Vodacom’s earnings boosted by strong second half

A stronger second half helped Vodacom Group grow its annual earnings by 7.8% on a normalised basis, with Egypt and Tanzania highlights along with a “resilient” performance in SA.

The group reported earnings before interest, tax, depreciation and amortisation (ebitda) growth of 7.8% to R55.5bn, though this was down 1.1% on a reported basis.

Normalised growth presents performance on a comparable basis and adjusts for trading foreign exchange, foreign currency fluctuation, hyperinflation accounting and excludes the effect of merger, acquisition and disposal activities.

Revenue for the year to end-March was 10.9% on a normalised basis at R152.2bn, while service revenue grew 11.2% to R120.7bn.

Headline earnings per share (HEPS) were 1.3% higher at 857c and a final dividend of 335c per share was declared, taking the total dividend to 620c, up 5.1% year on year.

“Given significant currency volatility, I am particularly impressed with the strong finish the group produced in the last six months, supporting the confidence we communicated in November last year that the organisation is poised for a stronger second half performance,” said CEO Shameel Joosub.

“Group service revenue grew by a robust 11.2% on a normalised basis, highlighting the resilience of our diversified portfolio and our strong commercial execution. We closed the year with 8.2-million additional customers across our footprint — a 4% increase that underscores our relentless focus on customer-centricity, network reliability and digital inclusion.”

Recent currency market stability, particularly in Egypt, boded well for the group’s performance in the foreseeable future, he said.

Joosub highlighted the “resilient performance” in SA and the “outstanding, continued growth” in Egypt and Tanzania.

Egypt delivered a 45.2% increase in local currency service revenue, buoyed by increased uptake of Vodafone Cash and the growing demand for mobile and fixed connectivity. With more than 50-million customers, Egypt now accounts for 23% of group service revenue.

The SA business reported service revenue growth of 2.3%, led by a recovery in the prepaid segment, sustained data traffic growth of more than 36.4%, and the increasing contribution of its beyond mobile services. These services contributed R11.2bn, or 17.8% of SA’s service revenue.

The international business, spanning Democratic Republic of Congo (DRC), Lesotho, Mozambique and Tanzania, achieved 7.1% normalised service revenue growth, with Tanzania the standout performer.

He said Vodacom’s businesses in Mozambique and DRC were affected by post-election tension and conflict in eastern DRC, respectively.

“With momentum behind peace efforts in both countries, we are hopeful of improved prospects into FY2026.”

M-Pesa processed more than $450.8bn in transaction value over the year — an 18.3% increase. Revenue from financial services grew 17.6% on a normalised basis, accounting for 11.6% of group service revenue. Additionally, Safaricom reported R22.6bn of financial services revenue.

“These results underscore the growing demand for payments, savings, lending and merchant solutions across our footprint,” said Joosub.

In Ethiopia, Vodacom recorded a 103.2% increase in its customer base to 8.8-million, driven by growing demand for connectivity and a promising commercial trajectory. Service revenue in local currency increased 238.9%.

“Despite current financial market turbulence, we are confident in the structural growth opportunity that Africa represents,” he said.

As part of the group’s Vision 2030 strategy, it is targeting growing its customer base to 260-million and financial services customer base to 120-million.

“While cementing our leadership in all forms of connectivity, we expect our group service revenue contribution from beyond mobile to increase to 30% from 21% today. As part of Vision 2030, we upgrade our medium-term targets for group service revenue and ebitda from high single-digit to double-digit growth,” Joosub said.

mackenziej@arena.africa

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