Vodacom is rocking – but takes earnings hit from Africa

Vodacom’s profit and revenue skyrocketed over its past financial year but took an earnings hit from its African operations.

The telecoms giant released its annual results for the year ended 31 March 2024, which revealed a strong performance.

The company’s revenue of R151 billion was up 26.4%, positively impacted by the acquisition of Egypt.

Vodacom CEO Shameel Joosub said the company’s Egypt acquisition contributed significantly to the 29.1% increase in group service revenue, supported by a resilient performance in its largest market, South Africa.

Vodacom saw EBITDA growth of 24.3% or 7.8% on a pro forma basis. Free cash flow generation of R18.2 billion supported lower leverage of 0.9x net debt to EBITDA.

Joosub said a 6.4% increase in net profit showcased the robustness of Vodacom’s strategy and execution track record of adapting to changes in its operating environments despite elevated global economic pressures.

“In a year when we celebrate our 30th anniversary, we also surpassed the 200 million customer mark. These are two particularly gratifying milestones in Vodacom’s history,” Joosub said.

“Our customer base is evenly split across our segments, which include South Africa, Egypt, International business and Safaricom, showcasing the breadth of our footprint, which covers more than half a billion people across the continent.”

In aggregate, Vodacom’s new services, which include digital and financial, fixed and IoT, reached a contribution of 20.0% of group service revenue.

Financial services are the key driver of Vodacom’s new services, evidenced by the 11.8% increase in financial service customers to 78.9 million.

Vodacom now processes an impressive $381.2 billion in annual transaction value.

However, Vodacom’s earnings took a hit in the past financial year, with headline earnings per share declining by 10.8% to 846 cents per share and earnings per share down by 11.2% to 842 cents. 

The company attributed this to a combination of start-up losses in Ethiopia, higher finance and energy costs, the impact of absorbing inflationary pressures, and weaker exchange rates across markets, including the recent devaluation of the Egyptian pound.

Vodacom declared a dividend of 590 cents per share, n 11.9% decline from the previous year’s dividend.