Blackouts, Ethiopia launch weigh on Vodacom

Vodacom has reported a drop in interim earnings, with a combination of start-up costs associated with the launch of its Ethiopian operations and electricity supply issues in its domestic market weighing on its results.

Its half-year results for the period ended 30 September, released on Monday, show headline earnings per share declined 9.5% to 457 cents.

Chief executive Shameel Joosub said the group’s attempts to absorb inflationary costs stemming from “dramatic” increases in energy costs, contributed in part to the earnings drop.

The group spent as much as R5.8 billion – the most it has spent in a period of six months – to “enhance customer experience and keep customers well connected” during unprecedented levels of load shedding.

It spent R2 billion on batteries alone, aimed at enhancing the resilience of its network during long bouts of rolling blackouts.

“We have invested quite heavily, in terms of creating that group resiliency. Some of the consequences, you’re seeing in the financials,” Joosub said.

“To be frank, from a net group perspective, we’ve seen our network’s resilience be much better than competition; the investment is definitely paying off.”

The group’s total expenses were up 13% to R33.7 billion, while in South Africa, expenses increased by 8.7% to R25.5 billion, fuelled by higher costs from equipment sales and the impact of higher fuel and energy costs, the company said.

During the half year, Vodacom added 800 000 data customers, helping it reach 23.8 million customers.

Its entry into Ethiopia, the second most populous nation in Africa, also led to the company incurring start-up costs as it launched a national telecommunications network through Safaricom in Ethiopia. It holds a minority stake in Safaricom.

It was awarded a telecoms licence by Ethiopian authorities, which has enabled it to roll out its network in 16 cities there.

It now has ambitious plans to extend its coverage to 25 cities by April next year.