Safaricom acquisition boosts Vodacom

Safaricom acquisition boosts Vodacom

Speaking at Vodacom's interim results, in Midrand, on Monday, CEO Shameel Joosub noted that the new acquisition had boosted an otherwise lacklustre profit performance during the six months to September 30. Voice revenue declined by 4.8%. It concluded acquisition of 34.94% interest in Safaricom, contributing R349 million profit for first two months, including amortisation of fair valued assets.

Group EBIT declined 0.2% (-1.4%) to R10.8 billion, impacted by higher growth in depreciation and amortisation charges, though Vodacom said it added 4.3 million customers during the first half of the year - 2.9 million of which were in South Africa, which now has a total of 40 million Vodacom subscribers (up over 12%).

An interim dividend share was down 1.3% to R3.90 per share, from a year-ago period.

In addition to increasing data network speeds and improving data coverage, the group said it retained a strong focus on providing customers with access to better, low-priced smart devices, by promoting Vodacom-branded devices. Group service revenue grew 2% to R34.7bn. "In turn, this should continue to drive revenue and customer growth across all markets", Joosub said.

M-Pesa revenue now contributes 27% to service revenue and mobile data 16% to Vodacom Group. Data and M-Pesa revenue also continued to grow. Migration to the new "more data" contracts, which have a larger data allocation, accelerated to 25% of the base.

Joosub added that the group had delivered on its promises to reduce data prices and addressing out-of-bundle prices.

"Additional spectrum will allow us to invest more efficiently and accelerate our rural coverage programme".

The company battled unfavourable currency headwinds, which took some shine off its worldwide operations, with revenue and service revenue declining 5.2% and 4.8%, respectively.

Data revenue comprised 13.6 percent (2017: 13.4%) of global operations' service revenue. M-Pesa revenue grew 14%. M-Pesa added 1.1 million customers in the first half of the year, reaching 14.8 million. "We expect that the Safaricom transaction will further drive M-Pesa development and penetration outside of South Africa", it said.

"Customer growth in all markets remains strong, with 56% of customers now using this service in Mozambique, 35.3% in Lesotho and 22.2% in the Democratic Republic of Congo".

The group's capital expenditure of R1.5bn was directed towards strengthening network and service differentiation and to support wider voice coverage and data growth.

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