South African mobile operator Vodacom Group (VODJ.J) reported an 8.9% rise in annual earnings on Monday and postponed issuing medium-term forecasts due to the uncertain economic outlook as the effects of the coronavirus pandemic continue to unfold.
“The past year has been characterised by strong customer growth – we now connect 116 million customers across the group, including Safaricom – and the benefits of prudent portfolio diversification,” Group Chief Executive Shameel Joosub said in a statement.
In South Africa, growth in the second half of the year ended March 31 more than offset the decline in service revenue during the first, supported by an increase in data elasticity and usage following sharp data price reductions announced in the first quarter.
Vodacom also improved its fibre roll-out in the second half of the year, more than doubling the total number of homes and businesses connected to 61,427.
The increased data traffic, a 21.5% jump in financial service revenue and a 6.7% rise in enterprise service revenue led to service revenue in South Africa rising 2.3% in the year ended March 31.
“The increase in the drivers of data growth gives us confidence that we will continue to see elasticity to compensate for the pricing transformation initiatives agreed with the Competition Commission and implemented from 1 April 2020,” Joosub said.
Last December the competition watchdog ordered Vodacom and rival MTN MTNJ. to cut 30-day data prices after it found that prices charged by the operators were much higher than those in other African countries.
Vodacom is also banking on high data demand by customers working and learning from home due to coronavirus restrictions, to lift revenue.
Outside of South Africa, its international operations continued to show strong growth, with an additional 4 million customers and increased demand for data and financial services under mobile money platform M-Pesa contributing to a 12.5% increase in service revenue.
This led to group revenue rising by 4.8% to 90.7 billion rand ($4.97 billion), with group service revenue up 5%.
Headline earnings per share (HEPS), the main profit measure in South Africa, rose to 945 cents from 868 cents a year earlier.
Vodacom, which is majority owned by Vodafone (VOD.L), declared a final dividend of 405 cents per share.
At 0817 GMT, shares in Vodacom rose 2.38% to 126.40 rand.
The company said it will be postponing the issuance of medium-term targets, “until such time that we have more clarity on the economic outlook and the effect on our business and operations over the medium term.”
On a call with media, Joosub said Vodacom will prioritize capital expenditure spend on network capacity to cope with increased data and voice traffic as people work from home as well as on batteries and back-up power for when power cuts resume.