Vodacom pays for future growth

Telecommunication giant Vodacom has reported a robust performance with a 36 percent increase in revenue, driven by the inclusion of Egyptian operations. CEO Shameel Joosub sat down with CNBC Africa's Godfrey Mutizwa to discuss the company's performance and future growth prospects. Despite the impressive top-line growth, the bottom line was somewhat strained due to various factors. Joosub explained that the acquisition of Egypt had led to the issuance of new shares and an increase in debt, resulting in higher interest costs. Additionally, investments in spectrum in South Africa and other markets contributed to the financial strain. However, Joosub remained optimistic, highlighting Egypt's positive contribution to earnings despite the challenges. The CEO emphasized the quality of the asset acquired and anticipated a stronger performance in the second half of the year. He noted the company's focus on growth initiatives, including cost optimization measures and the expansion of customer base. Joosub also addressed the challenges in Ethiopia and Tanzania, emphasizing a transition period and expecting improved performance in the upcoming months. He highlighted the strategic importance of the Ethiopian market, with plans to reach 7 million customers by the year-end. Joosub acknowledged the realities on the ground, including political unrest and network rollout challenges, but expressed confidence in the overall progress. The interview also touched upon Vodacom's cash flow position, with Joosub dismissing concerns of negative cash flow and reaffirming the company's cash-generative nature. Looking ahead to 2024, Joosub discussed expectations for improved performance in South Africa, citing potential benefits from reduced power-related costs. He emphasized Vodacom's strategic investments in power infrastructure and its commitment to managing challenges effectively. Overall, Joosub conveyed a sense of optimism and resilience in the face of growth challenges, underscoring Vodacom's strong position in the market and its strategic focus on sustainable expansion.