Shameel Joosub-led Vodacom Group reports single-digit decline in profit

South African telecommunications company, Vodacom Group, has posted a 4.3-percent decline in profit for the first half of its 2021 financial year, which ended on Sept. 30.

Figures contained in the telecom group’s latest filings revealed that its profit for the period fell to R8.87 billion ($584 million) in the first-half-year period from R9.27 billion ($610.2 million) during the same period last year, while revenue surged from R47.84 billion ($3.14 billion) to N49.9 billion ($3.28 billion).

The group’s first-half-year profit was pressured by difficulties in its operating environment, which resulted in a surge in indirect expenses. Tis was further compounded by an increase in operating costs.

Vodacom Group Limited is a South African telecommunications company, providing voice, messaging, data and converged services to more than 129.9 million customers.

The group has grown its operations to include networks in Tanzania, Democratic Republic of Congo, Mozambique and Lesotho.

In addition to its core telecom operations, Vodacom provides business services to customers in over 32 African countries, including Nigeria, Zambia, Angola, Kenya, Ghana, Cote d’Ivoire and Cameroon.

Its M-Pesa platform, including Safaricom, processed $301.9 billion in transaction value in the past 12 months.

Shameel Joosub, the CEO of Vodacom Group, said the group delivered resilient half-year results despite the disruptions and difficulties that it experienced in its operating environment.

Joosub noted that Vodacom Group’s decision to diversify its geographic exposure continues to pay dividends. He explained that its strategic investment in Kenya’s Safaricom in 2017 has proven to be value accretive, generating an annual total shareholder return of 26 percent.

The group recently announced two transformative acquisitions to further enhance its penetration in Africa, as well as its growth and return to shareholders.

In Egypt, the leading South African telecom operator acquired a 55-percent controlling stake in Vodafone Egypt, a clear market leader with a track record of strong growth and attractive returns.

In addition, the group agreed to acquire a strategic stake in Community Investment Ventures Holdings (CIVH), a holding majority owned by South African billionaire Johann Rupert’s Remgro Limited.

The deal will see Vodacom partner with Remgro through CIVH. The South African telecom company will inject R6 billion ($390.4 million) into the new entity and sell its fiber business to CIVH at a valuation of R4.2 billion ($275.9 million) in return for new shares.

Despite a single-digit reduction in its first-half-year profit, the board declared an interim dividend of R4.2 ($0.276) per share payable to shareholders on Dec. 3. The interim dividend is 1.2-percent higher than what investors received last year.

As of press time, Nov. 15, shares in Vodacom Group were trading at R137.96 ($9.0597), 1.53-percent lower than its market opening price.