Thanks to cost-containment measures, solid demand for data and strong growth in its international businesses, Vodacom has lifted its headline earnings per share in the 2012 financial year by 8,1% to R7,09 on revenue that rose by 9,4% to R66,9bn.
A 24% increase in free cash flow allowed the telecommunications group to raise its total dividend for the year to R7,10/share, an increase of 54,3% over the 2011 financial year.
The SA business, which forms the bulk of Vodacom’s business, reported an increase of 4,4% in service revenue to R48,4bn. This figure would have grown by 6,8% if mobile termination rates — the fees operators charge each other to carry calls on their networks — had not been reduced.
Vodacom now has 28,9m customers in SA, a net increase of 6,1m. (The group recorded total subscribers of 47,8m, an increase of 11m.)
It achieved the strong performance despite a claimed effective 13,6% reduction in the price of calls. Average revenue per user also decreased, falling by 14,2% to R157.
There was once again strong growth in smartphone sales — up by 55,4% to 5,1m in SA — which underpinned strong data revenue growth. Smartphone average monthly usage more than doubled to 92MB, although the effective cost per megabyte fell by 18,2% over 2011.
In SA, capital expenditure was 12,3% of revenue and increased by 36,8% year on year. A large portion of this money went into the radio access network, new transmission infrastructure and new base station sites. More than 4 300 Vodacom SA base stations are now serviced by the company’s own fibre and microwave backhaul links, an increase of about 1 700 sites over last year. Just over 5 000 base stations now deliver 3G access.
In its international businesses, earnings before interest, tax, depreciation and amortisation shot up by 73,9% to R1,5bn, with Ebitda margin of 14%, higher by 3,8 percentage points.
A group-wide 18,9% reduction in net debt to R7,7bn paints a picture of a rapidly improving balance sheet.
Despite the fact that Vodacom expects competition to intensify in the year ahead, especially in the data business, and despite consumers remaining under pressure due to inflation, it anticipates “continued improvements in our customer proposition, data demand, and continued momentum in our international operations will support growth”.
“Over the medium term, we are targeting low single-digit service revenue growth and steady Ebitda margin improvement (excluding foreign exchange movements,” the group says. — (c) 2012 NewsCentral Media
