Vodacom profits drop
Vodacom has reported a 9% decline in half-yearly net profit compared to last year, from R8.9 billion to R8.1 billion.
The mobile operator released its interim results for the period 1 April to 30 September 2022 on Monday, reporting revenue increases but a decrease in profits.
Operating profits were also down 5.6% from R14.1 billion to R13.3 billion.
Vodacom cited ongoing financial market volatility and weaker prospects for the global economy.
It noted that the war in Ukraine, which followed soon after the Covid–19 pandemic, continues to result in increased inflationary pressures and higher living costs worldwide.
Specifically, it noted that headline earnings were impacted by start-up losses in Ethiopia and higher finance costs as interest rates normalised to pre-Covid levels.
Vodacom said its earnings were also impacted by one-off factors and higher energy and network costs.
Group revenue was up 7.7% year-on-year to R53.7 billion, supported by rand depreciation against Vodacom’s basket of international currencies.
Group service revenue increased 7.2% to R41.7 billion over the period.
Eskom’s rotational power cuts were among the energy costs impacting Vodacom’s bottom line.
“In South Africa, we invested R5.8 billion in our network — the most in a six-month period — to further enhance the customer experience at a time when the country experienced record levels of power outages,” the company stated.
It reiterated that it had invested R2 billion just in batteries in the past two years.
“At the same time, we continue to work closely with Eskom to find a renewable energy solution for the benefit of our planet and customers,” Vodacom said.
Vodacom announced in September that it was launching a pilot programme with Eskom to source all its electricity from renewable independent power producers, and contribute this to the national grid.
Vodacom said it invested over R50 billion in its network in the past five years.
This has driven growth in new services such as financial and digital services, fixed broadband, and the Internet of Things.
“In addition to increased demand for personalised bundles and strong equipment sales, these factors contributed to a 4.9% rise in revenue in our largest market,” Vodacom said.
“Underpinned by an almost 20% increase in insurance policies, revenue generated from financial services improved 8.1% to R1.4 billion.”
After less than a year, Vodacom’s “super app”, VodaPay, has amassed 2.2 million registered users through 3.5 million downloads.
It has near-term plans to add cash-in and cash-out capabilities, and scale its affordable consumer microloans.
This positions VodaPay well to expand its offerings and drive deeper penetration of financial services, Vodacom said.
Vodacom declared a gross interim dividend of R3.40 per ordinary share, payable on Monday, 5 December 2022, to shareholders recorded in the register at the close of business on Friday, 2 December 2022.
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