Skip to main content
Vodacom Group Limited (the Company) is an investment holding company. Its principal subsidiaries are engaged in the provision of a wide range of communications products and services including but not limited to voice, messaging, converged services, broadband, data connectivity, mobile financial services and other value added services.
There have been no material changes to the nature of the Group’s business from the prior year.
Earnings attributable to equity holders of the Group for the year ended 31 March 2018 were R15 344 million (2017: R13 418 million) representing basic earnings per share of 947 cents (2017: 915 cents).
Full details on the financial position and results of the Group are set out in these consolidated annual financial statements.
An ordinary dividend of R13 186 million (2017: R11 829 million) was declared and paid during the year. Details of the final dividend in respect of the year ended 31 March 2018 are included under Events after the reporting period in this directors’ report.
|Declared 13 May 2016 and paid 27 June 2016||–||5 952|
|Declared 11 November 2016 and paid 5 December 2016||–||5 877|
|Declared 12 May 2017 and paid 26 June 2017||6 473||–|
|Declared 10 November 2017 and paid 4 December 2017||6 713||–|
|13 186||11 829|
The Company intends to pay as much of its after tax profits as will be available after retaining such sums and repaying such borrowings owing to third parties as shall be necessary to meet the requirements reflected in the budget and business plan, taking into account monies required for investment opportunities. However, there is no assurance that a dividend will be paid in respect of any financial period and any future dividends will be dependent upon operating results, financial condition, investment strategy, capital requirements and other factors. It is envisaged that interim dividends will be paid in December and final dividends in July of each year. There is no fixed date on which entitlement to dividends arises and the date of payment will be determined by the Board or shareholders at the time of declaration, subject to the JSE Listings Requirements.
The Company’s dividend policy is to pay at least 90% of headline earnings, excluding the contribution of the attributable net profit or loss from Safaricom Public Limited Company and any associated intangible amortisation. In addition, the Company’s policy is to distribute any dividend it receives from Safaricom Public Limited Company, up to a maximum amount of the dividend received, net of withholding tax. Further details regarding the acquisition of Safaricom Public Limited Company may be found in note 12.
The Company declared dividends of 815 cents (2017: 830 cents) per share for the year ended 31 March 2018.
The authorised and issued share capital are as follows:
Full details of the authorised and issued share capital of the Company may be found in Note 16. Shares were issued for the acquisition of an associate during the year. Further details may be found in note 12.
Shareholders approved a special resolution granting a general authority for the repurchase of ordinary shares by the Group, to a maximum of 5.0% (2017: 5.0%) of shares in issue, at the annual general meeting held on Tuesday 18 July 2017, subject to the JSE Listings Requirements and the provisions of the Companies Act of 2008, as amended. Any shares that may be repurchased for the time being shall be in connection with awards made in the normal course in respect of the Group’s forfeitable share plan. Approval to renew this general authority will be sought at the forthcoming annual general meeting on Tuesday 17 July 2018.
Treasury shares are held by Wheatfields Investments 276 (Pty) Limited (Wheatfields), a wholly-owned subsidiary and do not carry any voting rights.
During the year the Group allocated 2 186 094 (2017: 1 384 016) shares to eligible employees under its FSP and no restricted shares were allocated during the current and prior years. Further details may be found in the Remuneration report included in the integrated report as well as in Note 17.
The Group’s shareholder analysis as at 31 March 2017 was as follows:
|Shareholder spread||Number of
|1 – 100 shares||13 989||25.73||599 644||0.03|
|101 – 1 000 shares||32 096||59.03||11 326 857||0.66|
|1 001 – 10 000 shares||6 913||12.71||19 759 247||1.14|
|10 001 – 50 000 shares||890||1.64||19 685 969||1.14|
|50 001 – 100 000 shares||176||0.32||12 743 433||0.74|
|100 001 – 1 000 000 shares||244||0.46||78 605 952||4.57|
|1 000 001 shares and above||61||0.11||1 578 692 679||91.72|
|54 369||100.00||1 721 413 781||100.00|
|Distribution of shareholders|
|Holding Companies||2||0.00||1 110 629 881||64.52|
|Retirement Benefit Funds||343||0.63||218 011 521||12.67|
|Custodians||307||0.57||261 595 306||15.20|
|Individuals||47 699||87.73||32 210 124||1.87|
|Collective Investment Schemes||406||0.75||31 229 014||1.81|
|Wholly owned subsidiary||2||0.00||15 421 231||0.90|
|Insurance Companies||91||0.17||10 676 225||0.62|
|Public Companies||15||0.03||9 936 164||0.58|
|Trusts||3 964||7.29||8 214 076||0.48|
|Private Companies||766||1.41||6 501 030||0.38|
|Scrip Lending||18||0.03||3 761 124||0.22|
|Stockbrokers & Nominees||22||0.04||4 490 066||0.26|
|Organs of State||13||0.02||5 210 644||0.30|
|Foundations & Charitable Funds||162||0.30||1 363 076||0.08|
|Hedge Funds||8||0.02||243 860||0.01|
|Other Corporations||82||0.15||849 202||0.05|
|Close Corporations||239||0.44||529 037||0.03|
|Medical Aid Funds||27||0.05||406 733||0.02|
|Investment Partnerships||190||0.35||114 064||0.00|
|Unclaimed Assets||11||0.02||1 771||0.00|
|54 369||100.00||1 721 413 781||100.00|
|Non-public and public shareholders||Number of
|Non-public shareholders||49||0.08||1 328 102 370||77.15|
|Directors, prescribed officers and associates||26||0.05||1 053 186||0.06|
|Wholly-owned subsidiary||2||0.00||15 421 231||0.90|
|Strategic holdings (more than 10.0%)||18||0.03||344 438 221||20.01|
|Holding company||1||0.00||967 170 100||56.18|
|Public shareholders||54 320||99.92||393 311 411||22.85|
|54 369||100.00||1 721 413 781||100.00|
|Geographical holdings by owner|
|South Africa 1||53 798||98.95||1 312 832 419||76.26|
|United Kingdom||164||0.30||102 017 899||5.93|
|United States||118||0.22||109 922 211||6.39|
|Europe||103||0.19||177 475 912||10.31|
|Other||186||0.34||19 165 340||1.11|
|54 369||100.00||1 721 413 781||100.00|
|Beneficial shareholders holding 5% or more of the issued capital||Total
|% of shares
|Vodafone Investments SA (Pty) Limited||967 170 100||56.18|
|Vodafone International Holdings B.V.||143 459 781||8.33|
|Government Employees Pension Fund||200 978 440||11.68|
|1 311 608 321||76.19|
|Share price performance||2018||2017|
|Opening price 1 April||R152.00||R160.53|
|Closing price 31 March||R153.07||R152.00|
|Closing high for the year||R186.99||R171.10|
|Closing low for the year||R134.96||R140.00|
|Number of shares in issue||1 721 413 781||1 487 954 000|
|Volume traded during the year||728 949 298||458 311 450|
|Ratio of volume traded to shares issued (%)||42.35%||30.80%|
During the current year, the Group modified two of the existing loan facilities received from Vodafone Investments Luxembourg s.a.r.l. (Vodafone Luxembourg). On 3 May 2017, R8 000 million and R4 000 million loan facilities were revised from variable interest rate loans to fixed interest rate loans. The loan facilities bear interest at fixed rates of 8.703% and 8.991% and are repayable on 26 November 2019 and 26 July 2021 respectively.
Additionally, an existing fixed rate facility of R3 000 million was re-financed with a floating rate facility of R3 000 million at a rate of 3 month Jibar plus 1.50% with a repayment date of 24 May 2022.
The Group also re-financed a R1 530 million facility on 24 November 2017 and increased the facility with an additional R1 000 million draw down. This R2 530 million loan bears interest at 3 month JIBAR plus 1.50% and is repayable on 24 November 2024.
On 7 August 2017, the Group acquired 87.5% of Vodafone Kenya from Vodafone International Holdings B.V. (VIHBV). Vodafone Kenya holds a 39.93% stake in Safaricom, the Republic of Kenya’s leading integrated communications company. The investment in Vodafone Kenya has been treated as an investment in a subsidiary in terms of IAS 27: Separate Financial Statements. The 39.93% equity interest that Vodafone Kenya holds in Safaricom has been equity accounted as an investment in an associate.
The purchase consideration was settled by the issuance of 233 459 781 Vodacom Group Limited shares to the value of R42 618 million (net of directly attributable transaction costs of R3 million), measured based on the closing price of Vodacom Group Limited on the effective date, and, for the equity interest in Vodafone Kenya, a cash consideration of R51 million. Further details regarding the acquisition of Safaricom may be found in note 12.
Vodacom Tanzania Public Company Limited sold its 24.06% investment in Helios to Helios Towers Africa Holding Limited (HTA) during October 2017 for total cash proceeds of R797 million. This investment was included in non-current asset held for sale as at 31 March 2017. The sale resulted in a pre-tax profit on sale of R734 million being recognised. The remaining balance of loans receivable from Helios to the value of R42 million have also been sold to HTA. Further details regarding the transaction may be found in note 12.
The Group is ultimately controlled by Vodafone Group Plc which owns 64.51% of the issued shares through Vodafone Investments SA (Pty) Limited and Vodafone International Holdings B.V.
Vodafone Group Plc is incorporated and domiciled in the United Kingdom.
Movements in the directorate during the year under review:
|19 July 2017||SJ Macozoma|
|18 July 2017||MP Moyo|
Mr MP Moyo, independent chairman of the Company retired and stepped down from the Board at the annual general meeting held on Tuesday 18 July 2017. Mr PJ Moleketi, was appointed as independent chairman of the Company with effect from Wednesday 19 July 2017.
In terms of the Company’s memorandum of incorporation, Mr SJ Macozoma, having been appointed since the last annual general meeting of the Company, will retire at the forthcoming annual general meeting to be held on Tuesday 17 July 2018. In terms of the memorandum of incorporation, Ms BP Mabelane and Messrs DH Brown and M Joseph retire by rotation. Ms BP Mabelane and Messrs DH Brown and M Joseph are eligible and available for re-election. Their profiles appear in the ’Notice of annual general meeting’ included in the integrated report.
As at the date of this report, the directors of the Company were as follows:
PJ Moleketi (Chairman), DH Brown, BP Mabelane, SJ Macozoma, TM Mokgosi-Mwantembe.
M Joseph*, JWL Otty^, M Pieters•, RAW Schellekens•, V Badrinath~.
MS Aziz Joosub (Chief Executive Officer), T Streichert (Chief Financial Officer) @.
The Company Secretary is SF Linford and her business and postal addresses appear on the Corporate information sheet included in the integrated report.
|MS Aziz Joosub||1 037 063||–||875 361||–|
|Independent non-executive directors|
|MP Moyo||–||–||250||3 645|
|PJ Moleketi||643||15 480||643||15 480|
|V Jarana||–||–||128 470||–|
|1 037 706||15 480||1 004 724||19 125|
There have been no changes in beneficial interests that occurred between the end of the reporting period and the date of this report.
On 30 September 2016 the Pretoria High Court granted an application by the Ministry of Telecommunications and Postal Services (the Ministry) interdicting ICASA from implementing the spectrum licencing process contemplated in the Invitation to Apply (ITA) for the licensing of spectrum in the 700MHz, 800MHz and 2600MHz bands, pending the outcome of a judicial review on the lawfulness of the ICASA ITA.
The Group has made considerable progress in complying with customer registration requirements in all its markets in line with applicable laws. In Tanzania, significant measures are being taken to achieve full compliance. The Group will maintain full compliance with customer registration in markets where it already achieved full compliance.
On 17 November 2017, the Ministry published an invitation to the general public to provide written comments on the ECA bill. This Bill has its origins in the Integrated information and communication technology ICT Policy White Paper published on 2 October 2016. Stakeholders made oral representations to the Ministry at public hearings held on 6 and 7 March 2018. After consideration of comments and presentations made at the hearings, the Ministry will submit the ECA bill to Cabinet and then table it in Parliament.
In June 2017, ICASA published a notice of intention to conduct an inquiry to identify priority markets in terms of section 4B of the ICASA Act. The purpose of the study is to identify markets to be prioritised for a market review. The final phase of the inquiry would be the publication of a findings document, which is expected in the second half of the 2019 financial year.
On 30 April 2018, ICASA published final amendments to the End user and Subscriber Service Charter Regulations, which will become effective on 8 June 2018 and of which the objective is to address consumer concerns on out-of-bundle charges and expiry rules. These final amendments follow a consultation process between ICASA and industry stakeholders. The regulations address the key concerns as follows:
In June 2016, the Parliament of Tanzania passed the Finance Act, 2016 which amends listing requirements under the Electronic and Postal Communication Act, 2010 (EPOCA), to introduce mandatory listing requirements and require licensed telecommunications operators to list 25% of their authorised share capital through an initial public offering (IPO) on the Dar es Salaam Stock Exchange (DSE).
On 15 August 2017, Vodacom Tanzania listed on the Main Investment Market Segment (MIMS) of the DSE under the ticker VODA, and became the first telecommunications operator to comply with these regulatory changes. The listing was the largest initial public offering (IPO) in the 19-year history of the DSE, and raised net proceeds after underwriting costs of R2 770 million (TZS470 billion).
The Group has entered into an agreement with its local Tanzanian partner, Mirambo Limited (Mirambo), and certain of Mirambo’s shareholders, under the terms of which the Group will acquire all of Mirambo’s 588 million shares in Vodacom Tanzania. This will result in the Group increasing its total interest in Vodacom Tanzania from 61.6% (direct and indirect) to 75% (direct). The transaction close is subject to conditions precedent, including requisite regulatory approvals in Tanzania.
Vodacom Mozambique is in the process of renewing its 2G licence which expires in August 2018. Furthermore, the Mozambique council of ministers has approved the spectrum auction for licensing spectrum in the 800MHz, 1800 MHz and 2600MHz.
Regulators in Tanzania and Mozambique have reduced termination rates this year. Based on industry submissions and a new cost study the regulator in Mozambique revised MTRs upward with retrospective effect, and set a revised glide path to 2020. In Tanzania, the Group has filed an appeal against the regulator’s new five year glide path with the Fair Competition Commission on the grounds that new MTRs were modelled using data that was not representative of actual costs incurred by operators and MTRs are by virtue of the intervention now below cost. In South Africa, ICASA is in the process of constructing cost models that will inform MTRs to be applied from 1 October 2018.
Vodacom Congo is not in compliance with the minimum capital requirements as set out under the Organisation for the Harmonisation of Business Law in Africa (OHADA). Vodacom Congo has to increase its share capital to meet the minimum OHADA requirements. The Board and shareholders of Vodacom Congo are in negotiations to address the recapitalisation of the company.
The ARC Committee discharged all of those functions delegated to it in terms of its mandate, section 94(7) of the Companies Act of 2008, as amended and the JSE Listings Requirements. Further details on the role and function of the ARC Committee may be found in the Risk management report included in the integrated report. At a meeting of the Board held on 11 May 2018, the Board resolved to categorise Mr DH Brown and Ms BP Mabelane, members of the ARC Committee as financial experts. This was in view of their qualifications and many years experience as Chief Financial Officers.
The auditors’ business and postal address appear on the Corporate information sheet included in the integrated report.
In compliance with JSE Listings Requirements, the Board has considered and is satisfied that Ms Sandi Linford, the company secretary, is competent, has the relevant qualifications and experience and maintains an arm’s length relationship with the Board. In evaluating these qualities, the Board has considered the prescribed duties and responsibilities of a company secretary which includes the Companies Act of 2008, as amended, JSE Listings Requirements and governance requirements as set out in King IV.
Competition complaint on the National Treasury government transversal contract for mobile communications services
On 14 March 2016, National Treasury issued a tender for the supply and delivery of mobile communication services to national and provincial government departments in South Africa. The tender was awarded to the Group, for the period 15 September 2016 to 31 August 2020, after an open and transparent process. The Competition Commission has initiated an investigation, which is ongoing against the Group under sections 8(c) and 8(d)(i) of the Competition Act.
Facilities leasing and roaming agreements between Vodacom (Pty) Limited and Rain Networks (Pty) Limited (Rain) (previously Wireless Business Solutions (Pty) Limited)
A number of the Group’s competitors lodged complaints with the Independent Communications Authority of South Africa (ICASA) and the Competition Commission relating to the facilities leasing and roaming arrangements with Rain. On 25 April 2018, the Competition Commission ruled that these arrangements did not constitute a merger and that the transaction was not notifiable as contemplated in section 13A(1) of the Competition Act, Act 89 of 1998. ICASA’s investigation, on the other hand, is still ongoing.
Unwind of Vodacom (Pty) Limited Black Economic Empowerment (BEE) deal
In 2008, the Group facilitated a BEE ownership transaction (the BEE transaction) through the sale of an effective 6.25% in the issued share capital of Vodacom (Pty) Limited (Vodacom SA) to Royal Bafokeng Holdings, Thebe Investment Corporation and YeboYethu (RF) Limited through notional vendor finance (NVF). The NVF maturity date for the BEE transaction is 30 September 2018. The Group is currently in the process of negotiating a new BEE transaction.
A final dividend of R7 316 million (425 cents per ordinary share) for the year ended 31 March 2018, was declared on Friday 11 May 2018, payable on Monday 25 June 2018 to shareholders recorded in the register at the close of business on Friday 22 June 2018. The net dividend after taking into account dividend withholding tax for those shareholders not exempt from dividend withholding tax is 340.00000 cents per share.
Following the denial order issued by the US Department of Commerce against ZTE, the Group is in the process of assessing the impact on its networks and implementing the required contingency plans. The Group does not expect this to have a material impact on its operations.
The Board is not aware of any matter or circumstance arising since the end of the reporting period, not otherwise dealt with in the consolidated annual financial statements, which significantly affects the financial position of the Group as at 31 March 2018 or the results of its operations or cash flows for the year then ended.
During the current year, PricewaterhouseCoopers Inc. (PwC) were re-appointed as the Group’s auditors. At the annual general meeting on Tuesday 17 July 2018, shareholders will be requested to re-appoint PwC as the Group’s auditors for the 2019 financial year and it will be noted that Mr DB von Hoesslin will be the individual registered auditor who will undertake the audit.