Vodacom Group is mulling a bond issue and will pay a smaller proportion of its earnings in dividends as it looks to finance new growth plans.
Funds are needed to complete the acquisition of a majority stake in Vodafone Egypt — a US$2.7-billion deal agreed with UK parent Vodafone Group last year — and to pay for newly auctioned spectrum in South Africa, chief financial officer Raisibe Morathi said in an interview on Monday.
The group will revert to an outlay of at least 75% of headline earnings to shareholders, down from 90%, the group said earlier in its annual earnings statement.
The moves are about transforming Vodacom from a straight telecommunications provider to a technology firm, according to Morathi.
“We are arranging debt, and we needed a bit more firepower to support the servicing of that debt,” the CFO said. “Investors will now get 75% of a much faster-growing business.”
African carriers in particular are investing heavily in fintech services as more customers conduct banking and other business online. Vodacom benefits from the fast growth of M-Pesa, the Kenyan mobile money services operated by partner Safaricom, among other products.
Vodacom’s earnings per share gained 3.6% in the year to March and sales rose 4.5% to R103-billion. The stock gained as much as 1.6% in early trade in Johannesburg. — (c) 2022 Bloomberg LP