In a recent announcement, Vodacom Group has announced that it will retain 100 percent ownership of a new subsidiary poised to take over its tower business in South Africa. The telecom company also announced a rise of 5.2 percent in revenue for the first quarter of 2022.
Chief Executive Officer of Vodacom, Shameel Joosub, stated that the formation of the telecommunications-tower company was yet to be completed. Vodacom Group, based in South Africa, is also operational in other African countries.
Following a global trend, telecom companies in South Africa have either hived off their tower businesses, or sold them to companies specialised in the tower business.
These moves have enabled the companies to raise funds to support fast-growing services such as fintech. Some of the telecom companies have retained a stake in the tower companies.
The new subsidiary of Vodacom will own more than 9,500 tower sites, which include towers and rooftops, according to a statement from the company in its latest annual report which was published earlier this year.
The South African telecom company stated that the separation of its tower company would lower communication costs and enhance asset returns. The company also announced that a managing director for the new subsidiary would be named shortly.
Chief Financial Officer for Vodacom, Raisibe Morathi, stated that for the current year, the telecom operator would be in a position to consider multiple options after the separation of the tower company. The CFO also said that the company was not in a hurry to monetise, and the separation of the tower business was not intended to raise capital.
Vodacom revenue growth
Vodacom, in which UK telecom operator Vodafone holds a majority stake, announced that group revenue for the quarter ended on June 30 had grown to 26.1 billion Rand (USD1.53 billion), compared to 24.8 billion Rand for the corresponding quarter last year. The company said that the rise in revenue was assisted by growth in most of its markets, and South Africa in particular.
Service revenue growth for the company at 5.2 percent, was boosted by an increase of 10.4 percent from its international portfolio, and a growth of 9.3 percent from its financial services business, stated Joosub.
He added that the financial services growth rate was hampered by mobile-money levies in Tanzania, and said that if the growth rate had been adjusted for the impact, it would have attained an estimated 19.7 percent.
Vodacom mentioned that subsequent to the end of the quarter, levies had been further reduced. The company said that this amounted to a cumulative reduction of 60 percent in levies since its implementation in July 2021.
Service revenue in South Africa grew 3 percent, aided by sustained investment in network technology.