Vodacom Group Ltd., the largest provider of mobile-phone services to South Africans, said fiscal first-half profit rose 6.4 percent, missing estimates as it boosted spending to avoid a repeat of network outages.
Diluted earnings per share excluding one-time items increased to 3.22 rand in the six months ended Sept. 30, the Johannesburg-based company said today in a statement. That was lower than the 3.33 rand median estimate of four analysts surveyed by Bloomberg News.
The company, 65 percent owned by Newbury, England-based Vodafone Group Plc, is lowering prices to gain clients, to compensate for slower growth in service revenue. Vodacom reduced data and voice prices in the period, by 22 percent and 24 percent respectively in South Africa, where other operators have lowered tariffs.
Sales climbed 7.6 percent to 31.7 billion rand ($3.97 billion) while net income was little changed at 4.4 billion rand in the six months compared with a year earlier. Capital expenditure surged 68 percent to 3.46 billion rand.
“There’s still scope for more price reductions, according to our business plan,” Chief Financial Officer Rob Shuter said on a conference call. Vodacom wants to increase data revenue by 30 percent a year.
Vodacom shares declined 1.1 percent to 88.25 rand at 10:33 a.m. in Johannesburg, paring their gain this year to 15 percent.
The company said it expects the margin based on earnings before interest, taxes, depreciation and amortization to improve this fiscal year. While capital expenditure will accelerate in the second half, full-year spending should remain within the company’s forecast of 7.7 billion rand, Vodacom said.
The number of customers rose 22 percent to 48 million while data subscribers increased by 38 percent, the company said. Subscriptions in South Africa rose to 29 million users as Vodacom regained customers it lost after the country enacted laws that require customers to be registered. Vodacom gained 23 percent more subscribers in other parts of Africa.