Sh39bn dividend for Voda investors

Tuesday October 2 2018

The board chairman for Vodacom Tanzania Plc, Mr

The board chairman for Vodacom Tanzania Plc, Mr Ali Mufuruki said the company was unable to hit its profit and therefore, dividend targets for the year ending March 31, 2018 due to uncertain regulatory environment as well as a cutthroat competition among players in the market. 

By Alex Malanga @ChiefMalanga amalanga@tz.nationmedia.com

Dar es Salaam. Shareholders with Vodacom Tanzania Plc will pocket a total of Sh38.8 billion in total dividends, thanks to the growth in the telecommunication firm’s profits during its year ending March 31, 2018.

The money translates into a dividend per share of Sh17.33, up from a dividend per share of Sh12.74 which was shared during the prior year when a total of Sh28.53 billion was shared among shareholders.

Speaking yesterday immediately after the company’s Annual General Meeting (AGM), the board chairman for Vodacom Tanzania Plc, Mr Ali Mufuruki said the company was unable to hit its profit and therefore, dividend targets for the year ending March 31, 2018 due to uncertain regulatory environment as well as a cutthroat competition among players in the market.

The regulatory hiccups include strict enforcement of customer registration requirements, mandatory investment in a new government electronic revenue collection system and a 42.1 per cent reduction in the mobile termination rate (MTR).

He said the changes have been accompanied by the adoption of aggressive pricing strategies by their competitors. “We believe the new MTR glide path and some of the pricing decisions made by our competitors particularly those on data, are unsustainable and ultimately counter-productive in the long term,” said Mr Mufuruki. “This is because they undermine our ability to make the necessary investments required to provide the critical services needed by our customers.”

He said the trend led to decrease in profit margin despite the increase in revenue. “Sales of Helios towers stake during the period made figures of profit look in a positive shape as opposed to the reality on the ground,” said Mr Mufuruki.

Under the period of review, Vodacom recorded Sh170.2 million in net profit, well above the previous year’s Sh47.5 billion following a sale in Helios towers share at $58.5 million (about Sh132.2 billion). The Dar es Salaam Stock Exchange-listed telecom company recorded a-five per cent increase in revenues to Sh977.9 billion, thanks to elevated sales made in the past year from replacing unregistered devices on its networks.

“As it happens, options for market consolidation continue to be amongst the primary strategic investment for market growth. Under the right conditions,

Vodacom is positioned to execute market consolidation and or other strategic investments given its robust balance sheet,” said Mr Mufuruki

Vodacom acting managing director Hishim Hendi was optimistic to perform better this year, banking its hopes on the procurement of the new spectrum.

“We may now provide a superior 4G data user experience to a greater number of communities across the country. We will continue to target improved data monetisation through digital partnerships with content and platform providers,” said Mr Hendi. Network densification, capacity upgrade and 4G expansion sent high mobile data revenue by 34.7 per cent to Sh141.6 billion compared to the previous year.

“The challenges we are grappling with is just a transition period. We now see an opportunity to prioritise investment over the short term to further our leadership in data and M-Pesa user experience, while stimulating enterprise customer activity across strategically significant regions,” said Mr Hendi.