Table of Contents
Key points:
- Vodacom reports 10 percent growth in normalized group service revenue but sees a slight dip in non-normalized revenue.
- Financial services revenue grew 16.8 percent, driven by local currency growth in Egypt and strong performance in South Africa.
- Vodacom plans to invest R11.5 billion in capital expenditure to enhance customer experience and awaits a ruling on a major acquisition.
Vodacom, a telecommunications giant based in Johannesburg and led by South African executive Shameel Joosub, faces challenges in achieving desired growth across various markets.
In the trading update for June 30, 2024, CEO Joosub noted that despite tough economic conditions, their diversified strategy is beginning to pay off
The company exceeded its targets with a 10.0 percent increase in normalized group service revenue, reaching R29.0 billion. Additionally, the normalized group financial services revenue rose by 16.8 percent to R3.3 billion.
However, on a non-normalized basis, the group service revenue fell slightly by R14 million to R28.962 billion, and overall group revenue grew modestly by 1.5 percent to R36.2 billion.
Revenue diversification and growth in financial services
Joosub highlighted that non-mobile service revenues added R6 billion this quarter, about 20.8 percent of the total group revenue. The target is to boost this to between 25 percent and 30 percent in the medium term. The major growth drivers were financial services in Egypt and South Africa.
In Egypt, service revenue soared by 43.7 percent in local currency, significantly outpacing inflation. However, due to the Egyptian pound’s devaluation, revenue dropped by 7.2 percent in rand terms. In South Africa, service revenue increased by 1.8 percent, with data traffic and non-mobile services contributing substantially. These segments added R2.6 billion to the country’s total service revenue of R15.3 billion.
Investments and future outlook
This quarter saw Vodacom invest R1.9 billion, with plans to spend a total of R11.5 billion on capital expenditures this year to enhance customer experiences in South Africa. Joosub also discussed the pending Competition Tribunal ruling on Vodacom’s proposed acquisition of a significant stake in South African fiber operator Maziv, despite initial opposition from the Competition Commission.
Egypt continues to show strong performance metrics, including leadership in NPS and network quality, recognized as “Best in Test” by umlaut. The financial services customer base in Egypt grew by 47.9 percent to 8.7 million, with data traffic improving by 34.7 percent. Egypt now represents 21.9 percent of the group’s total service revenue, concluding the quarter with 47.4 million customers, a 6.1 percent increase.
Joosub detailed the investments in new spectrum in DRC, Mozambique, and Tanzania, leading to a 5.7 percent normalized growth in service revenue to R7.4 billion. The international customer base expanded to 55.0 million, supported by strong commercial execution and further network investments. Significant gains in data traffic and smartphone user numbers highlight the success of innovative financing models, such as the new daily repayment option.
Vodacom revenue up under Shameel Joosub
Vodacom Group, led by Shameel Joosub, boasts over 200 million subscribers across Africa. Beyond South Africa, Vodacom has operations in Tanzania, the Democratic Republic of Congo, Mozambique, and Lesotho, underscoring its commitment to expanding connectivity on the continent.
Joosub, one of South Africa’s wealthiest executives, holds a 0.09-percent stake in Vodacom, valued at roughly $9.56 million (R175.1 million). The veteran South African executive has been instrumental in guiding the company to recent financial achievements.
Vodacom’s revenue surged 26.4 percent year-on-year to R150.59 billion ($8.24 billion) for the fiscal year ending March 31, 2024. This marks an impressive financial milestone for the group.
