Vodacom takes a knock

Vodacom’s strong performance for the first half of its 2025 financial year was offset by significant foreign exchange headwinds.

The telecoms giant released its results for the six months through September 2024 today, which revealed a mixed performance.

On a normalised basis, Vodacom’s revenue grew by 10.4%, but foreign exchange headwinds meant the company only reported 1% revenue growth.

This also impacted the company’s operating profit, which would have grown by 9.6%, but Vodacom reported a decline of 5.2%.

The company’s earnings per share declined by 18.4% to 354 cents per share, while headline earnings per share dropped by 19.4% to 353 cents per share.

Vodacom said this decline was largely attributable to foreign exchange rate losses in Ethiopia of 53 cents per share and once-off operating costs and taxation in the Democratic Republic of the Congo of 30 cents per share

The foreign exchange rate losses in Ethiopia were the result of the depreciation of the birr in the second quarter and the related remeasurement of foreign-denominated assets and liabilities in Safaricom Ethiopia.

“The prevailing birr exchange rate does, however, provide scope for an earnings tailwind into the second half of the financial year, given that Ethiopia is currently loss-making,” Vodacom explained. 

In South Africa, Vodacom now services 49.2 million customers, an increase of 4.2% from last year. 

Vodacom CEO Shameel Joosub said this was driven primarily by beyond mobile services, the consumer segment and prepaid mobile data, which saw service revenue in South Africa grow 1.3% to R31.1 billion despite pressure in the wholesale segment. 

Beyond mobile services increased 8.1%, contributing R5.5 billion or 17.7% of service revenue. 

Vodacom’s South Africa segment grew EBITDA by 2.3% while operating profit increased by 2.4%, thanks to a moderated investment in energy resilience, given the recent stability of the national electricity grid.

Joosub explained that, given the expected phasing impact of the currency deprecation in Ethiopia on headline earnings for the full financial year, Vodacom’s board declared an interim dividend of 285 cents per share, slightly down from last year.

“Looking ahead and despite the pressures associated with this economic cycle, we will continue to invest in and execute our strategy,” Joosub said. 

“It is pleasing that our markets continue to deliver strong operational momentum despite the material currency devaluations in Egypt and Ethiopia.” 

“While we remain mindful of an evolving macro-economic environment across our footprint, including foreign exchange rate risk, I believe that the group is well positioned to capitalise on opportunities once the global economy shifts from its current cautious optimism to sustainable growth.” 

Maziv-Vodacom deal

The CEO also addressed the Competition Tribunal’s recent decision to prohibit Vodacom’s investment in Vumatel and DFA-owner Maziv at the end of October.

The Tribunal’s decision to prohibit the merger followed hearings that lasted 26 days, from 20 May to 27 September 2024. 

Community Investment Ventures Holdings (CIVH) is one of Remgro’s key investments. The company is active in the telecommunications and information technology sectors.

Its operating companies are Dark Fibre Africa (DFA) and Vumatel, which construct and own fibre-optic networks.

Following an internal restructuring in 2023, DFA and Vumatel are held under Maziv, a newly formed wholly-owned subsidiary of CIVH, which is majority-owned by Remgro.

Vodacom planned to acquire up to 40% of Maziv through assets of R4.2 billion and cash of at least R6.0 billion.

However, this plan was stopped in its tracks when the Competition Tribunal blocked the deal, citing anti-competitive concerns.

In Vodacom’s interim results, Joosub said the transaction was designed to assist Maziv in growing its fibre footprint into lower-income areas and would have been highly beneficial for South Africa. 

“We await the Competition Tribunal’s detailed reasons for prohibiting the transaction before considering all options available to Vodacom, which may include an appeal in the Competition Appeal Court,” he said.