Vodacom South Africa’s latest financial results reflect a tough period, with profits dipping and headline earnings per share falling, potentially disappointing investors as the company faces a R29 billion legal challenge from Please Call Me inventor Nkosana Makate. As of Monday morning, Vodacom’s stock was trading down by 5.2%.
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In its report, Vodacom disclosed group profits of R16.2 billion, a 9.6% decline from the previous year, with headline earnings per share falling by 19.4% to 353 cents. This dip was mainly due to Safaricom’s expansion into Ethiopia and the depreciation of currencies in Vodacom’s African markets, including Egypt.
“This decline largely reflects the impact of currency depreciation in Ethiopia (53 cents per share) and one-off costs in our International business. Given the expected currency impact for the full year, the Board has declared an interim dividend of 285 cents per share, an 86% payout,” CEO Shameel Joosub explained in Vodacom’s results for the period ending 30 September 2024.
Despite these challenges, Vodacom noted a 4.2% growth in its South African subscriber base, now serving 49.2 million users. South Africans spent over R31 billion on prepaid mobile data during the quarter, with 42.3 million customers on Vodacom’s prepaid network. Data usage also surged, with a 32.4% increase in consumption during this period.
However, Vodacom Business reported a 4% decline in revenue to R8.3 billion, primarily due to pressure on wholesale revenue. In South Africa specifically, profits grew by 2.4% to R9.8 billion, while in Egypt, they rose by 11.7% to R4.65 billion. Mozambique was the only market where Vodacom saw a revenue decline, dropping by 16.8% to R2.8 billion.
In its results, Vodacom addressed the ongoing legal dispute with Makate, acknowledging the potential financial impact on investors. Following a Supreme Court of Appeal ruling that Makate is entitled to at least R29 billion in compensation, the company faces significant uncertainty. Vodacom, which believes the compensation should be closer to R47 million, remains entangled in a lengthy legal battle since 2008, with Makate now appealing for R9.4 billion from the Constitutional Court.
Vodacom’s majority shareholder, UK-based Vodafone, reported annual earnings of just under $12 billion in May 2024, underscoring the international attention on Vodacom’s financial health amid this prolonged legal dispute.
