Work from home, online schooling boosts Vodacom

Vodacom Group Ltd, SA’s second-biggest telecoms operator, upgraded its medium-term operating growth target to mid-to-high single digit on Tuesday after reporting a 3.7% jump in full-year earnings.

The operator said it upgraded its medium-term operating profit growth target from mid-single digit on improved growth prospects for its international business and Kenya’s Safaricom, which is part owned by Vodacom and Britain’s Vodafone Group Plc.

Headline earnings per share (HEPS), the main profit measure in the country, rose to 980c in the 12 months ended March 31 from 945c a year earlier.

Vodacom, which is majority owned by Vodafone, declared a final dividend of 410c per share, up 1.2%.

Group revenue rose by 8.3% to R98bn, supported by service revenue growth of 5.8%.

Service revenue growth was “underpinned by the recovery in our international portfolio in the second half of the year and strong growth from our prepaid and enterprise segments, financial services and other new services in SA,” Vodacom said.

In SA, service revenue grew by 7% on the back of increased data usage as people worked and children were schooled from home, a summer rewards campaign and demand for financial services.

These helped to offset initiatives such as a R3bn service revenue impact of lowering data pricing in the country.

Its international operations reported service revenue growth of 1.6%, with a stronger second half offsetting the significant impacts of Covid-19 earlier in the year, Vodacom said.

The international business took a R2bn service revenue impact due to “zero-rating” or not charging peer to peer M-Pesa transactions.

M-Pesa, which is used to send money, save, borrow and make payments for goods and services, now processes $24.5bn (about R343bn) a month in transaction value across Vodacom’s international markets, including Safaricom, up 63.5%, it said.