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Vodacom 1st Half Profit Helped by Safaricom Acquisition

14 November 2017

Capital expenditure was ZAR 5.4 billion, representing 12.8 percent of revenue, and headline earnings per share (HEPS) was up 1.1 percent to ZAR 4.45 per share.

Regarding its global operations, exchange rate volatility negatively impacted growth.

Mobile operator Vodacom on Monday reported 7% increase in first-half net profit to R6.7bn, boosted by the acquisition of a 35% interest in Safaricom in a R35bn deal that concluded earlier in the year.

The Safaricom acquisition contributed R349m to profit for the first two months, the report read.

Vodacom, a unit of UK-based Vodafone VOD.L , declared an interim dividend per share of 390 cents, slightly changed from the previous year. The increased revenue was attributable to customer gains in South Africa and the increased use of data and microfinancing service M-Pesa internationally.

Contract customers increased by 107 000 to 5.2m. It had 3.3m Sim card connections on its Internet of things network at the end of September.

In its global operations, normalised service revenue rose by 5.5%, with the number of customers climbing by 1.4m to 31.1m. This is an increase from just two countries in 2015 (Kenya & Tanzania). Normalised revenue growth was 4.6%. Service revenue growth was further underpinned by strong normalised growth in both data and M-Pesa revenue.

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"We added 1.1 million customers in the first half of the year, reaching 14.8 million". 4G customers increased 62.8% to 6m, while the average monthly data usage on smart devices increased 19.5% to 776MB.

"Our pricing transformation strategy and targeted personalised offers continue to provide customers with greater value", it said. Data and M-Pesa revenue also continued to grow.

Improved in-bundle usage has resulted in a 24.2% reduction in the effective price per MB, Vodacom said.

Joosub added that the group had delivered on its promises to reduce data prices and addressing out-of-bundle prices. "On October 1, 2017, we further reduced out-of-bundle prices by up to 50%", he said.

"We have managed to do this while continuing to invest significantly in infrastructure at a time when the lack of available spectrum is pushing our costs higher".

The underlying performance of Safaricom remains strong, according to the report. Migration to the new "more data" contracts, which have a larger data allocation, accelerated to 25% of the base.

"Additional spectrum will allow us to invest more efficiently and accelerate our rural coverage programme".

Vodacom 1st Half Profit Helped by Safaricom Acquisition