South Africa’s Vodacom profit hit by Ethiopia loss

South Africa’s Vodacom Group on Monday reported a 10.8% fall in full-year earnings, impacted by start-up loss in Ethiopia, higher finance and energy costs and inflationary pressure.

The company, majority-owned by Britain’s Vodafone, co-launched Safaricom Ethiopia in 2022 as part of a consortium, betting that the populous nation will power growth after about five years of investment. Vodacom has a direct 5.7% stake.

The biggest telecoms operator in South Africa said headline earnings per share (HEPS), a profit measure, fell to 846 cents in the year ended March 31 from 948 cents a year earlier.

Group CEO Shameel Joosub said weaker exchange rates across markets including the recent devaluation of the Egyptian pound contributed to the decline in HEPS.

He said despite start-up costs associated with operations in Ethiopia, Safaricom has confirmed that its network roll-out was on track in Africa’s second-most populous country after Nigeria.

Group service revenue grew 29.1% to 120.9 billion rand ($6.57 billion), benefiting from the acquisition of Vodafone Egypt. On a pro-forma comparable basis, group service revenue growth was 9.2%, at the higher end of its medium-term range.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) grew 24.3% to 56.1 billion rand and by 7.8% on a pro-forma basis, with Egypt being a key driver of the growth.

Joosub said despite the economic backdrop, the group is committed to capital expenditure of 13% to 14.5% of overall revenue of 151 billion rand.

The board declared a final dividend of 285 cents a share.