Vodacom raises growth forecasts

Vodacom lifts its three-year targets for revenue and earnings as rising investment in its network delivers growth in SA and international markets.

Johannesburg - Vodacom Group, Africa’s largest wireless operator by market value, raised three-year targets for revenue and earnings as rising investment in its network delivers growth in South Africa and international markets.

Service revenue will probably rise by an average percentage in the low-to-mid single digits over the next three years, while earnings before interest, taxes, depreciation and amortisation is seen rising by mid-to-high single digits, the Johannesburg-based unit of Vodafone Group said in a statement on Monday. The company had previously forecast low single-digit growth for service revenue and mid-single digits for Ebitda.

“We continue to focus on developing our growth areas, by driving greater contribution from our international operations, deepening our enterprise offers, growing fibre to the home and fibre to the business, accelerating data growth,” Vodacom said.

Vodacom, which has overtaken cross-town rival MTN Group as the continent’s biggest phone company by market value, is investing in data-services growth as smartphone usage rises across markets including South Africa, Tanzania and the Democratic Republic of Congo. The company abandoned a pursuit of Neotel in March after almost two years of regulatory battles and legal opposition to the deal by competitors, an acquisition that would have boosted its Internet offering.

“We will explore further options and opportunities to secure access to spectrum in all our markets,” Vodacom said.

Earnings per share excluding one-time items rose 2.7 percent to R8.83 in the year through March, the Johannesburg-based company said. That compares with a R9.13 average estimate by analysts surveyed by Bloomberg. Sales rose 8 percent to R80 billion ($5.2 billion).

The earnings growth was affected by the remeasurement of foreign-currency denominated intergroup loans and one-off charges related to black economic empowerment, a way South Africa redistributes wealth to benefit those discriminated against during apartheid.

Vodacom will pay a final dividend of R4 a share, taking the total payout to R7.95. That compares with R7.75 in the previous year. The stock has gained 7.6 percent this year, valuing the company at R244 billion.

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