Vodacom Group sees profit hit

Vodacom Group sees profit hit

Vodacom Group reported an earnings hit due to macroeconomic conditions and loss in Ethiopia, however, its acquisition of Vodafone Egypt prevented further dips. 

Vodacom Group CEO Shamble Joosub said in a statement: “The encouraging revenue trend highlighted in the Vodacom Group’s performance in the first three months of the financial year continued into the second quarter - highlighting a strong operating performance. However, higher interest rates, elevated levels of inflation and currency volatility across our markets had an impact on the Group’s earnings.

Headline earnings per share, a measurement of profit, fell 4.2% year-on-year from US$4.57 to US$4.38 in the six months ending September 30. The operator noted this figure was slowed down by a previous year's deferred tax asset recognised in Tanzania and higher interest rates. 

Vodacom’s Egyptian unit contributed US$0.16 to earnings per share and ZAR14.3 billion (US$775 million) to group service revenue, noted Joosub. 

Service revenue from the group surged 42.2% to ZAR59.3 billion due to the acquisition of Vodafone Egypt and the depreciation of the South African Rand.

Vodafone Egypt was the group’s largest acquisition in its history when it forked out ZAR43.6 billion to acquire a 55% stake three years ago. 

Vodacom joined a consortium led by Safaricom to enter the Ethiopian market, with the launch of Safaricom Ethiopia in 2022. Vodacom Group CFO Raisibe Morathi noted to media the unit will break even in year four of operations, but EBITDA loss is predicted in the full financial year ending March. 

In South Africa, Vodacom’s largest market, the company revealed its ZAR4.5 billion investment over the last four and a half years, to keep ahead of power cuts, had lifted service revenue by 4%, and accelerated traffic growth by 45.2% in H1. Vodacom expects to spend around ZAR1 billion this financial year in mitigating power cuts. 

Around 10.4 million new customers were added in the last 12 months and the total subscriber base now stands at 196.2 million across the Vodacom Group. 

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