South Africa’s Vodacom Group, a major player in the telecommunications industry, reported a significant 10.8% fall in full-year earnings. This was primarily due to a start-up loss in Ethiopia, higher finance and energy costs, and inflationary pressure.
As part of its strategic initiatives, the company, majority-owned by Britain’s Vodafone VOD.L, co-launched Safaricom Ethiopia in 2022. This move, made in a consortium, is a strategic bet on the populous nation to power growth after about five years of investment. Vodacom holds a direct 5.7% stake in this venture.
The biggest telecoms operator in South Africa reported that its headline earnings per share (HEPS), a key profit measure, fell to 846 cents in the year ended March 31. This is a significant drop from the 948 cents reported a year earlier, indicating a challenging year for the company.
Group CEO Shameel Joosub said weaker exchange rates across markets, including the recent devaluation of the Egyptian pound, contributed to the decline in HEPS.
He said that despite the start-up costs associated with operations in Ethiopia, Safaricom has confirmed that its network roll-out is on track in Africa’s second-most populous country after Nigeria.
Group service revenue grew 29.1% to US$6.57 billion, benefiting from the acquisition of Vodafone Egypt. On a pro-forma comparable basis, group service revenue growth was 9.2%, at the higher end of its medium-term range.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) grew 24.3% to 56.1 billion rand and by 7.8% on a pro-forma basis, with Egypt being a key growth driver.
