Vodacom’s forex headache
Vodacom’s growth in the last three months of 2024 was severely hampered by foreign exchange headwinds, particularly in its Egypt segment.
The telecoms giant released a trading update for the quarter ended 31 December 2024, which showed lacklustre revenue growth.
The company said group revenue grew by 1.6% to R39.5 billion, impacted by a stronger rand.
If adjusting for foreign exchange impacts and the impact of merger, acquisition and disposal activities, group revenue could have grown by 12.6%.
Similarly, Vodacom’s service revenue would have grown by 11.6% on a normalised basis but, in reality, declined by 1.4%.
The company said this was impacted by the devolution of the Egyptian pound in March 2024.
Vodacom’s South Africa segment showed the strongest growth, with revenue increasing by 4.7%.
Egypt was by far the worst-performing segment, with a 7.5% decline in revenue. This segment, in particular, faced foreign exchange headwinds.
In local currency, this segment grew revenue by 54.9% and service revenue by 44.3%. Hovering, in rand terms, the segment saw service revenue shrink by 13.9%.
Vodacom CEO Shameel Joosub said these results support the telecoms giant’s previously communicated confidence that it is poised for a stronger second-half performance.
“While currency headwinds continue to impact various markets where we operate, the focused execution of our strategy has resulted in a resilient operational response to the extent that we remain well on track to deliver on our medium-term financial targets,” he said.
“Additionally, the recent currency market stability, particularly in Egypt, bodes well for the group’s performance in the year ahead.”
Vodacom said its medium-term targets remain unchanged at:
- Group service revenue growth of high single-digit growth
- Group EBITDA growth of high single-digit growth
- Group capital expenditure of 13.0% to 14.5% as a percentage of group revenue
However, the company said these targets do not account for potential hyperinflation adjustments.
Vodacom reported group capital expenditure of R14.3 billion year to date equates to an intensity ratio of 12.7%.
It warned that, for the 2025 financial year, the company’s intensity ratio is likely to be at the lower end or slightly below the medium-term target range, supported by savings on energy resilience spend in South Africa.
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