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Work and study at home trend a major boost for Vodacom as revenue climbs to R100bn

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Working and studying from home was a major boost for Vodacom during the year ended March 2021, with revenue climbing to almost R100 billion and shareholders receiving a bumper final dividend.

A logo sits on display outside the headquarters of Vodacom Group Ltd. in Johannesburg. Picture: Dean Hutton/Bloomberg

WORKING and studying from home was a major boost for Vodacom during the year ended March 2021, with revenue climbing to almost R100 billion and shareholders receiving a bumper final dividend.

Vodacom said group revenue increased to R98.3bn, 8.3 percent higher than the R90.7bn reported a year earlier thanks to the 5.8 percent increase in service revenue to R77.6bn.

“This is particularly pleasing in a difficult trading environment and is testament to the rapid manner in which the company and its employees adapted to the crisis,” chief executive Shameel Joosub said.

The group declared a R7.52bn final dividend, representing R4.10 a share, underscoring the business’ strong fundamentals, while the ordinary dividend a share for the year was 5.1 percent higher at R8.25 from R7.85 a year earlier.

Vodacom benefited from the strong growth in the prepaid, enterprise segments, the financial services business, other new services in South Africa as well as a recovery in the international footprint during the second half of the year.

The group added 8 million new customers during the year, bringing the total number of customers, including Safaricom, to 123.7 million.

Highlights for the year included the 12.9 percent hike in financial services customers to 57.7 million, including Safaricom. The group’s financial services business is mostly outside of South Africa where customers are mainly unbanked and rely on mobile financial services for their transactions.

The financial services business generated R19.3bn revenue during the year, contributing 17 percent to service revenue. Joosub said the group expected the financial services business to scale up with the introduction of the lifestyle super app in South Africa later this year.

In South Africa, the group made R10.1bn in capital investments to boost its network resilience and capacity after work and study shifted to home and the company introduced data price cuts in April 2020.

Domestic service revenue grew by 7 percent to R56.4bn on increased data usage. “The growth was fuelled by increased demand for connectivity, particularly in prepaid and Vodacom Business and new services such as loT and financial services,” said Joosub.

Mobile customer contract revenue increased 5 percent to R20.8bn with 133,000 new contract customers added during the year. Vodacom Business revenue increased 11.3 percent to R15.9bn supported by innovative work from home solutions.

However, international operations reported muted service revenue growth of 1.6 percent in the year, with a stronger second half helping offset the significant impacts of Covid-19 earlier in the year.

Commenting on the group’s results, David Lerche, the head of Equities at Sanlam Private Wealth, said Vodacom’s fundamentals were strong given the dividend. “The group’s balance sheet is not stretched and it also earns a much greater proportion of its profits in South Africa, so it doesn’t have the issues with repatriating profits from other countries that MTN has,” said Lerche.

He said that the results demonstrated that Vodacom again showed the stability and predictability of the telecoms industry as well as its cash-generation ability.

“Vodacom’s efforts to move beyond mobile to drive growth via fintech and the upcoming ‘super-app’ are interesting, but it will take time,” Lerche said.

Vodacom shares closed 1.80 percent lower at R124.68 on the JSE yesterday.

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