During its annual financial results presentation for the year ending March 2019, Vodacom has revealed that it experienced a drop in net profit for the first time in 4 years. This was as a result of data prices being dropped and costs associated with a Black Economic Empowerment (BEE) deal according to the telecommunications company.
However, Vodacom experienced strong earnings performance outside of South Africa.
"The financial impacts of delivering on our promise of further reducing the cost-to-communicate in South Africa, combined with costs associated with concluding our new R16.4 billion BEE ownership deal, is evident in the subdued increase in our operating profit. This masks an otherwise solid operational performance for the Group, where service revenue grew by 5.0%, led by strong performance in our International portfolio. Excluding one off BEE costs, Group headline earnings per share (HEPS) rose by 4.2%µ.In August last year, through Vodacom Lesotho, we laid claim to being first in Africa to connect customers to a commercial 5G network. Vodacom South Africa remains ready to follow Lesotho's lead as soon as the requisite 5G spectrum is secured, a crucial step in ensuring that the country doesn't get left behind from participating in the Fourth Industrial Revolution.We connected an additional 6 million customers to the Vodacom and Safaricom networks, a 5.8% increase to 110 million in total. At the same time, we invested close on R13 billion in network and IT infrastructure to ensure all customers benefit from superior service and network experience across our footprint," said Shameel Joosub, CEO at Vodacom Group.
Vodacom reported that net profit for the financial year was R 14,82 billion compared with R15,34 billion the year before. While revenue was reported to have been R86,63 billion, up from R86,37 billion.
Below are some of the highlights from the annual report as published by Vodacom.
Highlights from Vodacom's annual results
Group service revenue up 5.0% (3.8%) to R74.2 billion#; and Group revenue increased 4.3% (3.2%) to R90.1 billion#.
We now have 110 million customers across the Group, up 5.8%.
South Africa service revenue increased 2.1% to R55.7 billion#, improving growth in Q4, with 1.5 million new customers enjoying our superfast network.
International operations achieved mid-teens service revenue growth of 15.6% (10.3%*) as we drive Financial Services inclusion and continue to connect customers across all our
Safaricom reported net profit of 14.7% and proposed both a normal dividend of KES50.08 billion (R2.3 billion)(1) and a special dividend of KSh 24.84 billion (R1.1 billion)(1).
Safaricom contributed R2.8 billion# net profit, net of the amortisation of fair valued assets and before minority interest.
Concluded our R16.4 billion Broad-based black economic empowerment (BEE) ownership deal in September, the largest deal of its kind in the ICT sector.
Operating profit of R24.5 billion#, up 1.1% or 7.4% excluding a one off non-cash IFRS 2 charge of R1.4 billion, and transaction costs of R124 million relating to the BEE deal. Our
operations outside of South Africa now contributing 23.0% to operating profit, up from 14.0% in the previous year.
Continued significant capital investment of R13.0 billion to improve quality and coverage of all our networks, and strengthen our IT capabilities.
Earnings per share of 867 cents# and final dividend of 400 cents per share. Full year dividend of 795 cents per share, impacted by additional shares issued for the BEE ownership transaction.
Cover image credit: English: Vodacom container shop in Joe Slovo Park, South Africa. Wikimedia Commons