Vodacom Falls as South Africa Consumer Woes Hurt Local Growth - EcoFinBiz Blog

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Vodacom Falls as South Africa Consumer Woes Hurt Local Growth

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(Bloomberg) -- Vodacom Group Ltd. shares fell after the wireless carrier with the most South African customers reported slower revenue growth in its domestic market, as a sluggish economy hurt consumer spending.

  • Overall, first-half earnings before interest, taxes, depreciation and amortization rose 4.7 percent to 16.5 billion rand ($1.5 billion), while the interim dividend was increased to 3.95 rand a share from 3.90 rand.

Key Insights

  • The unit of the U.K.’s Vodafone Group Plc experienced tough conditions in South Africa, with revenue growth of 4.6 percent down from 7.7 percent last year. The carrier has used investment in data to offset the weak environment, helping to boost customer numbers, though revenue per user fell as callers opted for cheaper packages.
  • A 14 percent fall in headline earnings per share included the impact of a 16.4 billion-rand empowerment deal agreed to earlier this year. That helped Johannesburg-based Vodacom better comply with government initiatives to increase non-white participation in the economy.
  • Vodacom’s international portfolio was a bright spot, helped by the recent acquisition of a stake in Nairobi-based Safaricom Plc from its parent. Services such as money-transfer service M-Pesa have helped drive growth, and the 2.3 million new customers in the period almost matched the South African figure of 2.5 million.

Market Reaction

  • Vodacom shares fell 3.9 percent to 125.24 rand as of 9:55 a.m., extending the decline for the year to 14 percent.
  • “Vodacom’s dividend was good, and its international relations are improving, but South Africa’s data revenue growth was a bit disappointing,” said Peter Takaendesa, a money manager at Mergence Investment Managers.

Get More

Read the statement here.

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John Bowker, Ana Monteiro

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