Vodacom profit slows down by half in H1

VODACOM Tanzania net profit has slowed down by half in six months ending September due to charges paid to underwriter during public listing.

The firm, the first telecom to list on the Dar es Salaam Stock Exchange (DSE) posted a net profit of 18.89bn/- down from 32.68bn/- registered in the same period last year.

“…great regulatory uncertainty and macroeconomic pressure could pose risks to earnings growth in the second half of the year,” Vodacom warned in a financial statement issued yesterday. The firm added: “increase regulatory levies, enhancements made to our customers’ registration processes and mandatory capital expenditure as part of staterun projects place great pressure on margins”.

The telco said H1 profit slowing down follows 6.6bn/- paid to underwriter to Public Investment Corporation (SOC) as part of initial public offering of Vodacom Tanzania’s ordinary shares.

Nevertheless, despite service revenue increase by 6.4 per cent to 479.2bn/-, operating profit went down by 34.5 per cent to 38.02bn/- due to underwriter payment. “The acceleration in service revenue growth from the previous year has been facilitated by our strategy of delivering a superior data user experience and wider M-Pesa ecosystem,” the telecom firm said.

The firm’s customer base during the period grew up by 4.1 per cent to reach 12.9 million subscribers. The profitability decline has pushed down earnings per (EPS) share as well as EPS sunk 46.7 per cent to10/36 from 19/45. If it was not for “sharebased payment charges [to underwriter]…as well as credit note in the prior year, net profit after tax would have grown by 27.1 per cent…” it said.

Nevertheless, the company was upbeat on the future outlook banking on M-Pesa transactions through ‘Lipa kwa M-Pesa’ merchant payment platform.


“Improved data monetisation remains a core objective as we continue to drive up the number of smartphones on our network and invoke low data usage users…” it said. Vodacom share traded at 770/- yesterday down from 850/- during listing.