Commentary on the results

Vodacom incurred a tax expense of TZS36.4 billion which is 149.7 per cent higher than the prior-year (2020: TZS14.6 billion) driven by the tax expense from M-Pesa Limited as a separate legal entity and additional tax payable for the 2006 to 2009 years' assessments after the court of appeal ruled on the dispute in respect of the capital allowances relating to these years.

Although the payment of tax expense is placed as the major reason for the loss incurred, the company didn't manage to maintain and surpass their revenue margins for the year as the service revenue fell by 5.7 per cent.

Despite the loss incurred by the company, Vodacom was able to pay its shareholders a gross final dividend of TZS27.5 billion (TZS12.26 per share) in line with the policy as well as a special dividend of TZS400 billion (TZS178.57 per share) in respect of the financial year ended 31 March 2020.

These dividends were payable from income reserves. However, following the net loss after tax for the year, the board of directors has decided not to recommend dividend for the financial year ended 31 March 2021.

The last quarter of the financial year 2021 has shown promises of future recovery of the company's revenues as Service revenue grew by 6.3 per cent in the fourth quarter, supported by growth in M-Pesa and data revenues. M-Pesa revenue increased by 11.3 per cent in the last quarter and accelerated further in April 2021.

Vodacom still enjoys the advantage of being the only Telecommunications Company listed on the Dar es Salaam Stock Exchange (DSE) so far and continues to lead the industry with a customer market share of 40.7 per cent.

Vodacom share price was TZS 770 at the close of business on 17th May 2021, declined by 9.4 per cent from its TZS IPO price.

Despite the financial results, VODACOM share price remained flat at TZS 770, and based on our analysis we still offer to sell recommendation to VODACOM Tanzania Plc.

According to the financial results, Vodacom Tanzania Plc (DSE: VODA) reported a Net loss of TZS 30 billion in the financial year ending 31 March 2021 which is a 165.8 per cent decline compared to a Net profit of TZS 45 billion for the year ended 31 March 2020.

The company has posted a 48.4 per cent decline in Operating profit during its financial year ended March 2021to TZS49.5 billion from TZS95.9 billion in March 2020. The decline in the operating profit was due to a decline in Service revenue, Voice revenue, M-Pesa revenue and Messaging revenue by 5.7 per cent, 16.5 per cent, 0.4 per cent and 24.8 per cent respectively as impacted by competitive pricing pressure and subdued economic activities during the COVID-19 pandemic.

On the other hand, Mobile data revenue grew by 3.3 per cent to TZS186.9 billion despite the intense competitive pricing pressure that led to a 30 per cent decline in average price per megabyte.

Overall, expenses lessened by 1.1 per cent to TZS660.8 billion due to the company's cost containment programme, however it was offset by the 17.0 per cent increase in publicity expenses, 6.8 per cent increase in payroll expenses as well as 4.9 per cent increase in other operating expenses such as network costs resulting from a higher number of network elements and inflationary adjustment applied under service contracts.

EBITDA decreased by 13.3 per cent to TZS316.1 billion while Earnings per share (EPS) declined 165.8 per cent was mainly driven by the decline in operating profit and additional tax expense.

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