Vodacom grows subscribers, earnings

Johannesburg, 31 May 2002

Vodacom increased its headline earnings 37% to R2.45 billion in the 12 months to 31 March, and now has 6.86 million subscribers.

The figures were released in the interim report of VenFin, a JSE-listed company that owns 13.5% of the cellular operator. VenFin says the network performed well, recording an earnings before interest, tax, depreciation and amortisation margin of 34.9%.

At the end of March, Vodacom had 6.56 million subscribers in SA, with its operations in Tanzania reporting 228 491, Lesotho 56 549 and the Democratic Republic of Congo (DRC) 21 116.

Vodacom reported around 5.82 million subscribers at the end of September. Rival MTN at the time had 3.54 million subscribers.

Although the number of Vodacom subscribers outside the country account for only 4.5% of the total, operations were only recently launched in the DRC, and both it and Tanzania are considered markets with a high potential for future growth.

MTN, whose parent company M-Cell is due to release its results on 12 June, earlier this year reported that it had already signed up 300 000 subscribers at its Nigerian subsidiary. The country has three times the population of SA and only a fractional number of telephones in use.

By November last year it had another 420 000 subscribers in Uganda, Cameroon, Rwanda and Swaziland.

Both MTN and Vodacom have identified expansion into the rest of the continent as crucial for their future growth as the local market is seen as saturated. Cell C, which entered the South African market late last year, says it has signed up 500 000 subscribers since, but 80% of those defected from either MTN or Vodacom.

VenFin results

R&V Holdings, in which VenFin has a 33% interest, saw its earnings decrease during the year.

VenFin CEO Joshua Malherbe says this is mainly because of lower interest earned - the result of lower interest rates. Other factors were less cash as well as the previous year`s non-recurring income of R77 million.

R&V`s income consists mainly of interest earned on cash and on the Alexander Forbes bond.

Another main source of headline earnings at VenFin is net interest received on cash in SA and abroad. This rose from R60 million to R89 million despite lower local interest rates and the redeployment of cash into new investments.

"The other investments performed satisfactorily in the difficult market conditions, with a headline loss of R38.7 million," Malherbe says. This compares with a previous headline loss of R75.9 million for these operations.

"The majority of these investments is still in a development phase and will only contribute to the group`s earnings over the medium- to long-term."

Malherbe says VenFin is continually involved in evaluating potential investments and acquisitions locally and abroad.

He adds that VenFin focuses on high growth technology investments possessing proprietary intellectual property with international potential.