Vodacom hit by work-from-home shift in South Africa

 ·13 May 2024

Vodacom has seen a drop in profits, reporting that more corporates in South Africa are moving away from work-from-home policies, putting pressure on its Business unit.

Speaking in the group’s results for the year ended 31 March 2024, Vodacom CEO Shameel Joosub said that start-up losses in Ethiopia, higher finance and energy costs, the hit of absorbing inflationary pressures, and a weaker exchange rate across its markets hit the group’s headline earnings.

Overall, headline earnings per share decreased by 10.8% to 846 cents per share.

With the group’s dividend policy of paying at least 75% of headline earnings, the group still declared a dividend per share of 590 cents per share – an 11.9% drop from the prior financial year.

In South Africa, service revenue grew by 2.6% due to new services, the consumer contract segment, and prepaid mobile data.

However, Joosub said this growth was partly offset by pressure in Vodacom Business, as the shift away from work-from-home policies saw corporate customers recalibrating their spending. A more mobile workforce would benefit mobile sales and services – a return to the office would see a bigger spend on fixed-line services.

Despite this, new services in South Africa were up 11.2% and contributed R10.2 billion, or 16.5% of service revenue.

The 7.9% increase in service revenue from financial services to R3.2 billion was largely due to its insurance business and payments, while Airtime Advance allowed for increased digital inclusion.

The group spent R11.1 billion on infrastructure, which included supporting its network resilience, leveraging its new spectrum assets and enhancing its IT platforms.

“Our proposed purchase of a joint venture stake in South African fibre company Maziv will enable affordable access to connectivity in some of the most vulnerable parts of the country through an
ambitious fibre roll-out programme, assisting in narrowing the country’s digital divide,” said Joosub.

“The transaction is subject to a review by the Competition Tribunal with hearings due to commence on 20 May 2024, during which Vodacom will showcase the strong public interest and pro-competitive advantages that the transaction would have on the fibre market, and the country as a whole.”

The group’s overall financials for the period can be found below:

Financials (Rm)FY 2023FY 2024% change
Revenue119 170150 59426.4
Service revenue93 650120 89729.1
Net profit from associates and joint ventures2 6072 197(15.7)
Operating profit29 25235 33720.8
Net profit18 11119 2626.4
Net debt to EBITDA1.10.9(0.2x)
Earnings per share (cents)948842(11.2)
Headline earnings per share (cents)948846(10.8)
Total dividend per share (cents)670590(11.9)


Looking ahead, Joosub said that the group is committed to supporting the next phase of its TechCo transition with imperatives “such as amplifying our (its) commitment to purpose and customers, excelling at simplicity and innovating for growth so that we deliver sustainable growth.”

Key to this strategy is accelerating mobile and fixed connectivity, scaling handset financing and the roll-out of digital and financial services across all its markets. The group is also looking to increase rural and fibre connectivity through infrastructure sharing across expanded African partnerships.

Although the global economic outlook is uncertain, the new macro reforms in Egypt and Kenya encourage the group.

“Building on this momentum, our portfolio of products positions us to deliver on our purpose and capture the structural growth opportunities across our markets while also supporting an upgraded outlook for group service revenue growth.”

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