Vodacom Cuts Dividend Amid Flat Earnings, Network Spending
Vodacom Misses Estimates After a Year of Heavy Network Spending
(Bloomberg) -- Vodacom Group Ltd. cut its dividend and reported earnings that missed estimates as Africa’s biggest wireless carrier by market value absorbed the acquisition of a stake in Kenya’s Safaricom Ltd. and expanded its network.
The unit of Vodafone Group Plc reduced the annual payout to shareholders by 1.8 percent and said earnings per share were flat year-on-year due to the one-time effect of the Safaricom deal, Chief Financial Officer Till Streichert said on a call with reporters. Even so, sales rose and the number of subscribers in markets including South Africa, Tanzania and the Democratic Republic of Congo passed 100 million.
Vodacom announced the purchase of a 35 percent stake in Nairobi-based Safaricom from its parent a year ago to expand its sub-Saharan African operations and mobile-money offering, which is popular in countries with limited access to banks. Telecommunications companies see Africa as a high-growth market for data sales as technology becomes more accessible and less expensive.
The shares fell 3.8 percent to 151.01 rand as of 1:42 p.m. in Johannesburg, paring gains for the year to 3.8 percent. Crosstown rival MTN Group Ltd. is down 9.2 percent.
Video Boost
Vodacom is seeking to boost its fiber network in South Africa, which will enable it to offer customers a greater ability to stream video, music and gaming, Chief Executive Officer Shameel Joosub said in a presentation to analysts and reporters. The company has agreed to deals with U.S. streaming giant Netflix Inc. and Naspers Ltd. unit Showmax to supply content for a new video platform, to be launched in “a few weeks.”
Joosub also said he sees opportunities for growth in Tanzania after Vodacom raised 476 billion shillings ($208 million) in an initial public offering in the East African country last year.
Vodacom invested 11.6 billion rand to expand its African network, mostly in South Africa, and maintained targets such as mid-single digit service revenue growth.
To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net.
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John Bowker
©2018 Bloomberg L.P.