ARTICLE 1

Acquisition, rapid growth, weaker rand gives big boost to Vodacom revenue

1 February 2023 EDWARD WEST

VODACOM Group lifted revenue 14.8% to R30.7 billion in the three months to December 31, after benefiting from the Vodafone Egypt acquisition, rand depreciation and continuing fast growth in financial services.

The cellphone operator said group service revenue was up 16.1% in the third quarter of its financial year, with normalised growth of 3.5% supported by growth in data revenue and financial services. Service revenue in South Africa grew 3% to R15.39bn following a strong performance in mobile prepaid. International service revenue increased 18% to R6.98, driven by data revenue growth and a weaker rand. Financial services revenue increased 30.6% to R2.6bn, with VodaPay app downloads reaching 4.5 million.

Vodafone Egypt was consolidated from December 8, 2022, and R1.88bn in revenue was reflected. Vodacom CEO Shameel Joosub said the acquisition of a 55% stake in Vodafone Egypt for R46.3bn was a transformative transaction for the group and would position it as a leading pan-African technology company. It also means our population reach exceeds 500 million people across Africa, providing a clear growth path for Vodacom, he said.

Normalised group revenue, which strips out currency fluctuations and the impact of Vodafone Egypts acquisition, grew 4.3%. He said investments into technology and network infrastructure contributed to Vodacom South Africa's increase in revenue. In addition to a successful summer campaign, this growth was led by a greater contribution from new services and an acceleration in prepaid mobile revenue, he said.

The acquisition of a joint venture stake in South African fibre company Maziv, previously InfraCo the deal still awaits Competition Commission approval would help to narrow the digital divide by enabling affordable access to connectivity through an ambitious fibre roll-out programme, Joosub said.

Financial services, the fastest growing contributor to Vodacoms suite of services, gathered momentum. The 30.6% increase in financial services revenue to R2.6bn was largely due to demand for services on an evolving M-Pesa platform across the international portfolio, as well as double-digit growth in insurance policy and Airtime Advance sales in South Africa.

International services revenue growth was underpinned by a 33.6% increase in M-Pesa revenue and a 32.5% rise in data revenue. Over 12 months, M-Pesa processed $366.7bn (R6.4 trillion), an increase of 17%, and it remained Africas largest mobile money platform by transaction value, Vodacom said.

We continue to ensure we have the right measures in place, including our commercial initiatives and cost-efficiency programmes to help mitigate the impacts from global macroeconomic risks, Joosub said.

Bianca Lakha, a junior analyst at Old Mutual Wealth Private Client Securities, said: They highlighted the businesss resilience and astute capital allocation ability to succeed .... At Old Mutual Wealth Private Client Securities, we remain confident about Vodacoms ability to grow earnings amid a challenging macro-economic environment.

ARTICLE 2 TymeBank ropes in TFG to expand its footprint

Siphelele Dludla 26 January 2023

Digital bank TymeBank has roped in retail giant TFG (The Foschini Group) to exploit its footprint in expanding its financial products and services to its expanding customer base, both in-store and on digital platforms.

The partnership is set to deliver, among others, more than 600 TymeBank TFG Money branded kiosks to open TymeBank TFG Money bank accounts in TFG stores across the country.

The Tymebank TFG Money debit card is linked to two of South Africas leading rewards programmes. Customers benefit from TFG Rewards and Pick n Pay Smart Shopper when they shop at any one of the 20+ TFG brands, in-store or online, and double Pick n Pay Smart Shopper Points when shopping at Pick n Pay.

TFG customers will benefit from TymeBanks Buy Now Pay Later product MoreTyme, which is interest-free with no fees over a three-month period with three equal instalments.

Since launching in February 2019, it has more than 6 million customers, and taking on traditional banks such as Absa, Standard Bank and FNB among others, TymeBank has rolled out several strategic initiatives, saying its ensuring that it provides a holistic value proposition to its customers.

Through a distribution partnership with Pick n Pay and Boxer, and more recently TFG, TymeBank has a total of 1 450 kiosks (including the 600 at TFG stores) and 15 000 retail points in retail stores across the country.

At the official launch in Johannesburg yesterday, TymeBank CEO Coen Jonker, said the strategic partnership between TymeBank and TFG was offering a new way of banking for South African consumers and delivering considerable benefits for customers as well as the organisations themselves.

TFG is renowned for its retail strength and strong customer focus, and this partnership is a unique example of two leading brands coming together to offer a truly innovative and customer-centric way of banking a new front door to banking, Jonker said.

As TymeBank were excited about how this partnership is further expanding our reach and diversifying the current TymeBank customer profile. With the potential to expose over 30 million TFG loyalty programme (TFG Rewards) members to the TymeBank brand, we believe this partnership accelerates our mission to bring accessible, affordable banking to all South Africans.

Indicators show customers were embracing TymeBanks offering, with an average 23 million transactions per month, a 70% 30-day account activity rate, and an average acquisition of 188 000 customers per month. Through continued innovation we have been able to drive customer growth and engagement at an unprecedented rate in South Africa, Jonker said.

And through partnerships such as these that leverage our respective expertise and resources, we can not only reimagine but reinvent the banking experience, he said.

TFGs managing director for value-added services, Scott Brown, said their vision was to create the most remarkable omnichannel experiences for their customers as they have 34 retail brands trading worldwide in fashion, value, jewellery, accessories, sporting apparel, cellular, homeware and furniture.

Brown said establishing a long-term partnership with TymeBank and being able to offer their products and services to their customer base under the TFG Money umbrella, was perfectly aligned with their goal of driving financial inclusion.

The cobranded product suite is complementary to the TFG Money Account and opens the door for new customer segments to engage with and benefit from financial services solutions enabled by TFG, Brown said.

There is a great fit between our brands, our goals, and the way we work, and this has allowed us to be fast-to-market with our first set of co-branded products. Were looking forward to working alongside TymeBank to further establish TFG Money as a go to brand for South Africans who want to benefit from a new style of banking."

ARTICLE 3

Curro slams door on new assets despite earnings and revenue surge

Tawanda Karombo 3 March 2023

JSE-listed South African private schools operator Curro Holdings has slammed the door on new acquisitions, with executives at the company saying they prefer to raise dividends in the medium term as well as revamping the current portfolio through a R2.8 billion capex spend over the next three years.

Curro yesterday reported a 34.7% rise in recurring headline earnings, which amounted to R330 million for the year to end December 2022 while headline earnings per share quickened by as much as 50% to 61.4 cents per share over the same period. It resultantly paid a final dividend to be drawn down from income reserves for the period of 11.08 cents per share.

Despite of this robust financial performance, CEO Cobus Loubser told investors in the company after its annual results presentation yesterday, Curro Holdings would not pursue any new acquisitions. We would seek to increase dividends in the medium term. We will focus on the portfolio we have before we embark on the next phase of expansion growth, Loubser said in response to analysts and media questions.

The companys shares on the JSE slumped 2.74% to trade around R8.51 yesterday afternoon, while it was 2.78% down in the year-to-date comparative.

Although the company was not seeking acquisitions of new schools in the medium term, it was geared to invest R2.8bn on capital expenditure for the period 2023 to 2026, Loubser said. About R800m of this would be expended on maintaining, expanding and replacing existing facilities in 2023.

The company would also seek to capitalise on digital options as a way of avoiding drag on its learner-to-teacher ratio, which currently stands at 17.7 per teacher. I am cautious; we need to appreciate that if we add learners that will be a drag on learner/teacher ratio. We are looking up to the digital space to empower learner journey and the pace of investment will be determined by the volume of learner growth, added Loubser.

In the year to December, Curro recognised impairments of R127m relating to some lower-yielding schools. It, however, generated R800m cash from its operating activities during the year, an increase of about 4% over the earlier year.

The company benefited from tuition fees increases of about 14.1% as a result of growth in learners and annual fee increases, which it said were ahead of inflation across its portfolio of schools. It had to put more learners out of its schools compared to 2021 because of bad debt, with its overall enrolled learners standing at 73 000 as at 20 February 2023.

This all lifted revenues by 17.3% to R4.2bn, supported by an increase in ancillary revenue, which was R96m and 36.1% higher than the previous year. Moreover, the level of extracurricular activities normalised gradually during the year under review.

Curro Holdings had to install electricity meters at all its facilities to track consumption and manage behaviour; it acquired several large diesel generators to provide back-up power where most required and evaluated battery and solar solutions to be able to generate and store enough electricity in dealing with worsening power outages.

We will continue to invest in back-up power solutions in 2023 to mitigate our operational risk and reduce energy dependency and cost over the long term, the company said.

Other headwinds emanated from higher interest rates and the impact of inflation on the cost of food, fuel and electricity which worked to suppress consumers disposable incomes amid expectations by Curro management that this will continue in 2023.

1. Identify and explain the strategies of Vodacom (Article 1), Tymebank (Article 2) and Motus (Article 3)