Vodacom S Africa growth boosts first-half revenue

Bloomberg

Vodacom Group Ltd., Africa’s biggest wireless operator by market value, reported a 4.1 percent increase in first-half sales as strong growth in its home market of South Africa offset falling customer numbers in some international businesses.
Sales rose to 40.2 billion rand ($2.8 billion), while service revenue growth was 5.3 percent, led by the addition of 2.3 million active clients since March, mostly in South Africa, the carrier said in a statement Monday. International service revenue growth of 5.4 percent lagged the South Africa figure of 5.6 percent, while customers numbers in territories that include Mozambique, Tanzania and the Democratic Republic of Congo slumped as governments enforced disconnections and changed registration processes.
“Our network advantage has provided us with flexibility when navigating our international operations through these short-term pressures and we remain squarely focused on the long-term potential,” Chief Executive Officer Shameel Joosub said in the statement. “Nonetheless, I would note the deterioration in the macroeconomic conditions both in the DRC and Mozambique, which we are monitoring closely.”
Vodacom, which is 65 percent owned by Newbury, England-based Vodafone Group Plc, had previously seen the international operations driving growth as more customers start using data and internet services as voice revenue declines. The company reiterated a target of low-to-mid single-digit service revenue growth over three years, excluding spectrum purchases and
acquisitions.
Vodacom shares declined 0.6 percent to 142.24 rand at 10:25 a.m. in Johannesburg on Monday. The stock is down 6.6 percent this year, valuing the company at 213 billion rand.
Headline earnings per share, which exclude one-time items, were 4.40 rand in the six months through September, little changed from a year earlier, the Johannesburg-based company said. South Africa service revenue grew 5.6 percent to 25.5 billion rand, driven by strong customer net additions and increased data demand, Vodacom said. The interim dividend was unchanged at 3.95 rand a share.
The carrier will spend 8 billion rand in 2016 to improve its network infrastructure and 12 percent to 14 percent of sales in its 2017 financial year. A court hearing on the future of South Africa’s spectrum auction early next year will affect capital expenditure predictions, Joosub said on a conference call.
The South African government and the telecoms regulator had been at odds on how spectrum should be allocated in the country. An auction would enable Vodacom to roll out its network at a much faster rate.
The regulator had previously indicated that bidding would start at 3 billion rand, said Joosub.