Vodacom FY dividend payout ratio at 100%?
Mobile operator Vodacom (VOD) could lift its full-year dividend pay-out ratio to 100%, according to an analyst at financial services group, Stanlib.
On Wednesday (8 February 2012), the group announced record customer growth and a 12.2% rise in group revenue for the quarter ended December 2011, to R17.997 billion.
Vodacom highlighted record net customer additions of five million in the quarter, with group customers up 27.3% to 52.9 million.
It noted a 41.2% increase in group active data customers to 13.8 million and data revenue increased 23.8% to R2.082 billion.
South Africa delivered a solid performance with service revenue growing 5.6% to R12.755 billion.
Customers increased 25.4% year on year to 31.7 million, a record net increase of 2.8 million in the quarter.
Telecoms analyst at Stanlib, Fred Teeling-Smith, noted a “good set of numbers with subscriber growth being driven by heavy promotional activity in December.”
Looking ahead, Vodacom said that, while it was encouraged by the strong revenue growth in the quarter, “we remain focused on tackling the increased competition in all our geographies and also remain alert to fragile global economic conditions. Therefore our medium-term service revenue guidance of ‘low single digit’ remains unchanged.”
“I expect this to be surpassed in the short term,” Teeling-Smith said of the group’s low single digit revenue growth forecast.
“Margin expansion will continue on back of reduced interconnect impact and continued cost cutting,” he said adding that International operations were ahead of expectations.
According to Stanlib, Voacom’s share price would continue to be supported by upward revisions in dividend expectations.
“I am expecting a close to 100% dividend payout ratio for FY12,” Teeling-Smith said.
A relatively high pay-out ratio could however, often mean little expansion is to be expected from the company in the near future.
An analyst at Thebe Stock Broking said that international growth was still an area of concern for the group. Vodacom’s international operations include those in the Democratic Republic of Congo, Tanzania, Mozambique and Lesotho.
“I would continue to look at Vodacom’s data business, having set out ambitious targets. With operations in only four other territories, there is an emphasis on its (Vodacom) data growth and plans,” he said.
Suraj Sookdhew, portfolio manager at RMB Private Bank, told BusinessTech that the 3Q2011 results from Vodacom surprised most analysts.
“This strong growth (particularly in subscriber base) – whilst negative to the average -revenue-per-user (ARPU) figures – has shown up positively on the revenue line. In addition, data revenues reflected a pleasing increase of 25.8%
“The company’s strong cash flow generation, earnings visibility and high dividend yield provide a solid underpin to its share price. These pleasing numbers are likely to result in many analysts increasing their earnings forecasts for the company,” Sookdhew said.
By close of play on Friday, Vodacom’s shares traded at R100.00 on the JSE.
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