Vodacom Group said yesterday its headline earnings had dropped by 6.4% due to load shedding and the global economic slowdown.
In its preliminary results for the year ended March 31, 2023, released yesterday, the mobile operator said its headline earnings came to 948 cents, a drop from the 1 013c posted a year ago.
The group reported that it declared a 670c per share dividend from income reserves, which is 21.2% less than the 850c per share dividend it declared last year. The group said the dividend payment was in line with its new dividend policy of paying out at least 75% of headline earnings.
Its revenue for the year increased by 16% to R119 billion led by the purchase of a 55% stake in Vodafone Egypt, and depreciation of the local currency.
Vodacom Group CEO Shameel Joosub said the sustained levels of load shedding had been “disastrous” for the South African economy and the industry as a collective.
“Since 2020, Vodacom South Africa has spent over R4.0 billion in back-up power solutions such as batteries and generators and a further R300 million in the past financial year on additional running costs in the form of diesel, security, and maintenance.
“We remain confident that the ‘virtual wheeling’ pilot project that we’re pioneering with Eskom will be signed off in the near term and that this will have a significantly positive impact on the country’s power grid, and ultimately on the over 20 000 towers across the industry that require a reliable power supply to operate optimally,” he said.
Joosub said the power crisis in South Africa, higher interest charges, Ethiopia start-up losses, mergers and acquisitions costs and higher inflation across its markets weighed on net profit growth of 2.1%.
The mobile operator said it was strengthening its data-offering in South Africa, but its efforts were disturbed by load shedding.
Its international operations in the DRC, Lesotho, Mozambique, and Tanzania produced good growth underpinned by a 31.1% increase in M-Pesa revenue and a 33.2% rise in data revenue.
“As expected, start-up costs associated with Safaricom Ethiopia have curbed Safaricom’s contribution to group operating profit to R2.8 billion, 9.8% lower than last year.
“Pleasingly, Safaricom Ethiopia was recently awarded a mobile financial services licence, representing another important milestone in our ambition to transform lives in that country,” it said.
Joosub said financial services were the key contributor to Vodacom’s new services.
“This is evidenced by the 29.2% increase in group financial services revenue to reach R9.9 billion, as we continue to scale our product suite for consumers,” he said.
Looking ahead, Joosub said: “The operating environment that we face requires an unwavering focus to deliver our strategy to meet our business objectives, and serve our customers.
“We continue to ensure that we have the right measures in place – including our commercial initiatives and cost-efficiency programmes – to help mitigate the impacts from the global macroeconomic risks,” he said.
Vodacom’s results were in line with market expectations.
FNB’s week ahead note released on Friday, said with regard to Vodacom consensus expected a strong fourth quarter revenue performance (+14.5%), while adjusted earnings per share (similar to headline earnings per share) are anticipated to decline 8.3%.
In afternoon trade yesterday, the share was largely flat on the JSE at R112 – down 0.28%.
BUSINESS REPORT