Damage from civil unrest was limited, says Vodacom

Vodacom, SA’s biggest mobile phone operator, says the damage to its infrastructure from the recent wave of violence that hit Gauteng and KwaZulu-Natal has not been material.

The mobile operator said it had moved to maintain service and ensure the safety of staff, suppliers and customers. This had forced operators to close stores in affected areas and put network towers at risk.

In a trading update for the group’s quarter to end-June, its first, Vodacom did not dwell on the events nor provide any figures on the damage or potential lost revenue.

Group revenue of R24.8bn was up 9% to end-June, with its international performance weighed down by a stronger rand.

Revenue in SA rose 13.2% to R19.53bn, but international revenue in reported terms fell 5.2% to R5.49bn, with the rand appreciating 20% against a basket of currencies used by Vodacom. In normalised terms, international revenue rose 15.2%.

Vodacom operates across eastern and central Africa and is pushing to diversify its revenue and the countries where it operates, including bulking up its provision of financial services.

In reported terms, group financial services revenue was up 17.4% to R1.88bn.

Absa Asset Management analyst Roy Mutooni said financial services was likely to be an area of growth as the demand for data starts to slow down across the industry after a spike brought on by Covid-19 lockdowns.

M-Pesa, the group’s mobile payments unit run jointly with Kenya’s Safaricom, “remains a key potential future driver of value unlock for the group”, said Mutooni.

He said the recent launch of Vodacom’s super-app, a key part of its financial services strategy, “is likely to drive further innovation across the M-Pesa ecosystem more than 70 merchants had already joined.

Peter Takaendesa, head of equities at Mergence Investment Managers, said operators were likely to start seeing their margins on mobile money transactions cut as policymakers across the continent catch up with the new technology and find ways to tax it.

Earlier in July a proposal in Tanzania to impose a tax on mobile money transactions came into effect. Vodacom has operations in the country.

The group said it continued to see robust demand for data, even when compared to a high base in early 2020 as Covid-19 forced customers to adapt to working and learning at home.

The group’s SA customer base increased by 13.1% to 44.6-million year on year and rose 7% to 40.3-million internationally.

After starting the day in negative territory on Friday, Vodacom’s shares closed 1.12% firmer at R131.28, having risen almost 7% since the start of the year. Over the same period, MTN has risen 75% and Telkom almost 41%.