By Siyanda Mthethwa and Nqobile Dludla
JOHANNESBURG (Reuters) -South African mobile telecoms operator Vodacom Group reported a near 33% jump in first half profit on Monday as growth from its businesses on the continent offset a decline in its home market, where it booked a one-off cost.
The company, majority owned by Britain’s Vodafone, said its headline earnings per share (HEPS), a key profit measure in South Africa, jumped to 467 cents in the six-month period ended September 30, up from 353 cents a year earlier.
The figure includes a one-off payment to former employee Kenneth Makate to settle a 17-year legal dispute over a call-back service. The settlement amount was not disclosed.
South Africa’s biggest mobile operator by subscribers had estimated even higher HEPS growth before trimming its outlook last week after reaching the out-of-court settlement.
SBG Securities on Friday estimated the settlement at roughly 500 million rand ($28.88 million), based on the mid-point of Vodacom’s revised HEPS estimate range of 459 cents and 494 cents.
Vodacom said operating profit grew 25.5% in April-September to 20.2 billion rand as profit increased at all businesses except for South Africa. Operating profit in South Africa declined 11% to 8.8 billion rand, reflecting pressure on core profit and the one-off cost related to the settlement.
Group service revenue rose 12.2% to 65.8 billion rand, as its newest market Egypt continued to be the main growth driver and as it also benefited from improved performances in its other markets including by Kenya’s Safaricom, which Vodacom partly owns.
Service revenue in South Africa grew modestly by 2.2%, supported by contract and beyond mobile services, but prepaid revenue remained under pressure.
“You’ve got a consumer that’s more under pressure, but you’ve also got a lot more competitive competition in the prepaid segment,” Group CEO Shameel Joosub told Reuters.
To help drive growth in prepaid and attract sticky customers, Vodacom is offering bigger data deals at discounted rates and more competitive offers on devices, he added.
($1 = 17.3125 rand)
(Reporting by Siyanda Mthethwa, Additional reporting by Nqobile Dludla; Editing by Sherry Jacob-Phillips and Susan Fenton)
