Vodafone Egypt contributed $420 million to Vodacom Group’s service revenue for the period of consolidation from 8 December 2022 to 31 March 2023.

This, as the South African-headquartered Vodacom Group rang in convincing performance for the year ended March.

The pan-African telco, with presence in seven countries, reported its annual performance today, applauding its newest addition to the group, Vodafone Egypt, for a convincing performance.

Vodafone Egypt ended the financial year with 45.5 million customers, average revenue per user grew by 19.3%, while financial services revenue for Egyptian telco was $20 million (R398 million) for the period of consolidation, accounting for 5.0% of service revenue.

Vodacom Group took control of Vodafone Egypt in a R43.6 billion deal sealed in November, after it received regulatory approval to acquire a 55% controlling stake in Egypt’s telecoms market leader.

Vodafone Egypt holds a 43% market share, and has 43 million consumer and enterprise customers.

Top performance

Today, Vodacom revealed that since consolidating Vodafone Egypt on 8 December 2022, it has contributed $420 million (R8 billion) to group service revenues, prompting an upgrade in the group’s medium-term service revenue and EBITDA growth targets.

Shameel Joosub, Vodacom Group CEO, comments: “Vodafone Egypt contributed R2.9 billion to EBITDA for the period of consolidation. The reported EBITDA margin of 34.6% was impacted by foreign exchange losses on working capital balances as the Egyptian pound depreciated against major currencies.

“On a normalised basis, the EBITDA margin for the period of consolidation was 42.1% on a full year proforma basis, Vodafone Egypt generated EBITDA of EGP16 billion (R12.5 billion), representing an EBITDA margin of 39.7%. Excluding foreign exchange losses, the full year proforma EBITDA margin was 43.7%.

“Capital investment for the period of consolidation was R1.2 billion. On a full year proforma basis, Vodafone Egypt’s capital investment was EGP6.0 billion (R4.6 billion), representing a capital intensity ratio of 14.8%, as we continued to deploy 2 600 MHz spectrum and roll out new sites.”

Further, he says: “The Vodafone Egypt acquisition, which completed in December 2022, presents a unique opportunity to advance our strategic connectivity and financial services ambitions through one of Africa’s premier telecom operators.

“Vodafone Egypt is a clear market leader, as we showcased to investors in March 2023, and is strategically positioned to capture growth in a fast-growing information and communications technology market.”

Good Growth

Turning to other group operations outside its home market of South Africa, Vodacom says it produced good growth in DRC, Lesotho, Mozambique and Tanzania, underpinned by a 31.1% increase in M-Pesa revenue and a 33.2% rise in data revenue.

However, Joosub says “as expected, start-up costs associated with Safaricom Ethiopia have curbed Safaricom’s contribution to Group operating profit to R2.8 billion, 9.8% lower than last year.”

“Pleasingly, Safaricom Ethiopia was recently awarded a mobile financial services licence, representing another important milestone in our ambition to transform lives in the country.”

In other metrics reported in the period, Vodacom Group revenue of R119.2 billion was up 16% (4.9%), positively impacted by the acquisition of Vodafone Egypt and rand depreciation against the basket of international currencies.

Financial services revenue increased 29.2% to R9.9 billion, contributing 10.5% to Group service revenue. Group EBITDA grew by 13.2%.

Vodacom is now serving a combined 185.8 million customers across the group, including Safaricom on a 100% basis.

The telco declared full year dividend of 670 cents per share and declared a final dividend of 330 cents per share, which it says is consistent with its new policy.

Sturdiness

Commenting on the overall group performance, Joosub says: “In a year defined by the global economic slowdown and financial market uncertainty, Vodacom Group has delivered a satisfactory set of results, showcasing the resilience of our strategy and our track-record in adapting quickly to changes across operating environments.

“Given the numerous external pressures, it is particularly pleasing to have delivered a 17.2% increase in group service revenue (up 7.2% excluding Vodafone Egypt) with net profit up 2.1%.”