Major blow to Vodacom

Mobile operator Vodacom has suffered a significant blow to profits, with headline earnings diving close to 20% in the six months ended 30 September 2024.

The group reported flat earnings for the period, growing 1% to R73.54 billion (2023: R72.8 billion). On a ‘normalised’ basis—looking at performance on what Vodacom deems a “comparable basis”—revenue growth was up 10.4%.

The comparable basis adjusts for trading foreign exchange and foreign currency fluctuation and excludes the impact of merger, acquisition and disposal activities to show a like-for-like comparison of results.

Using this metric, Vodacom says that its operating profit for the period was up 9.6%—however, on the books, it was down 5.2% to R16.13 billion (from R17 billion the year prior).

Group service revenue was up 9.9% when adjusted, but in nominal terms, down 1.2% to R58.6 billion.

Net profits for the period are not adjusted. The group’s profits dropped 21.1%, from R9.97 billion in 2023 to R7.86 billion in 2024.

Headline earnings share was down by 19.4% to 353 cents from 438 cents the year prior.

Financials (not adjusted)

This was largely attributable to the currency depreciation in Ethiopia (53cps) and one-off costs in International business.

Given the expected phasing impact of the currency deprecation in Ethiopia on headline earnings for the full financial year, the Board declared an interim dividend of 285cps equating to an 86% payout.

Vodacom Group CEO Shameel Joosub noted that in South Africa, the group now shas 49.2 million customers, an increase of 4.2%.

“Driven primarily by beyond mobile services, the consumer segment and prepaid mobile data, service revenue in South Africa grew 1.3% to R31.1 billion despite pressure in the wholesale segment.

Beyond mobile services increased 8.1%, contributing R5.5 billion or 17.7% of service revenue.

South Africa grew EBITDA by 2.3% while operating profit increased 2.4% on the back of a moderated investment into energy resilience given the recent stability of the national electricity grid.

“Looking ahead and despite the pressures associated with this economic cycle, we will continue to invest in and execute on our strategy,” Joosub said.

“It is pleasing that our markets continue to deliver strong operational momentum, despite the material currency devaluations in Egypt and Ethiopia.

“While we remain mindful of an evolving macro-economic environment across our footprint, including foreign exchange rate risk, I believe that the Group is well positioned to capitalise on opportunities once the global economy shifts from its current cautious optimism to sustainable growth.”

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