Vodacom, Africa’s largest phone operator by value, has announced a reduction in its full-year dividend for fiscal 2023 in order to pursue new ventures in Egypt, Ethiopia, and its fibre business.
Vodacom announced that the dividend would be reduced to R6.70 from R8.50 the previous year. Vodacom’s decision comes as the company plans to invest in expanding its operations in Egypt and Ethiopia, as well as developing its fibre business. Bloomberg polled analysts, who predicted an average dividend of R6.76 per share.
Vodacom, which had been paying at least 90% of its adjusted headline earnings since 2013, announced a reduction in the pay-out to at least 75% of headline earnings last year. For fiscal 2023, which ended in March, the company reported headline earnings of R9.48 per share.
Despite facing challenges such as a deepening power crisis, unemployment issues, and infrastructure vandalism in South Africa, Vodacom managed to increase sales by 16%, reaching R119.2 billion in 2023. Analysts had predicted R117.6 billion in sales at the outset.
Vodacom has revised its medium-term targets for group service revenue growth from the mid-single digits to the mid-to-high single digits as part of its growth strategy.
South Africa’s economy and industry have suffered as a result of the country’s ongoing power outages. Vodacom has decided to prioritise investment in power resilience as a result. In a press release, CEO Shameel Joosub stated that the company has invested R4 billion in backup power equipment such as batteries and generators since 2020. Furthermore, it has set aside R300 million this year for the procurement of diesel, maintenance, and enhanced security measures for its sites. Joosub admitted that this money could have been used to expand the country’s 5G networks.
According to the statement, Vodacom’s financial services segment experienced significant growth, with service revenue from this sector increasing by nearly a third to R9.9 billion. M-Pesa, the company’s mobile money platform, now handles an impressive $365 billion in transactions per year.
In the future, Vodacom intends to expand its offerings on its super-app, VodaPay, which was developed in collaboration with China’s AliPay. According to CEO Shameel Joosub, this includes expanding its lending, insurance, and payment products, as well as exploring new business opportunities in remittances and wealth management.