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Vodacom profits affected by Ethiopia’s start-up costs

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Vodacom

Vodacom Group on Monday reported a 10.8% fall in full-year earnings, impacted by start-up losses in Ethiopia, higher finance and energy costs, and inflationary pressures.

The company, majority-owned by Britain’s Vodafone Group, co-launched Safaricom Ethiopia in 2022 as part of a consortium, betting that the populous nation will power growth after about five years of investment. Vodacom has a direct 5.7% stake.

The biggest telecoms operator in South Africa said headline earnings per share (Heps), a profit measure, fell to $0.4 in the year ended 31 March, from $0.5 a year earlier.

Group CEO Shameel Joosub said weaker exchange rates across markets including the recent devaluation of the Egyptian pound contributed to the decline in Heps.

He said despite start-up costs associated with operations in Ethiopia, Safaricom has confirmed that its network roll-out was on track in Africa’s second most populous country after Nigeria.

Group service revenue grew 29.1% to $6.6 billion benefiting from the acquisition of Vodafone Egypt. On a pro forma comparable basis, group service revenue growth was 9.2%, at the higher end of its medium-term range.

Group earnings before interest, tax, depreciation and amortisation grew 24.3% to $3 billion and by 7.8% on a pro forma basis, with Egypt being a key driver of the growth.

Joosub said despite the economic backdrop, the group is committed to capital expenditure of 13% to 14.5% of overall revenue of $8,25 billion.

The board declared a final dividend of $0.15/share.

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