Vodacom, SA's largest cellular company, has kept to its mandate of paying out almost all of its headline earnings, as it declared a 355c interim dividend.
The group paid out almost R5.3 billion in dividends in the year to March and said in the six months to September it would pay out 90% of headline earnings per share. It reported a total net profit of R6.1 billion.
In the first half of the year, Vodacom reported group service revenue up 6.9% to R29.7 billion, as total active customers leapt 20.8% to 50.1 million. The company said headline earnings per share were 396c, compared with 324c a year ago.
CFO Ivan Dittrich says headline earnings per share would only have grown 12.5% if the operator had to pay secondary tax on companies (STC). STC has been abolished and replaced with a withholding dividend tax, which means that shareholders now pay tax on the dividends paid out by firms.
Although Vodacom contained growth in operating expenses to 5.2% as it cut back on marketing and sought to find efficiencies, free cash flow was impacted by working capital expenses, as well as its speed up of capital expenditure in the first half of the year.
Vodacom spend 52% of its full-year capital spend - amounting to R4.7 billion - in the first six months, compared to 45% a year ago. It expects to spend a slightly lower amount in the second half, but says full year expenditure will be between 11% and 13% of group revenue.
CEO Shameel Joosub says the group will spend around R7 billion a year in SA as it invests in network infrastructure and IT in a bid to offer the best customer service experience. Vodacom is also investing in its online service portal, he adds.
Last year, Vodacom spent R8.7 billion across all its operations to boost revenue growth and drive data. Joosub says the company wants to roll out data wherever it has voice facilities and has been upgrading its towers as well as its backbone.
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