Vodacom Group has announced plans to increase spending on its network in South Africa over the next five years. The telecommunications company will spend at least R12-billion per year on average, up from the average R10-billion per year spent over the past five years.
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Vodacom made the announcement at this week’s South African Investment Conference, citing the need to enhance network resilience to keep customers connected amid rolling power cuts caused by Eskom’s inability to meet the country’s energy needs. The increased investment is also aimed at accelerating Vodacom’s deep rural coverage program to help bridge the digital divide and deepen financial inclusion.
The move comes as rival MTN South Africa continues to outperform Vodacom in network performance tests conducted by independent experts like Ookla, which owns the popular speedtest.net platform.
Vodacom has also recently announced a drop in profits. 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.
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.
