Vodacom revenue inches upwards, targets African expansion

Mobile network giant Vodacom announced incremental growth in revenue and profit in the year to end-March in its final results presentation on Monday, despite chopping its rates to offer a more competitive pricing structure to its customers.

The group saw revenue in the year to end-March grow by 1,5% to R81 billion, while after-tax profit rose by 1,7% to R13 billion. The group declared a final dividend of R4,35 and its annual total to R8,30, which represents 4.4% raise on the previous year's R7.95. The headline earnings per share rose by 4,5% to 923c per share and the final dividend per share of 435c, taking the total dividend to 830c per share for the year.

"A year ago we said that the strategies that we have implemented to differentiate our network experience, to proactively change our pricing and to offer customers more value through segmented and personalised offers, will continue to sustain revenue growth," said Vodacom CEO Shameel Joosub.

"Our solid results this year show that we continue to make great progress against these strategic priorities with our performance driven, in particular, by strong customer growth in South Africa, where we added close to three million customers, largely contributing to a 5,6% increase in service revenue growth. This was offset by the impact of currency volatility and the anticipated effects of customer registrations and disconnections in our International operations."

Joosub added that voice and data had fallen by 14,3% and 16% respectively in South Africa, but the group had grown subscriber numbers by 8,6% to 37,1 million, of which 32 million were prepaid customers. Vodacom also added 218 000 contract customers during the year.

Vodacom is a leading African mobile communication company providing a wide range of communication services including mobile voice, messaging, data and converged services to more than 66 million customers. It is majority owned by Vodafone (65% holding) one of the world's largest mobile communications companies by revenue.

At the CFO Awards 2017 held in Sandton last week, Vodacom CEO Till Streichert walked away with the most coveted award - CFO of the Year - as well as the Strategy Execution and Finance Transformation Awards.

After taking the reins as CFO in August 2015, Till was instrumental in overseeing Vodacom Tanzania's IPO listing and the group's ERP upgrade, as well as being involved in negotiations over a settlement in the company's "Please Call Me" dispute with a former employee. The soft-spoken German, who has vast experience in the telecommunications sector and holds a doctorate in philosophy from Hanover College, is passionate about the all-encompassing role he plays as Vodacom's finance boss and believes CFOs have the power to make a massive impact on their organisations, whether as financial stewards or strategic influencers.

In big news coming out of the presentation, Vodacom is looking to increase its African footprint with a R35 billion investment in Kenyan telecoms firm, Safaricom.

The deal is subject to regulatory and shareholder approvals and Vodacom will fund the acquisition of a 34.94% stake in Safaricom held by the UK's Vodafone, by issuing 226.8 million new ordinary shares. Safaricom's other shareholders are the government of Kenya (35%), public investors (25%) and Safaricom employees (0.07%).

Safaricom is the dominant telecoms company in Kenya, owns M-Pesa, the biggest mobile money service on the continent, and has well over 19 million subscribers in Kenya. Safaricom was established in 1997 and is listed on the NSE with a market capitalisation of around $8 billion. The company provides integrated telecommunications services, including mobile and fixed voice, SMS, data, Internet and mobile money to both consumer and enterprise customers.

"Acquiring a strategic stake in Safaricom will provide our shareholders with access to a high growth, high margin, high cash generation business operating in a high growth market. In addition to producing mutually beneficial opportunities for growth, it will create further incremental value through the close cooperation between the two businesses, particularly in driving M-Pesa adoption across our operations," Joosub says.