Vodacom Group post full-year loss on Ethiopia

Vodacom Group, a leading African telecommunications company, has recently faced some financial challenges with the launch of its operations in Ethiopia and the impact of the devaluation in Egypt. The group reported a full-year loss, largely attributed to the startup losses in Ethiopia and the devaluation in Egypt. The CEO of Vodacom Group, Shameel Joosub, discussed these challenges and the positive impact from the Egyptian market in an interview with CNBC Africa. Shameel Joosub emphasized that while the net profit took a hit due to the Ethiopian startup losses and the Egypt devaluation, the overall performance in terms of revenue and EBITDA was satisfactory. The Ethiopian startup losses and the Egypt devaluation had a significant impact on the company's earnings, amounting to about 150 cents per share. However, despite these challenges, the Egyptian market showed strong growth, with a 52% increase in local currency and a 22% increase in revenue. Regarding the Ethiopian operation, Shameel Joosub expressed confidence that the investment would yield positive results in the future, expecting the operation to turn profitable by fiscal year 2027. Although there are still ongoing capital expenditures for infrastructure development in Ethiopia, Joosub highlighted the long-term benefits of the investment. On the other hand, the Egyptian market made a substantial contribution to Vodacom Group's sales figures, despite facing challenges such as the devaluation and inflation. Joosub mentioned that the company managed to maintain healthy margins in Egypt, with EBITDA margins averaging around 43-44%. He further explained that a price increase in January helped accelerate growth in the market, resulting in a 40% year-over-year growth in revenue. In addition to the challenges in Ethiopia and Egypt, Vodacom Group is also focusing on the fintech sector, which has shown significant growth and potential. With 79 million customers across the continent purchasing financial service products from Vodacom, the company processes about $1.1 billion in transactions daily. Joosub shared ambitious plans to grow the customer base to 100 million by 2027 and increase financial service revenue to $2.1 billion. Moreover, Joosub highlighted the importance of renewable energy and cost optimization strategies to mitigate the impact of increasing energy costs across the markets where Vodacom operates. He also addressed the impact of high-interest rates and inflation on the company's margins, expressing optimism that a potential decrease in interest rates could benefit the business. The interview concluded with a brief mention of ongoing discussions regarding the Makati meta, a telecommunications infrastructure deal. The details of the discussions were kept confidential, but Joosub expressed hope for a positive resolution in the near future. Overall, Vodacom Group is navigating through challenges in new markets while leveraging opportunities for growth in existing markets and the fintech sector. Despite setbacks in Ethiopia and Egypt, the company remains optimistic about its long-term prospects and strategic initiatives.