Vodacom Group (VOD) H1 2025 Q&A earnings summary

Executive summary

• Group revenue rose 1.0% to R73.5 billion, with normalised growth of up to 10.4% year-over-year, driven by strong performance in Egypt, financial services, and digital inclusion initiatives, despite significant currency headwinds in Egypt and Ethiopia.

• Service revenue declined 1.2% to R58.6 billion, but increased 9.9% on a normalised basis, at the top end of medium-term targets.

• Financial services customer base rose 12.7% to 83 million, with mobile money transaction value reaching $1.2 billion per day and financial services now contributing 11.4% of group service revenue.

• Group EBITDA declined 2.7% to R26.6 billion, but grew 8.5% on a normalised basis; headline EPS fell 19.4% to 353 cents, mainly due to FX losses and one-off costs.

• Interim dividend of 285 cents per share declared, maintaining an 86% payout ratio.

Financial highlights

• Group operating profit declined 5.2% to R16.1 billion (up 9.8% normalised); net profit attributable to equity holders dropped 18.4% to R6.8 billion.

• Capital expenditure was R8.8 billion, representing 12.0% of revenue.

• Free cash flow was negative R1.1 billion, impacted by working capital absorption and FX effects, especially in Egypt.

• Net debt/EBITDA at 1.1x, with net debt at R57.7 billion.

• Dividend payout maintained at 86% of headline earnings, among the highest on the JSE.

Outlook and guidance

• Medium-term targets reaffirmed: high single-digit growth for group service revenue and EBITDA, and capital expenditure at 13.0%-14.5% of revenue.

• Beyond mobile services expected to contribute 25%-30% of group service revenue in the medium term, with financial services targeted at mid-teens contribution.

• Effective tax rate expected to normalize to 28%-30% after one-off impacts in H1; current effective tax rate at 38.4% due to one-off items.

• Board expects full-year dividend payout at 75% of headline earnings.

• Focus remains on digital and financial inclusion, network expansion, and cost containment.