Vodacom misses earnings estimates – Will explore further ‘Neotel-type’ options

Vodacom raised three-year targets for revenue and earnings as rising investment in its network delivers growth in South Africa and international markets.

Published on:

16 May 2016, 7:40 am

By Loni Prinsloo

(Bloomberg) — Vodacom Group Ltd., Africa's largest wireless operator by market value, raised three-year targets for revenue and earnings as rising investment in its network delivers growth in South Africa and international markets.

Service revenue will probably rise by an average percentage in the low-to-mid single digits over the next three years, while earnings before interest, taxes, depreciation and amortization is seen rising by mid-to-high single digits, the Johannesburg-based unit of Vodafone Group Plc said in a statement on Monday. The company had previously forecast low single-digit growth for service revenue and mid-single digits for Ebitda.

A logo sits on display outside the headquarters of Vodacom Group Ltd. in Johannesburg, South Africa.

"We continue to focus on developing our growth areas, by driving greater contribution from our international operations, deepening our enterprise offers, growing fiber to the home and fiber to the business, accelerating data growth," Vodacom said.

Vodacom, which has overtaken cross-town rival MTN Group Ltd. as the continent's biggest phone company by market value, is investing in data-services growth as smartphone usage rises across markets including South Africa, Tanzania and the Democratic Republic of Congo. The company abandoned a pursuit of Neotel Pty Ltd. in March after almost two years of regulatory battles and legal opposition to the deal by competitors, an acquisition that would have boosted its Internet offering.

"We will explore further options and opportunities to secure access to spectrum in all our markets," Vodacom said.

Earnings per share excluding one-time items rose 2.7 percent to 8.83 rand in the year through March, the Johannesburg-based company said. That compares with a 9.13 rand average estimate by analysts surveyed by Bloomberg. Sales rose 8 percent to 80 billion rand ($5.2 billion).

Read also: Vodacom targets loss-making Broadband Infraco after lapse of R7bn Neotel bid

The earnings growth was affected by the remeasurement of foreign-currency denominated intergroup loans and one-off charges related to black economic empowerment, a way South Africa redistributes wealth to benefit those discriminated against during apartheid.

Vodacom will pay a final dividend of 4 rand a share, taking the total payout to 7.95 rand. That compares with 7.75 rand in the previous year. The stock has gained 7.6 percent this year, valuing the company at 244 billion rand.

From Fin24

Data spurs on solid Vodacom revenue growth

By Gareth van Zyl

Johannesburg – South Africa's biggest mobile network Vodacom [JSE:VOD] has reported group revenue growth of 7.5% across its operations with its data revenues climbing 26.7%.

The company released its preliminary results for the year ended March 31 2016 which reported that its total revenue across its African and South African operations increased from R74.5bn to R80bn for the financial year.

Vodacom's African markets range from Mozambique to Lesotho and the Democratic Republic of the Congo (DRC).

In South Africa specifically, Vodacom reported that its revenue grew at 5.2% to reach R62.3bn thanks to a 6.2% increase in equipment sales. Vodacom South Africa also recorded a 4.9% increase in service revenue to R49.3bn as the business returned to growth following a 50% cut in mobile termination rates (MTRs).

https://twitter.com/ArabileG/status/730631768605401088

Vodacom Group also reported that its headline earnings per share (HEPS) – which is a measure of profit in South Africa – is up 2.7% to 883 cents per share. Vodacom has said that its HEPS, though, was "negatively impacted by remeasurement of foreign currency denominated intergroup loans and one-off BEE charges".

But it's Vodacom's data services business which has recorded among its strongest growth. Data revenue for the group increased 27.7% to R17.3bn with data traffic growth of 46.8% for the period.

"Affordability of devices and data bundles led to a 46.8% increase in data traffic as data bundle sales jumped 85.9%. Our personalised 'Just 4 You' offers, part of our wider pricing transformation strategy, assisted in improved voice revenue trends, while at the same time reducing effective price per minute by 16.9%," said Vodacom CEO Shameel Joosub in a statement to shareholders.

Read also: PIC's R25bn stake in Vodacom up for grabs – for Romeo, "selected" investors

Meanwhile, in terms of subscriber numbers, Vodacom said that its base in South Africa increased by 2.1 million over the year to 34.2 million connections, which entrenches its dominance in the country.

Across its African operations, Vodacom reported that it experienced a "slight decline in customers to 61.3 million" over the period owing to several countries moving to deactivate unregistered SIM cards.

Other highlights of Vodacom's results include that its group Ebitda (earnings before interest, taxes, depreciation ammortisation) grew 12.8% to R30.3bn, its group capital expenditure – which focused on LTE expansion – was R12.9bn for the period and its group data revenue was up 28.5%.

Vodacom's final dividend for the year is 400 cents, which takes its total dividend to 795 cents per share for the year is Group data revenue up 28.5%, supported by strong network investment. – Fin24

Source: http://www.fin24.com/Tech/Companies/data-spurs-on-solid-vodacom-revenue-growth-20160516

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