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Vodacom's first-half earnings drop by 5%

This year, Vodacom halved mobile termination rates, hitting a key revenue source for the biggest operators.

Vodacom. Picture: Facebook.

JOHANNESBURG - South African mobile phone operator Vodacom's first-half earnings dropped 5 percent as a reduction in interconnection rates in its home market hit revenue.

The local unit of Vodafone Plc said diluted headline earnings per share, a measure of profit that excludes certain one-time items and is the benchmark in South Africa, fell to 415 cents per share in the six months to end-September, from 438.1 cents a year ago.

Earlier this year, South Africa's telecommunications regulator halved mobile termination rates (MTR), or the amount operators charge one another to connect calls, hitting a key revenue source for the biggest operators.

"The impact of the lower MTRs was to reduce service revenue by almost a billion rand. Excluding this impact, South Africa would have seen service revenue growth of 2.9 percent," Vodacom said in a statement.

Vodacom kept its interim dividend at 430 cents per share after adding 13 percent new customers to a total 61 million.

The operator offers telecommunication services across five African countries including Lesotho, Tanzania, the Democratic Republic of Congo and Mozambique.

Revenue from those countries grew 13 percent and accounted for nearly a quarter of the group's service revenue.

Vodacom is the dominant operator in South Africa although dwarfed by rival MTN across the continent. Its shares are flat so far this year, compared with an 8 percent increase by Johannesburg's Top-40 index.