Vodacom sings new Africa tune

2012-11-13 07:29

Johannesburg - Vodacom [JSE:VOD] is looking for acquisitions in sub-Saharan Africa, a sign the South African mobile operator aims to be a bigger player in the fast-growing continent.

The unit of British operator Vodafone also reported a 22% rise in first-half profit on Monday, helping its shares to a record high.

The dominant mobile operator in South Africa, Vodacom is dwarfed elsewhere in Africa by rival MTN Group. Keeping the current pace of growth will require a bigger African presence, Vodacom Chief Executive Shameel Joosub said.

"For us to sustain the growth going forward, we think we need to look at new opportunities," he said in a response to a question about potential acquisitions in Africa.

"Our African model is working ... and we're confident we can roll it out successfully."

He did not give details about a potential size or a preferred country for an acquisition.

Vodacom already has a presence in Lesotho, Mozambique, Tanzania and the Democratic Republic of Congo (DRC), where it has been locked in a longstanding dispute with its local partner.

International operations accounted for 18% of its revenue in the six months to end-September, up from 14% in the same period a year earlier.

By contrast, MTN makes 63% of its revenue outside South Africa. As well as MTN, Vodacom could face competition from India's Bharti Airtel, which also has an African presence.

"It's obviously good from a corporate perspective that management are looking to diversify their revenue," said Reuben Beelders, a portfolio manager at Gryphon Asset Management in Cape Town, adding that Africa was a competitive market.

DRC dispute

Chief Executive Joosub signalled the company's changing attitude towards Africa following his appointment in September, saying Vodacom no longer had plans to exit the DRC and would try to resolve a year-old fees dispute.

Under previous Chief Executive Pieter Uys, Vodacom had looked to exit the business and had hired investment bank Rothschild to advise on a sale of its 51% stake.

Vodacom's partner in the DRC sued Vodacom in 2009 for $166m, over interest rates and service fees charged by the South African company for nearly a decade.

Talks are still ongoing to resolve that dispute, Joosub said.

Revenue totalled R34.4bn, up from R31.7bn a year earlier. The number of "active customers" increased by 21% to 50.1 million.

Headline EPS, a measure of profit that excludes certain one-time items and is the benchmark in South Africa, rose 22%. The company raised its interim dividend by nearly 37%, to 355 cents.

Helped by the hefty dividend hike, shares in Vodacom rose more than 5% at one point in Johannesburg trade, to touch a record high of R116.99.

The share closed up 4.95% at R116.39.

Shares in the company are up 30% so far this year, outperforming the benchmark Top-40 index and rival MTN, both of which are up around 16%.

  • charlesbronson.bronson - 2012-11-13 07:59

    Who cares! Not the normal guy in the street. Cell C rates are still the best! Viva Cell C Viva!

  • adriaan.pieterse - 2012-11-13 09:56

    "Our African model is working ... and we're confident we can roll it out successfully." So what he is saying is "Our model for screwing the public is working perfectly" Funny how Joosub says that they cannot reduce data rates because of costs they still show HUGE profits year on year. So glad I left Vodacon.

  • mj.hough.7 - 2012-11-13 11:35

    Vodacom please sort out the poor SIGNAL out in South Africa!! Waiting for my contract to end the off to MTN, cannot do this crap reception anymore. IMPROVE YOUR SERVICE TO YOUR LOCAL CONSUMERS BEFORE EXPANDING!!

      tresor.mpika.9 - 2012-11-13 14:04

      and I bet MTN won't give any hassle, i would be surprise if you later decide to move to Cell C when your harnymoon with MTN comes to a crumbling end

  • Blixum - 2012-11-13 15:39

    Pieter Uys's legacy. Well done Pieter.

  • hermann.visser.39 - 2012-12-20 06:24

    For past 3/4 years all i get from vodacom is a sms every 3/4 months saying a new mask about to be setup/ erected near the botanical gardens in ruimsig / johannesburg/ roodepoort area. Meanwhile the reception is minus 100% at featherbrook estate area and cell C do not even have ZERO reception. Vodacom stink, cell c is rotten and mtn is close on their heels. THE BOTTOM LINE IS THEY DO NOT CARE AT ALL BECAUSE THEY ARE FAT CATS AND BLUFF THE PUBLIC. Wish a provider can be found to give just normal reception service. Hermann visser

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