Vodacom share price falters on Q3 results
In this article we review the Vodacom results and how the share price has reacted to the news.
Vodacom Q3 2022 result update highlights
Vodacom has released a Q3 2022 results update. The salient features of the results are as follows:
Group revenue increased by 6.4% to R26.7 billion
Group service revenue was up 5.3% supported by sustained demand for connectivity and growth in new services such as financial services
South Africa service revenue grew 4.5% with notable growth highlighted from Vodacom Business
International service revenue increased by 6.7%, supported by data and M-Pesa revenue growth
Financial services revenue increased 12.5% to R2.0 billion, aided by increased adoption by fintech platforms such as Vodapay
Comments on Q3 update
Double digit growth in the group’s financial services have been well supported by Fintech endeavors such as Vodapay and M-Pesa. The financial services division now accounts for roughly 9% of group revenue and is steadily gaining traction.
South African operations remain the bulk source of operating profit for the group accounting for more than three quarters thereof. Local prepaid revenue was stagnant despite an increase in prepaid subscribers. The near 8% increase in contract based revenue was solid in what is a saturated market.
The Vodacom Q3 update was slightly below consensus although shows a positive recovery from what was a soft preceding quarter. Nevertheless, we have seen a negative market reaction with the share price down on the day and underperforming its peers and much of the industrial sector today.
Fibre
Vodacom managed to increase the number of subscribers to its fibre services by over 50% (to 165 000). In the reporting quarter the group announced its intentions to expand its fibre offering in South Africa through acquisition. The acquisition proposes a 30% (with the option of 40%) stake in CIVH Fibre Assets subject to regulatory approval. Submissions to regulators ICASA and the Competition Commision have been filed and are awaiting approval. CIVH Fibre assets include Vumatel and Dark Fibre Africa.
Vodacom - Technical View
The share price of Vodacom remains in a broad range trading environment. While a close above 14750 could yield further gains towards resistance at 15140, the price currently trades deep into overbought territory at present.
Our preference is to wait for a deep correction from overbought territory to occur before looking for long entry at one of the lower support levels (13530 to 13040).
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
