Vodacom Group has delivered solid financial results, boosted by its financial services business, in its financial trading report for the year ended 31 December – with a service revenue increase of 17.2%.
In SA, the telco’s financial services continue to grow at a double-digit rate, supported by its insurance portfolio, VodaPay and Airtime Advance product.
According to the telephony group’s full-year results,while the global economic slowdown and load-shedding knocked its profit by 6.4%, its financial services revenue increased 29.2% (14.3%) to R9.9 billion, contributing 10.5% to group service revenue.
The telephony group says given the numerous external pressures and financial market uncertainty, it is particularly pleasing to have delivered a satisfactory set of results. This reflects the resilience of its multi-service strategy and track record in adapting quickly to changes across operating environments, it comments.
Vodacom Group continues to scale its product suite of financial services – comprising VodaPay, VodaLend, VodaSure and VodaTrade, among others – for consumers and merchants across the continent, it notes.
Financial services customers increased 100%, to 70.6 million, transacting $1 billion per day. It says group EBITDA growth of 13.2%, or 6% (3.6%), excluding Vodafone Egypt, reflects a clear improvement in second-half profitability.
Shameel Joosub, Vodacom Group CEO, says: “In South Africa, financial services continue to grow. I am particularly encouraged by the traction and transaction volume growth that our VodaPay super app continues to attract through its 5.7 million downloads and 3.3 million registered users.
“In the coming year, we will scale lending, insurance and payment products, including cash-in and cash-out, while creating new business cases for remittances and wealth management.
“Our digital services, fixed and internet of things businesses were also solid performers, while wholesale revenue pressures and a strong prior year saw Vodacom Business service revenue decline marginally by 1.7%.”
Electricity deficit
The power crisis in SA, higher interest charges, Ethiopia start-up losses, merger and acquisition costs, as well as higher inflation across its markets, weighed on net profit growth of 2.1%.
The sustained levels of load-shedding have been disastrous for the South African economy and the industry as a collective, adds Joosub.
“Vodacom responded to SA’s power crisis with increased investment in power resilience, which has ensured network availability and contributed to an accelerated demand for data, up 45.4% in the fourth quarter,” says the group.
“Since 2020, Vodacom SA has spent over R4 billion on backup power solutions, such as batteries and generators, and a further R300 million in the past financial year on additional running costs in the form of diesel, security and maintenance.”
The group’s proposed purchase of a joint venture stake in South African fibre company Maziv is expected to assist in narrowing the digital divide, by enabling affordable access to connectivity in some of the most vulnerable parts of the country through an “ambitious” fibre rollout programme, it points out.
“The joint venture will house the material fibre network assets of Vodacom SA and CIVH [Community Investment Ventures Holdings], and having received Independent Communications Authority of SA approval in October last year, subject to conditions, the transaction remains subject to the Competition Commission’s ongoing approval process,” says Joosub.
In other markets, the group adds, since consolidating Vodafone Egypt on 8 December 2022, it has contributed R8 billion to group service revenue, prompting an upgrade in the group’s medium-term service revenue and EBITDA growth targets.
“We diversified and accelerated our growth profile by completing the acquisition of a 55% stake in Vodafone Egypt for R43.6 billion, the largest acquisition in the Vodacom Group’s history and one that expands our population reach to over 500 million people across Africa.”
The group says it remains committed to spending 13% to 14.5% of its overall revenue on capital expenditure that ultimately results in an enhanced customer experience through sustained investments in technology and network infrastructure.
“Looking ahead, the operating environment that we face requires an unwavering focus to deliver our strategy, meet our business objectives and serve our customers. We continue to ensure we have the right measures in place – including our commercial initiatives and cost-efficiency programmes – to help mitigate the impacts from the global macro-economic risks,” states Joosub.
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