Vodacom charged by data surge


Vodacom charged by data surge

Published Date: 2020-11-17 | Source: Stephen Gunnion | Author: Stephen Gunnion

Vodacom charged by data surge

The network operator says data usage surged in the first half of its financial year due to demand from stay-at-home customers.

Vodacom has reported a strong rise in first-half profit as customers used more of its data during the lockdown. It's also raised its dividend by a healthy margin after receiving a big payout from Kenyan associate Safaricom.

The country's biggest cellphone network said local data usage surged 86% in the six months ended September as customers worked, entertained and studied from home. The growth more than made up for price cuts in April after it slashed the cost of its 30-day data bundles by an average 34% following the Competition Commission's inquiry into the data services market.

The group added 4.1 million customers over the six months, taking its total customer base across the continent to 120 million, including Safaricom.

International markets, including Safaricom, contributed R8 billion to revenue. However, following a sustained period of very strong growth, they were impacted by disrupted economies and livelihoods on the back of Covid-19, resulting in a 5.2% decline in service revenue in constant currency terms. It expected consumer spending to recover as trading and economies reopened from lockdowns.

Group revenue rose 7.8% to R47.8 billion for the six months to end September, with service revenue gaining 7% to R38.5 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in 7% higher at R19.4 billion. Earnings per share increased by 15.6% to 533c while headline earnings per share were 15.7% higher at 532c, boosted by a one-off deferred tax rate adjustment of R707 million following a decrease in the corporate tax rate in Kenya. Free cash flow jumped 92% to R5.3 billion due to strong cash generation and the timing of a dividend receipt from Safaricom. It's lifted its interim dividend by 9.2% to 415c per share.

Vodacom said it remained cautious about the pace of economic recovery across its markets as disposable income would remain under pressure as a result of unemployment and depressed economic activity.

Its shares fell 3.8% to R123.08 yesterday.

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