Vodacom HY HEPS down 9.5%
Shares of Vodacom under pressure today following the release of its interim results. While the telecoms giant grew top line revenue in the period, boosted by increased demand for data and financial services, profits 9.5 per cent due to losses from its Ethiopian operations Joining CNBC Africa for more is Shameel Joosub, CEO at Vodacom Group.
Mon, 14 Nov 2022 11:35:24 GMT
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AI Generated Summary
- Despite revenue growth, Vodacom's profits declined by 9.5% due to losses in Ethiopian operations
- The company is addressing challenges like power cuts and inflation impact through investments and cost optimization
- Vodacom is focused on finalizing strategic transactions in Egypt and South Africa to drive growth and expansion
Vodacom Group, a leading telecoms giant, is facing challenges in its Ethiopian operations, which have impacted the company's profitability. The CEO, Shameel Joosub, shared insights on the company's performance and future plans in a recent interview with CNBC Africa. Despite growing top-line revenue fueled by increased demand for data and financial services, Vodacom reported a 9.5% decrease in profits, primarily due to losses from its Ethiopian venture. Joosub acknowledged that startup losses in Ethiopia were expected and projected a stronger performance in the second half of the year.
Ethiopia, a new market for Vodacom, has shown promising growth with over 740,000 customers within a short period. The company anticipates improvements in the second half, citing factors like enhanced energy resilience and the resolution of a DLC contract separation. Joosub highlighted the challenges posed by frequent power cuts in South Africa, mentioning the significant investment in batteries and generators to maintain network operations. The rising fuel costs and theft of batteries have further added to operational complexities.
Vodacom is striving to mitigate the impact of inflation on consumers by offering personalized and bite-sized offerings. While the company has implemented minor price increases for contract customers, Joosub noted difficulties in passing on inflationary costs to consumers. Instead, Vodacom aims to optimize costs through internal efficiencies and collaborations within the industry.
Looking ahead, Vodacom is focused on finalizing two key transactions in Egypt and South Africa. The company recently obtained regulatory approvals in Egypt, signaling progress towards closing the deals in the coming weeks. In South Africa, Vodacom awaits competition commission approval for the fiber consortium transaction. Joosub expressed optimism about the advancements in both markets and emphasized the strategic importance of completing these transactions successfully.
In conclusion, Vodacom Group continues to navigate challenges in its operating environment while pursuing growth opportunities in new markets. The company's resilience and strategic initiatives will be crucial in overcoming obstacles and delivering value to its customers and stakeholders.