Vodacom Group said its revenue increased by 7.8 percent to ZAR 47.8 billion in the six months to 30 September compared to ZAR 44.39 billion in the same period in 2019, underpinned by service revenue growth of 7.0 percent and the weaker rand. Service revenues rose 7.0 percent to ZAR 38.5 billion and were up 3.4 percent on a constant currency basis.
The African operator added 4.1 million new customers during the period to serve a combined 120 million customers across the group, including Safaricom. Total financial services customers, including Safaricom, increased by 13.9 percent or 6.7 million to 54.8 million.
Earnings per share rose 15.6 percent to ZAR 5.33 in the first half, and headline earnings per share rose by 15.7 percent to ZAR 5.32, boosted by a one-off deferred tax rate adjustment of ZAR 0.7 billion in the period. Net profit rose 13.1 percent to ZAR 9.29 billion, and EBITDA increased by 7 percent to ZAR 19.43 billion.
Free cash flow jumped 92.1 percent to ZAR 5.28 billion, reflecting growth in cash generated from operations and the timing of the Safaricom dividend receipt. Capital expenditure rose by 3.2 percent to ZAR 6.55 billion in the first half. Vodacom declared an interim dividend of ZAR 4.15 per share, up 9.2 percent from a year earlier.
Looking ahead, Vodacom sees scope for consumer spend to recover as trading and economies re-open from lockdowns. Vodacom reinstated its medium-term targets of mid single-digit service revenue and operating growth and capex at 13.0-14.5 percent of group revenue. These are an expected average over the next three years based on constant currency rates and excluding exceptional items. Vodacom said operating profit growth would trend below the target this fiscal year, offset somewhat in reported figures by the rand weakness.
Organic revenue down 5% at International operations
At the International operations, Vodacom reported service revenue growth of 5.8 percent to ZAR 11.41 billion, benefitting from rand weakness in the period. In constant currency, service revenue was down 5.2 percent, hurt by the effects of the coronavirus crisis. The customer base increased 5.5 percent to 38.6 million, with net additions of 924,000 in the second quarter reflecting some improvement in its commercial activities relative to the first quarter.
Vodacom's international operations added 459,000 new data customers to end the period at 20.4 million. Of these customers, only 10.7 million were on smartphones. Data traffic growth for the six months was buoyant at 50.0 percent, as a result of network investments and affordable commercial propositions. Data revenue grew 4.8 percent in local currency, and M-Pesa revenue was up 14.1 percent to ZAR 2.2 billion.
EBITDA declined by 1.9 percent to ZAR 4.22 billion at the international operations, reflecting the service revenue decline, which was mitigated by cost containment initiatives. Capital investment of ZAR 1.5 billion was focused mainly on expanding the 4G network and equalled a 3.1 percent decrease over ZAR 1.57 billion in 2019.
