Vodacom feeling currency pressure
The weakness of the South African ran, which reached a five-year low last month, is hurting mobile operator Vodacom, according to a report from Reuters.
The international news agency reported that Vodacom Group, which is 65% owned by Vodafone, is negotiating with its global suppliers to bring down prices because of the weaker local unit, citing CFO Ivan Dittrich on a call with analysts.
The bulk of its capital expenditure and a “meaningful” amount of its operating expenses, particularly network costs, are denominated in foreign currencies, Dittrich said.
“It’s a pity,” Vodacom chief executive Shameel Joosub said on the conference call. “Because obviously we could get more equipment if the rand was more stable.”
While Vodacom hedges its rand exposure and has some operations outside South Africa, it generates as much as 80% of its revenue from within South Africa.
MTN Group meanwhile, has a far bigger spread in the rest of Africa, and the Middle-East, which ensures a greater lift from a softer rand.
The rand has lost as much as 8% in 2014, following an 18% slide in 2013.
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