Vodacom gets a boost from Egypt but earnings dip

Vodacom reported revenue growth of over 35% for the six months through September 2023, but its earnings dipped amid higher interest rates, elevated levels of inflation and currency volatility.

Vodacom released its results for the six months ended 30 September 2023 today, which revealed solid results for the telecoms giants.

Group revenue was up 35.5% to R72.8 billion, boosted by the acquisition of Vodafone Egypt.

Service revenue grew by 42.2%, or 7.9% when excluding the Vodafone Egypt acquisition.

Vodafone Egypt was the largest acquisition in Vodacom’s history and delivered service revenue of R14.3 billion, contributing 24.1% of group service revenue despite challenging macroeconomics, the company said. 

This performance was supported by strong growth in data revenue, customer engagement and content integration. Vodafone Egypt ended the period with 47.0 million customers, up 5.5%.

Vodacom’s EBITDA increased by 35.1%, or 5.5% on a pro-forma basis, but the company’s EBITDA margin shrunk by 0.1 percentage points.

The company’s earnings per share declined by 5% to 434 cents per share, while headline earnings per share shrunk by 4.2% to 438 cents.

CEO Shameel Joosub attributes this dip to higher interest rates, elevated levels of inflation and currency volatility across Vodacom’s markets

He said the decline was largely attributable to start-up losses in Ethiopia, higher interest rates and a prior year deferred tax asset recognised in Tanzania.

Vodacom’s free cash flow also dipped into the negatives in the period, going from R2.03 billion in 2022 to -R181 million in the reporting period. However, operating cash flow grew by 49.1% to R7.17 billion.

Vodacom declared an interim dividend of 305 cents per share, down 10.3% from the previous year.