Vodacom sees rise in revenue and operating profit, but net income dips

14 May 2019

South Africa-based mobile phone company Vodacom Group said revenue for the twelve months ended 31 March 2019 rose 4.3% year-on-year to ZAR90.01 billion (USD6.3 billion), service revenue climbed 5.0% to ZAR74.15 billion, and operating profit edged up 1.1% to ZAR24.52 billion from ZAR24.49 billion. However, despite EBITDA improving 2.4% y-o-y to ZAR33.69 billion, net profit declined 0.8% to 14.54 billion, in a period in which Vodacom concluded a ZAR16.40 billion broad-based black economic empowerment (BEE) ownership deal (September 2018), the largest of its kind in the ICT sector. Full-year headline earnings per share also fell by 6.6%, it said, impacted by the new BEE ownership deal, partially offset by an increase in contributions from Safaricom in Kenya, acquired in the prior year.

In South Africa, Vodacom said that service revenue increased by 2.1% y-o-y to ZAR55.70 billion, with ‘improving growth’ reported in the fourth quarter as 1.5 million net new customers joined its ‘superfast network’. International operations, meanwhile, achieved service revenue growth of 15.6%, as the company drove financial services inclusion and continued to connect customers across all its operations. At 31 March 2019 Vodacom had 110 million customers across the group, an annualised increase of 5.8%.

Commenting on the results, CEO Shameel Joosub said: ‘This year we have given back significant value to stakeholders. We unlocked ZAR7.5 billion in value for YeboYethu shareholders, and in September 2018 concluded the largest ever broad-based BEE transaction in the South African telecommunications sector … A sharp reduction in our out-of-bundle tariffs contributed to the 37% decline in effective data prices since the end of March last year. In addition to enabling customers to manage their spend and utilise their data, virtually worry-free. This translates into a further ZAR2 billion in savings enjoyed by customers as part of our ongoing pricing transformation strategy. Over a three-year period, data prices have fallen by 57%; despite not having access to further available spectrum … The financial impacts of delivering on our promise of further reducing the cost-to-communicate in South Africa, combined with costs associated with concluding our new ZAR16.4 billion BEE deal, is evident in the subdued increase in our operating profit.’

South Africa, Vodacom Group