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We continue to allocate our capital efficiently to projects that create
long-term value for shareholders. This requires making trade-offs
and sometimes taking tough decisions, such as the recent phasing
out of the M-Pesa product in South Africa. We took this decision as
M-Pesa had not achieved the expected uptake in South Africa.
Our five-year average return on capital employed (ROCE) is at
57.3%. The effect of the mobile termination rate cuts and the
increase in assets incurring higher depreciation charges and
financing costs reduced the ROCE. As we see top line growing,
EBITDA margin expanding and our capex intensity lowering, I am
confident that our ROCE will stabilise and improve in the future.
Looking ahead to our medium-term outlook
Our key goals for the next three years are to build on the improving
commercial execution of our customer CARE programme, reviewed
in more detail under our customer strategy.
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More detail on the improving commercial execution of our customer
CARE programme, reviewed in more detail under our customer strategy.
Our balance sheet remains strong, providing us with sufficient
capacity for leverage thereby enabling us to execute our growth
strategy and realise possible future M&A opportunities where these
contribute to adding shareholder value.
We revise our medium-term targets upwards to low to mid single
digit Group service revenue growth, mid to high single digit Group
EBITDA growth and Group capital expenditure of 12% to 14% of
Group revenue over the next three years. These targets are on
average, over the next three years and are presented on a
normalised* basis, and exclude any M&A activities and spectrum
purchases. In addition, we assume broadly stable currencies in each
of our markets and stable macro and regulatory environments.
Till Streichert
Chief Financial Officer
3 June 2016
CFO’s review
continued
Vodacom Group Limited
Integrated report for the year ended 31 March 2016
42