Vodacom M-Pesa
Vodacom Group CEO, Shameel Joosub

Vodacom, South Africa’s mobile phone operator that is transforming itself into a technology company, is well-positioned to weather the coronavirus storm as it got into this crisis with a strong balance sheet.

Vodacom reported on Monday that it was sitting on R13.9 billion in cash and cash equivalents as at 30 September 2020.

Since March 2020, the World Health Organisation, officially declared the novel coronavirus, COVID-19, a pandemic, triggering various government interventions to stem the spread

The Vodafone-owned company, which is led by Shameel Joosub, believes the strength of its financial position will continue to allow it to conduct its business through this volatile period.

“We have low gearing of 0.9 times net debt to EBITDA (including leases), and limited debt repayments in the short-term, with sufficient facilities to maintain liquidity. 81% of our debt is rand-denominated, limiting the foreign currency exposure,” the company informed investors on Monday.

“Our debt structure, excluding leases, is split 46% fixed and 54% floating debt, with our fixed component of debt protecting against significant adverse interest rate movements, while our floating rate debt allows us to participate in lowered interest rates.

“Our ‘Fit for growth’ initiatives are well embedded in our operations, and to a large extent are structural and focused on the digital transformation of our business which leaves us with the opportunity to still employ short-term cost control measures to improve the resilience of our business, where required.”

To show its financial strength, Vodacom also declared an interim dividend of  415 cents per share, up 9.2%, supported by headline earnings growth from its consolidated companies and the Safaricom dividend receipt.

Vodacom reported a 15.7% rise in headline earnings per share (HEPS) to 532 cents, %, boosted by a one-off deferred tax rate adjustment of R700 million in the six months to end-September. HEPS is South Africa’s main profit gauge.

While revenue rose 7.8% to R47.8 billion, underpinned by service revenue growth of 7.0%

“Considering the magnitude of challenges arising from the pandemic in the past six months, it is particularly pleasing that we recorded a solid financial performance at group level, where service revenue increased 7.0%,” Joosub said.


“This was underpinned by strong growth from our Consumer and Enterprise businesses in South Africa, where service revenue rose 7.1% despite reductions of up to 40% in monthly data bundles which came into effect on 1 April 2020.”

The company remain cautious about the pace of economic recovery across its markets as disposable income will remain under pressure as a result of unemployment and depressed economic activity.

“Still, we remain steadfast in our quest to entrench Vodacom Group as a leading pan-African technology company and firmly believe that our investment into financial, digital and lifestyle services will increasingly provide opportunities to deepen our relationship with the 120 million customers who choose to use the Vodacom Group network across our footprint,” said Joosub.

Vodacom also attracted 4.1 million new customers, pushing its total subscribers to 120 million across all its operations.

Vodacom Business fixed-line revenue was up by 11.4%, excluding wholesale transit, which  was supported by strong growth in cloud and hosting and connectivity revenue.

“We accelerated our fibre roll-out in the six-month period, more than doubling the total number of homes and businesses connected to 95,258,” Vodacom said.

“Our owned fibre passed 128,213 homes and businesses as of 30 September 2020.”


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