South Africa's Vodacom half-year earnings inch up 1 percent

Reuters

Finnish network equipment maker Nokia will trial its 5G technology in South Africa in collaboration with Vodacom Group, the firms said on Tuesday, as they seek to provide faster data delivery.

Vodacom's results for the six months ended 30 September 2017 show that its earnings before interest and tax (EBIT) margin in South Africa has declined.

JSE-listed Vodacom on Monday posted a 1.1% uptick in headline earnings a share to 445c for the first half of the financial year. Data revenue declined by 2.7 percent, with normalised growth of 6.6 percent, supported by an increase of 1.8 million data customers, to 14.8 million, up 23.3 percent.

In addition to increasing data network speeds and improving data coverage, the group said it retained a strong focus on providing customers with access to better, low-priced smart devices, by promoting Vodacom-branded devices.

The further 1.4 million subscriber additions in its global operations, means group subscribers have reached just over 71 million. customers across the Group, up 11.8%. It continues to focus on improving data monetisation in all markets as demand grows rapidly. Data bundle sales grew by 55.5% to 347m.

The underlying performance of Safaricom remains strong, according to the report.

Regarding its global operations, exchange rate volatility negatively impacted growth.

"These are promises that we have delivered on, with effective data prices decreased by 24.2% during the six-month period. On October 1, 2017, we further reduced out-of-bundle prices by up to 50%", he said. Migration to the new "more data" contracts, which have a larger data allocation, accelerated to 25% of the base.

Revenue for worldwide operations declined 5.2% and service revenue declined 4.8%; however, on a normalised basis, revenue and service revenue grew 5% and 5.5% respectively.

"Additional spectrum will allow us to invest more efficiently and accelerate our rural coverage programme".

During the first half of the year, on average, R24 billion was processed monthly through the M-Pesa system, the company said. Taking out exchange rate volatility growth would have been 5.5%. Normalised revenue growth was 4.6%.

Data revenue declined by 2.7%, but comprised 13.6% of worldwide operations' service revenue.

It added that customer growth in all markets remained strong, with 56% of customers now using this service in Mozambique, 35.3% in Lesotho and 22.2% in the DRC. "We expect that the Safaricom transaction will further drive M-Pesa development and penetration outside of South Africa", it said.

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