Vodacom makes it onto J'burg stock exchange

It’s been a long haul, but Vodafone finally won a 65% controlling stake in South Africa’s biggest mobile operator, Vodacom, yesterday. Vodacom and fixed incumbent Telkom, which owned the outstanding 35%, wasted no time in listing the company on the Johannesburg Stock Exchange yesterday.

Lindsey McDonald, ICT analyst with Frost & Sullivan based in Cape Town, comments, “Before its listing yesterday, the complex nature of Vodacom’s shareholding restricted its ability to make strategic decisions. With Vodafone now owning 65% of the group and Telkom releasing its share via the stock exchange, the company is set to move forward in a clear, new direction.”

The share price rose slightly to R60 (€5.19).

Vodacom released its first interim results as a listed company, revealing a 14.5% growth in revenues, but a 22.2% drop in net profit. The group ascribed this drop to the charges related to the Broad Based Black Economic Empowerment (BBBEE) deal and the tough economic environment.

McDonald says, “The results show the effects of the current hard times. They have however managed to keep expenses relatively stable, while operating costs have risen at a steady rate.”

She highlights the 28.8% growth in data revenues and 80% growth in Vodacom SA broadband customers as an indication of where future revenue growth can be expected.

“This growth is significant, but at the same time it’s coming off a relatively small base,” Mc Donald adds. “We still haven’t seen the ramp up in broadband services from fixed-line operators that we would like, so Vodacom’s coverage is perceived to be the most comprehensive and reliable. That’s why it has become a leader.”

Mc Donald expects that the next year will see Vodacom make a concerted effort to enter other African markets. However, she warns that this will require a clear strategy. “There is already very well established competition from the likes of MTN and Zain in the rest of Africa,” she cautions. “These operators also already have strong value propositions, such as MTN’s one rate for roaming in Africa and Zain’s One Network. Vodacom will need to offer something unique.”

She adds that the operator is likely to take its services into the rest of the continent through further acquisitions.