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Vodacom records revenue growth

May 15, 2020 3 min read

MASERU- While Vodacom Lesotho was faced with a number of challenges towards the end of the 2019/20 financial year; the company has recorded a revenue growth of 5.3 per cent largely driven by success in Mpesa and data services. This has been revealed by Vodacom Group Limited in their integrated annual report for the year ended March 31, 2020.

Vodacom Group Limited is a leading African communications company providing a wide range of communication services, including mobile voice, messaging, data, financial and converged services to 116 million (including Safaricom) customers. 

The company has grown its mobile network business to include operations in Tanzania, the DRC, Mozambique, Lesotho and Kenya, covering a population of over 289 million people. 

In Lesotho, the group owns 80 percent stake in Vodacom Lesotho while a local company, Sekhametsi Investment Consortium owns 20 percent stake in the company.  

The leading telecommunications company registered a 15.4 percent growth in data customers against the 9.1 percent recorded in the previous year. With regard to Mpesa services, Vodacom Lesotho saw a 49.5 percent growth in a 30-day active Mpesa customers, thus against 37.9 percent recorded in 2019 fiscal year. 

This is despite the deteriorating economic pressure in recent years coupled with a number of challenges towards the end of the 2019 financial year, which saw the company being accused of non-compliance with the regulatory fees for the financial year 2018/19 by the Lesotho Communications Authority (LCA).

The company was further accused of failure to appoint independent auditor as well as failure to meet Universal Service Fund obligations.  

In a statement, the LCA revealed that the licence conditions of Vodacom Lesotho require them to submit annual financial statements accompanied by certification issued by independent auditors.

“…Secton 97(2)(g) of the Lesotho Companies Act, 2011 prohibits a company from appointing a person related to an officer (director) of a company in a position to influence financial transactions or financial statements of a company as its auditor,” LCA said in a statement last year.

But for as far back as 2015, the LCA noted that Vodacom Lesotho directors and shareholders failed to appoint independent auditors as specified in section 97(2)(g) in that the external auditor is a relative of the Chairman of the Board of Vodacom Lesotho.

According to LCA, the explanation provided by the telecommunication company revealed a deliberate intention to undermine compliance with laws of Lesotho.

On August 2 2019, LCA issued a penalty of M8.2 million against Vodacom Lesotho for failure to regulatory fees as they fell due and payable on or by 1 July the same year. 

The LCA (Licensing Classification and Fees) Rules 2018 prescribe on clear terms that the Authority shall impose penalties for non-payment of regulatory fees and prescribes how these penalties shall be imposed.

In December 2019, the LCA issued a notice of enforcement proceedings against Vodacom Lesotho on the basis of its opinion of non-independence of its external auditors.

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Fast forward to February 2020, things got heated as the LCA further directed Vodacom Lesotho to show cause on why their communications licence should not be withdrawn.

Vodacom Group Limited reported in their integrated report released on Monday this week that they have had several engagements with LCA and still awaits final decision.

“In March 2020, following several engagements with the LCA, Vodacom Lesotho made written representation against the revocation of its licence. The LCA is yet to issue a final decision on the matter,” Vodacom Group Limited noted. 

Despite a series of challenges however, Vodacom Lesotho managed to realize growth, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) recording a slight increase of 1.4 percent against a 3.4 percent growth in 2019.

Vodacom Group Chief Executive Officer (CEO) Shameel Joosub noted in his own remarks that Mpesa continues to deliver on its promise of delivering financial inclusion, while at the same time positively contributing to economic growth in markets where it is ubiquitous. 

“Having expanded the Mpesa ecosystem, customers in our International markets, including Safaricom, now process more than US$14.7 billion a month in transactions through the platform.”

“We currently have 40 million customers transacting on Mpesa across all our operations, generating total revenue of R16.2 billion and growing at 22 percent a year,” the CEO said in the annual report.  

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