This is the outcome of free peer-to-peer M-Pesa transactions, a feature introduced at the onset of COVID-19, the South African network operator said in its latest update to the market on its interim results for the six months that ended on 30 September 2020.
However, this also “impacted the financial performance of our international portfolio, [but] it played an important role in facilitating economic activity in addition to being the right thing to do for customers,” said Vodacom Group CEO Shameel Joosub in the statement.
A common theme for the period under review was the group’s response to COVID-19 in its various markets, where it services 120 million – this includes Safaricom. In South Africa, where it is headquartered, for example, data usage rose 86% driven in part by work- and study-from-home demand.
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The M-Pesa initiative supported rapid platform growth and customer adoption of digital channels “to the point where the M-Pesa ecosystem now processes $20.5bn a month in transactions across our international markets, including Safaricom, and contributed R8bn in revenue in the period.”
The Vodacom Group’s international portfolio, which has enjoyed a sustained period of strong growth, was affected by the disruptions to economies and livelihoods brought about by the outbreak of COVID-19. This, in turn, has caused a 5.2% decline in service revenue in constant currency terms.
Overall, though, “reported results show service revenue growth of 5.8%, benefiting from rand weakness. We expect consumer spend to recover as trading and economies re-open from lockdowns,” said Joosub.
Vodacom’s investment in Safaricom delivered a 52.2% boost in the group’s operating profit, supported by currency factors and a one-off deferred tax rate adjustment of R0.8bn.
But Safaricom’s local currency results reflected the effects of depressed economic activity and lower M-Pesa peer-to-peer monetisation, related to COVID-19 pandemic. Despite this, Safaricom has increased capital expenditure 25.5%, “supporting platform growth and a notable financial improvement into the second quarter compared with the first quarter.”
Numbers tell a story
In the period under review, the Vodacom Group’s interim results reflect:
- A 7.8% rise in group revenue to R47.8bn.
- The group had an additional 4.1 million customers. The company now has a customer base of 54.8 million for its financial services. This is a 13.9% improvement or 6.7 million more people than the previous period.
- The group declared an interim dividend of R4.15 (415 cents).
In response to the surges in data usage in South Africa, the Vodacom Group “made substantial reductions in monthly … bundle tariffs.”
In addition, Vodacom introduced ConnectU, which enables zero-rated access to websites such as jobs portals and online learning platforms, as well as discounted offers for poor communities. This added to higher usage.
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“We remain cautious about the pace of economic recovery across our markets as disposable income will remain under pressure as a result of unemployment and depressed activity,” said Vodacom Group CEO Joosub.
“Still, we remain steadfast in our quest to entrench Vodacom Group as a leading pan-African technology company. And [we] firmly believe that our investment into financial, digital and lifestyle services will … provide opportunities to deepen our relationship with the 120 million customers who choose to use the Vodacom Group network across our footprint,” he added.
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