South African operator Vodacom has registered an H1 drop in both operating profit and net profit which it has attributed to losses from its start-up business in Ethiopia and higher finance costs.
For the six months ending 30th September 2022, operating profit dropped 5.6% from ZAR14.058 billion (US$813.35 million) to ZAR13.268 billion, while net profit fell 9.0% to ZAR8.072 billion. Additionally, CAPEX was up 9.8% from ZAR6.920 billion to ZAR7.599 billion.
Group CEO Shameel Joosub noted that the war in Ukraine and the pandemic had both resulted in “increased inflationary pressures and elevated living costs in many countries across the world, including markets where Vodacom operates” and claimed that “Vodacom has attempted to absorb considerable inflationary costs from the dramatic increase in energy costs as far as possible.”
Joosub noted that the starting costs for Vodacom’s Ethiopian unit will soon start returning revenue, claiming: “Encouragingly, the fact that it was recently announced that Safaricom Ethiopia will be awarded a financial services licence is expected to accelerate our ambition to transform lives in Africa’s second most populous country. We have already launched our network in 16 cities in Ethiopia with plans to expand services to 25 cities by April 2023, to reach our first milestone of 25% population coverage.”
Supporting Joosub’s optimism, Vodacom did indeed see revenue increases across H1, with group revenue up 7.7% year-on-year to ZAR53.713 billion and service revenue increasing 7.2% to ZAR41.729 billion. The group also gained an additional 3 million subscribers across the period, bringing it to a total of 132.6 million customers across its operations.