Vodacom strong; eyes war in Ethiopia ahead of licence bid

While parent company Vodafone has been hit hard by slashed roaming data revenue, South Africa’s Vodacom has seen soaring household-data usage since the start of lockdown in March. Vodacom CEO Shameel Joosub says the firm is confident that it will be in a strong financial position for the local spectrum auction. Meanwhile Vodafone says it is looking ahead to 2021. A ‘key focus for 2021’ will be how the 20% of the European Union’s 750 billion euro Recovery Fund earmarked for digital initiatives will be distributed, it said. – Melani Nathan

Vodacom resets targets with post-pandemic light on horizon

By Loni Prinsloo

(Bloomberg) — Vodacom reinstated growth targets based on an expected economic recovery from the Covid-19 crisis in 2022, and said it has the financial strength to take part in a long-awaited auction of broadband spectrum in South Africa.

The country’s largest mobile-phone company now sees mid-single digit growth in both service revenue and operating profit over the next three years, according to a statement on Monday. The move follows a decision by the Johannesburg-based company to scrap forecasts in the early phase of the pandemic, in response to the uncertain environment.

South Africa’s telecommunications industry has held up better than some during the coronavirus era, with soaring household-data bills helping to offset the impact of slower economic activity. In Vodacom’s home market, data usage surged 86% in the six months through September, and the company boosted investment in network infrastructure over the period to 6.6 billion rand ($427 mn). Next up for the company, which is majority owned by the U.K.’s Vodafone Group, is to prepare for South Africa’s sale of more than R8bn of spectrum, pledged in early October as part of a range of government measures to revive the economy.

Vodacom and MTN Group, its chief rival, have long called for the move, but political disputes over how it should proceed have thwarted the process.“We have a strong balance sheet, and we have adequate headroom to take on more debt at favorable rates to take part in a spectrum auction,” Vodacom Chief Executive Officer Shameel Joosub said on a call with reporters.

Read also: Vodacom appoints new Group Chief Financial Officer

Ethiopia War

Vodacom, which has international operations in Tanzania, Mozambique and the Democratic Republic of Congo, is among carriers planning to bid for new telecom licenses in Ethiopia, though an ongoing military conflict in the Horn of Africa nation is giving the carrier cause for concern.

“We are monitoring the situation and we will make a call closer to the time,” the CEO said. Vodacom is planning to take part alongside Vodafone and Kenya’s Safaricom, in which it owns a minority stake.

Fighting erupted between Ethiopia’s central government and the northern Tigray region in early November, leading to the deaths of hundreds of people to date. The battle won’t distract the government from implementing reforms, including the telecom privatization, State Finance Minister Eyob Tekalign said last week.

Vodacom reported first-half gains in revenue, earnings and customer numbers, and will pay an interim dividend of R4.15, up 9% year-on-year.

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