Vodacom Tanzania rebounds with Sh44.6 billion annual net profit

Dar es Salaam. Vodacom Tanzania has posted a net annual profit of Sh44.6 billion, reversing losses as data and mobile money grew rapidly in the wake of declining revenue from voice calls.

According to the company’s preliminary results for the twelve months ending March 31, 2023, released yesterday, the mobile network provider’s performance improved from a loss of Sh20.3 billion of the previous year.

The results show year-on-year growth of 10.2 percent, buoyed by solid performance in data, a recovery in M-Pesa, and accelerated fixed revenue growth, generating Sh1.1 trillion in service revenue.

Mobile voice plunged by 1.2 percent to Sh283.5 billion in the year to March 31, 2023, while the revenue from mobile data had the fastest growth at 34.2 percent to Sh273.7 billion, the telcom company’s earnings statement showed.

The growth of data revenue demonstrated a strong demand for data services and accelerated smartphone adoption, the statement added, while the decline of voice revenue reflected competitive pricing pressure, the DSE-listed company said.

M-Pesa, the telco’s largest revenue contributor, grew by 8.4 percent to Sh357.1 billion, driven by the uptake of new services and a diversified product portfolio. Fixed revenue grew by 27.3 percent to Sh19.5 billion, supported by infrastructure investments and customer acquisition.

Addressing investors and other key stakeholders during a call to announce the preliminary results, the Managing Director of Vodacom Tanzania, Mr Philip Besiimire, explained that the strong financial performance recorded over the past year represents significant progress in the company’s strategy and achievements in its social contract initiatives.

“It is pleasing that during the year we progressed well with the implementation of our purpose-led strategy. It was encouraging to see good progress in the fulfilment of our social contract pledges and solid financial performance,” said Mr Besiimire.

“We accelerated farmers’ registration on our M-Kulima platform to reach 3.1 million from just 140,000 registered farmers in March 2022.

Through M-Pesa, we distributed proceeds worth Sh4.6 billion to the enrolled farmers, providing secure and efficient cashless transactions, market information, and weather forecasts,” he said.

In 2022, Vodacom introduced Tanzania’s first 5G network in line with the company’s network investment to meet growing customer needs.

Vodacom said it invested Sh156.0 billion towards network coverage, capacity enhancement, and IT infrastructure improvements, adding 390 4G and 231 5G sites and deploying 283 kilometres of fibre, which supported the significant increase in 4G and 5G traffic as well as providing high-speed connectivity to businesses.

“The annual escalation of service contracts, particularly those involving tower leases, and extra investments in innovative technologies like 5G were the key contributors to our operational expenses this year, Mr Bisiimire noted.

Additionally, Mr Bisiimire said, Vodacom invested $63.2 million in the Tanzania Communications Regulatory Authority’s spectrum auction and purchased four blocks of key low- and mid-band spectrum.

“With this acquisition, we will be able to maximise fixed-wireless access growth potential and make even more progress towards closing the digital divide,” said Mr Besiimire.

M-Pesa has shown a growth trajectory thanks to the reduction of mobile money levies, the company’s strategy, and the expansion of its product portfolio.

“Following the reduction of levies, the volume of peer-to-peer and cash-out transactions is increasing. We applaud the government for reducing taxes, which sparked a boom in mobile finance and enhanced our support for M-Pesa’s push for financial inclusion,” said Mr Besiimire.

He added that the number of companies enrolling in Vodacom’s electronic payment system increased while its merchant base grew to 150,000. According to him, over two million customers transacted Sh6 trillion digitally through merchants.