Vodacom Group Ltd. slashed its full-year dividend for fiscal 2023, as Africa’s biggest phone operator by value plans investments in new ventures in Egypt, Ethiopia and its fiber business.
(Bloomberg) — Vodacom Group Ltd. slashed its full-year dividend for fiscal 2023, as Africa’s biggest phone operator by value plans investments in new ventures in Egypt, Ethiopia and its fiber business.
The dividend will be 6.70 rand, down from 8.50 rand the previous year, Vodacom said in a statement Monday. That compares to an average estimate of 6.76 rand per share according to analysts surveyed by Bloomberg.
The wireless carrier maintained a policy of paying at least 90% of its adjusted headline earnings since 2013 until last year, when it said it would cut the payout to at least 75% of headline earnings. It reported headline earnings of 9.48 rand per share for its fiscal 2023, which ended in March.
While Chief Executive Officer Shameel Joosub is battling a deepening power crisis, unemployment and vandalism of its infrastructure in South Africa, the firm increased sales 16% to 119.2 billion rand ($6.2 billion) in 2023. Analyst expected sales of 117.6 billion rand.
The company upgraded its medium-term targets for group service revenue growth to mid- to high-single-digit from mid-single digit.
The power cuts have been “disastrous” for South Africa’s economy and industry, and pushed Vodacom to boost investment in power resilience, Joosub said in the statement. The operator has spent 4 billion rand in back-up power equipment such as batteries and generators since 2020, and 300 million rand this year on additional diesel, maintenance and security of its sites, he said.
That money could have otherwise been spent on expanding the country’s 5G networks, Joosub said on a call with journalists.
The group’s service revenue from financial services grew by almost a third to 9.9 billion rand, according to the statement. Its mobile money business M-Pesa is now processing $365 billion in transactions a year, the company said.
Vodacom is planning to expand lending, insurance and payment products offered on its super-app VodaPay, which was developed in partnership with China’s AliPay, while creating new business cases for remittances and wealth management, Joosub said.
(Updates with details starting in fifth paragraph.)
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