.1% despite reductions of up to 40% in monthly data bundles which came into effect on 1 April 2020,” Joosub noted.

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