Vodacom declares dividend despite ‘knocks’

Vodacom CEO Shameel Joosub told investors on a conference call that the group was “quite positive” despite an uncertain global economic outlook. Picture: Nhlanhla Phillips/Independent Newspapers

Vodacom CEO Shameel Joosub told investors on a conference call that the group was “quite positive” despite an uncertain global economic outlook. Picture: Nhlanhla Phillips/Independent Newspapers

Published May 14, 2024


By Nicola Mawson

JSE-listed Vodacom declared a dividend of 590 cents per share, consistent with its policy of paying 75% of headline earnings per share to shareholders, for the year to March 31, despite suffering what CEO Shameel Joosub called “big knocks”.

The mobile telecoms giant – which is still embroiled in a legal battle over the “Please Call Me” service that is again in the Constitutional Court, reported R151 billion in revenue – a 26.4% gain year on year thanks largely to its purchase of the Egyptian operation in 2022 for R41bn.

However, one of the big knocks Joosub referred to was the result of devaluing that operation, an exercise that is now over.

Net profit was R19.26bn, a 6.4% gain on the prior year, while the key measure of profitability, headline earnings per share (HEPS) came in at 846 cents, a 10.8% decline.

Vodacom said a combination of start-up losses in Ethiopia, higher finance and energy costs, the impact of absorbing inflationary pressures, and weaker exchange rates across markets including the recent devaluation of the Egyptian pound contributed to the 10.8% decline in headline earnings.

Other issues Joosub said impacted results included a prior-year deferred tax asset recognised in Tanzania, which dropped headline earnings by 15 cents per share.

Vodacom’s share price eased 2.2% to R92.01 per share by 3.30pm yesterday on the back of the company’s annual results.

Joosub said in the results booklet that in a year when the company celebrates its 30th birthday, it has also gone over the 200 million subscriber mark.

“These are two particularly gratifying milestones in Vodacom’s history.” The company’s footprint, including Egypt, now covers half a billion people.

Vodacom’s new services, which include digital and financial, fixed, and Internet of Things reached a contribution of 20% of group service revenue, as Vodacom also advanced its product diversification.

“Financial services is the key driver of our new services and a meaningful enabler of our purpose to connect for a better future,” said Joosub.

Vodacom, South Africa’s biggest mobile operator, said its push in terms of financial services resulted in an 11.8% increase in financial service customers to 78.9 million.

It now processes $381.2 billion (R6.9 trillion) in annual transaction value.

“We expect that our efforts to diversify the group’s footprint and product-mix will unlock strong returns over the medium term,” Joosub said.

“Despite the economic backdrop, we remain committed to spending 13% to 14.5% of our overall revenue on capital expenditure that ultimately results in an enhanced customer experience through sustained investments in technology and network infrastructure,” he added.

During the year, Vodacom spent R20.42bn in capital expenditure (capex), a 23.8% increase on last year.

This investment went into improving capacity and resilience of the network and increasing 5G roll-out in South Africa.

Egypt invested R4.6bn on growing and strengthening the network to support increased demand, while Vodacom’s international business remained focused on increasing both coverage and capacity as well as continuing 4G roll-out.

Joosub said future capex would enhance network resilience through the acceleration of 5G coverage, its rural coverage programme to help bridge the digital divide, and keeping customers connected despite power challenges across key markets.

“We’re quite positive in terms of where we are,” Joosub told investors on a conference call, despite an uncertain global economic outlook.