South Africa Vodacom’s FY earnings rise, upgrades operating growth target

PUBLISHED: Tue, 18 May 2021 08:58:03 GMT
Nqobile Dludla

JOHANNESBURG, May 18 (Reuters) – Vodacom Group Ltd, South Africa’s second biggest telecoms operator, upgraded its medium-term operating growth target to mid-to-high-single digit on Tuesday, after reporting a 3.7% jump in full-year earnings.

The operator said it upgraded its medium-term operating profit growth target from mid-single digit on improved growth prospects for its international business and Kenya’s Safaricom , which is part owned by Vodacom and Britain’s Vodafone Group Plc.

Headline earnings per share (HEPS), the main profit measure in the country, rose to 980 cents in the 12 months ended March 31 from 945 cents a year earlier.

Vodacom, which is majority owned by Vodafone, declared a final dividend of 410 cents per share, up 1.2%.

Group revenue rose by 8.3% to 98.3 billion rand ($6.99 billion), supported by service revenue growth of 5.8%.

Service revenue growth was “underpinned by the recovery in our international portfolio in the second half of the year and strong growth from our prepaid and enterprise segments, financial services and other new services in South Africa”, Vodacom said.

In South Africa, service revenue grew by 7% on the back of increased data usage as people worked and had school from home, a summer rewards campaign and demand for financial services.

These helped to offset numerous initiatives such as a 3 billion rand service revenue impact of lowering data pricing in the country.

Its international operations reported service revenue growth of 1.6%, with a stronger second half offsetting the significant impacts of COVID-19 earlier in the year, Vodacom said.

The international business took a 2 billion rand service revenue impact due to “zero-rating” or not charging peer to peer M-Pesa transactions.

Sign Up for Our Newsletter Daily Update

Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.

M-Pesa, which is used to send money, save, borrow and make payments for goods and services, now processes $24.5 billion a month in transaction value across the Vodacom’s international markets, including Safaricom, up 63.5%, it said. ($1 = 14.0553 rand)

(Reporting by Nqobile Dludla; Editing by Jacqueline Wong and Rashmi Aich)