Vodacom ups dividend and reinstates growth targets after Covid-19 boost
Pandemic has forced people to work from home, with data usage in SA surging
SA’s biggest mobile phone operator, Vodacom, says it is confident it has the cash to weather increasing pressure on SA consumers in coming months, reinstating its three-year growth targets as it eyes better economic conditions in its 2022 year.
The Covid-19 pandemic and subsequent work and learn-from-home trends benefited the group during its six months to end-September, with Vodacom reporting that data use in SA surged 86%.
This offset price reductions of up to 40% in monthly data bundles from April, and service revenue in SA rose 7.1% to R27.6bn.
The group says it expects the disposable income of consumers in SA to be under pressure during its second half, while work-from-home trends should also start to normalise. It does expect an improving economic outlook heading into its 2022 financial year, which begins in April 2021.
Vodacom upped its interim dividend 9.2% to 415c to end-September — a R7.6bn payment — while it has also has reinstated its medium-term targets, which include mid-single digit group operating profit growth.
Net profit rose 13.1% to R9.27bn to end-September, though this was affected by a positive one-off deferred tax rate adjustment of R805m, related to a decrease in the corporate tax rate in Kenya.
Group revenue rose 7.8% to R47.8bn on a reported basis, while normalised revenue, which adjusts for items such as currency fluctuations to give a better indication of like-for-like performance, rose 4.7%.
Vodacom’s international operations were under more pressure from the pandemic, but benefited from a weaker rand.
International service revenue rose 5.8% in reported terms to R11.4bn, but fell 5.2% on a normalised basis.
Net group debt fell 11.4% to R36.6bn year on year.
“Considering the magnitude of challenges arising from the pandemic in the past six months, it is particularly pleasing that we recorded a solid financial performance at group level, where service revenue increased 7%,” said CEO Shameel Joosub.
They “remain cautious about the pace of economic recovery across our markets as disposable income will remain under pressure as a result of unemployment and depressed economic activity”, Joosub said.
In morning trade Vodacom’s share was up 0.21% to R128.20, having risen 11.19% so far in 2020.
Update: November 16 2020
This article has been updated with share price information.
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