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- Vodacom's business faced pressure from the country's energy crisis and inflationary pressures in its half-year to end-September.
- The firm's headline earnings per share fell almost double digits, taking a hit from its launch of mobile services in Ethiopia, but also higher finance costs.
- The mobile operator spent a record R5.8 billion on its SA network in its half-year, and has spent R2 billion on batteries alone over the past two years.
- For more financial news, go to the News24 Business front page.
SA's largest mobile operator Vodacom, which has been battling power challenges and the effects of rising inflation, says it spent a record R5.8 billion on its local network in its half year, including on batteries, as it sought to ensure a more resilient network for customers.
The firm said it had now spent more than R2 billion on batteries alone for the past two years, and its network spend, along with new products, helped underpin a 4.9% in revenue to R41.2 billion in its largest market during its half-year.
However, group headline earnings per share fell 9.5% to R4.57 in the six months to end-September, with the firm taking a hit from launching mobile services in Ethiopia, as well as higher finance costs as its debt climbed.
Vodacom CEO Shameel Joosub said the network investment came "at a time when the country experienced record levels of power outages" and put measures to absorb the pressures faced by customers.
"Vodacom has attempted to absorb considerable inflationary costs from the dramatic increase in energy costs as far as possible," said Joosub.
To counter the effect of the country's energy crisis, Vodacom is piloting a programme that would see it source its electricity from renewable independent power producers and also add the power to the national grid.
Measures such as battery deployment to towers to support network resilience during load shedding contributed to increased group total expenses by 13% to R33.7 billion.
In SA, expenses increased 8.7% to R25.5 billion, impacted by higher costs from equipment sales. The company said the expenses came from higher fuel and energy costs and higher technology and network costs.
Vodacom's SA operations grew service revenue 3% to R29.5 billion in the first half of the year, with a rise in smartphone penetration supporting growth in data traffic, the company's financial results released on Monday showed.
Data traffic was up 30.3%, with 800 000 new users bringing its total to 23.8 million customers.
Click here for details of Vodacom's shares and other info.
Smart devices were up by 11.8% to 27.6 million, while 4G and 5G devices increased by 24.1% to 20.3 million. The average usage per smart device increased by 24% to 2.8GB per month.
"The data revenue growth reflects the high adoption of our data-led bundles, which offer lower rates to the most price-sensitive, lower-income consumers," said Joosub.
Group service revenue increased 7.2% to R41.7 billion, supported by the local Vodacom operations, which contribute 80% to the company's earnings.
The startup costs associated with the recent launch of Safaricom Ethiopia, in which Vodacom holds a minority stake, contributed to a decline in earnings, and along with a spend on SA spectrum ensured net debt climbed R6.6 billion to R44.6 billion. Finance costs climbed almost at third to R2.19 billion.
Joosub said the network had already launched in 16 cities in Ethiopia with plans to expand services to 25 cities by April 2023, to reach its first milestone of 25% population coverage.
In midday trade on Monday Vodacom's shares had slipped 4.5% to R123.06, having fallen about 8.7% so far in 2022.
