• Vodacom Group saw profits of R9.6 billion in South Africa posted in its latest interim results.
• This represents a 3.3 percent year-on-year decrease on the back of tough macroeconomic conditions in the country.
• Its other business arms like Safaricom and Vodafone Egypt saw sturdy profit gains compared to previous years.

It’s been a difficult year for some of South Africa’s largest corporations. With telecom firms like MTN and Telkom reporting on huge spending thanks to loadshedding affecting operations, and retailers like Pick n Pay posting slumped profits on the back of a year-long shrinkage in consumer spending power, now even the latest results from Vodacom tell of local woes.

In its interim results posted on Monday, Vodacom revealed that operating profits topped R9.6 billion compared to R9.9 billion last year, a 3.3 percent decrease. Vodacom made less money this year than the year previous even though revenues were up by 4 percent to R30.7 billion.

The telecom blames “a backdrop of a depressed macroeconomic environment and inflationary pressures on the consumer wallet” on the decline in yearly profits, but still posted gains in several other business areas. Including the usage of its new services, including financial, digital, fixed and IoT which were up 18.1 percent and contributed R5.1 billion to the group or 16.6 percent of local revenue for the period.

This shows that new products are still an important piece of the business’ growth in South Africa

In the last six months, Vodacom also added 105 000 South Africans as contract customers, rounding out a base of 6.8 million who pay monthly. Data traffic increased by 45.2 percent with 25.8 million people buying data from Vodacom during the period.

South Africans are seemingly using more data as usage per smart device – smartphones or tablets – increased for Vodacom by 33.6 percent to 3.7GB per month. Prepaid data usage also increased by 15.3 percent with customers paying R6.2 billion in the last six months.

“This growth reflects our best-in-class network availability and the success of our data-led propositions focused on providing affordable offers to the most price-sensitive, lower-income customers,” explained the telecom in its results statement.

Amid the tough market and energy difficulties from loadshedding, Vodacom said it invested R4.8 billion to ensure that its network stays online for its customers. The investment sought to also make better usage of the spectrum assets it purchased from ICASA in 2022, as well as to enhance its IT platforms.

It said it expects to spend a further R11 billion on capital expenditure for its business within the current financial year.

Apart from its South African business, Vodacom saw excellent results from its other arms, including Safaricom, which has been working for the last few years on an Ethiopian launch. The group spent considerable capital in entering the market, which has virtually no other telecoms to compete with Safaricom.

Reflecting this in less than a year Safaricom Ethiopia reached 4.1 million 90-day active customers. The launch of M-PESA in Ethiopia will also no doubt contribute to future profits growth. Despite the positive forecast, startup losses gained in Ethiopia hurt this latest set of interim results.

Together with its Kenyan market, where M-PESA is the de facto digital payment platform with nearly 100 percent market share, Safaricom saw revenues of R21 billion.

Headline earnings per share were at 438 cents, a 4.4 percent decrease from the same time period in 2022.

You can read the full results from Vodacom here (PDF).