For the half-year ending on 30 September, Vodacom has reported a 9 percent decline in net profit compared to the same period last year. Its profits dropped from R8.9 billion in 2021 to R8.1 billion in 2022 from 1 April until 30 September. According to the company, these results are due to financial market volatility and weaker prospects in the global market.
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Vodacom’s operational profits were also down by almost 6 percent from R14.1 billion to R13.3 billion. It has cited increased inflationary pressures spurred by the global pandemic and the war in Europe as major reasons for the shrinkage, saying that its customers have less discretionary spend as a result.
Looking at its global businesses, Vodacom has said that headline earnings were impacted by start-up losses in Ethiopia and higher finance costs as interest rates normalised to pre-Covid levels. Its earnings were also impacted by higher energy and network costs, although revenue increased.
Group revenue increases by almost 8 percent to R53.7 billion, which was supported by rand depreciation against Vodacom’s basket of international currencies. When looking at the group’s service revenue, it increased by 7 percent to R41.7 billion.
Vodacom also pointed to Eskom’s inability to deliver reliable power having an effect on its bottom line. “In South Africa, we invested R5.8 billion in our network — the most in a six-month period — to further enhance the customer experience at a time when the country experienced record levels of power outages,” the company stated.
In the past two years, Vodacom has invested more than R2 billion in batteries, and that investment isn’t finished yet. “At the same time, we continue to work closely with Eskom to find a renewable energy solution for the benefit of our planet and customers,” Vodacom said.
Vodacom’s massive investments in new services such as financial and digital services, fixed broadband, and the Internet of Things is starting to show dividends.
“In addition to increased demand for personalised bundles and strong equipment sales, these factors contributed to a 4.9% rise in revenue in our largest market,” Vodacom said. “Underpinned by an almost 20% increase in insurance policies, revenue generated from financial services improved 8.1% to R1.4 billion.”
