South Africa: Vodacom’s full-year earnings dwindle by 6.6 pct on black share scheme

The mobile phone operator in South Africa, Vodacom has reported a 6.6 percent drop in full-year earnings due to one-off costs related to a share scheme offered to black investors.

Headline EPS is the main profit measure in South Africa and strips out certain one-off items. Vodacom, which is majority owned by Vodafone, concluded a broad-based black economic empowerment (BEE) ownership deal in September, which saw Vodacom issue additional shares.

Under black economic empowerment rules, South African companies are encouraged to meet quotas on black ownership, employment and procurement as part of a drive to reverse decades of exclusion under apartheid.

It also updated its medium-term capital expenditure target to reflect the IFRS 15 accounting standard and also changed its profitability target to operating profit from earnings before interest and taxes to include the benefits of the Kenyan Safaricom acquisition.

Medium-term group capex is now expected to be in the range of 13 percent to 14.5 percent from 12 percent to 14 percent, while the operating profit target is expected to be in the mid-high single digit growth rate.

Vodacom, which competes with MTN group and Telkom, said group service revenue jumped 5 percent, led by a strong performance overseas. “It was a stellar year for our International portfolio where economic and political environments have improved,” group Chief Executive Officer Shameel Joosub said in a statement.

Vodacom grew service revenue there by 15.6 percent and expanded margins, while in South Africa service revenue inched up by 2.1 percent due to price cuts and a stagnant economy.

South Africa has been considering regulating the price of internet data as well as out-of-bundle charges as part of efforts to bring costs down.

With inputs from agencies.

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