By Nqobile Dludla
JOHANNESBURG (Reuters) - Vodacom Group will retain full ownership of a new subsidiary that will take over its South African tower business, the telecoms company said on Thursday, announcing a 5.2% rise in first-quarter revenue.
Formation of the telecommunications-tower company, which follows similar actions by Vodacom's rivals, is not yet complete, chief executive officer Shameel Joosub said.
Vodacom Group, a South African firm, also operates in other African countries.
South African telecoms firms have either carved out tower businesses or sold them to specialist tower companies, a move also seen globally. By doing so, they have raised money for such purposes as funding fast-growing services, such as fintech.
Some have also retained equity in the tower companies.
Vodacom's tower company will own more than 9,500 sites, including towers and rooftops, the company said in its latest annual report, published this year.
The separation of the South African tower portfolio would enhance asset returns and lower communication costs, Vodacom said, without explaining how. A managing director for the subsidiary would be named later.
Vodacom chief financial officer Raisibe Morathi said this year the operator would be open to many options once the tower company had been separated, but "we don't have any need to monetize. We're not looking to do this to raise capital."
Vodacom, majority-owned by Britain's Vodafone (NASDAQ:VOD), said group revenue for the quarter ended on June 30 had risen to 26.1 billion rand ($1.53 billion) from 24.8 billion rand in the same quarter last year, helped by growth in most of its markets and South Africa in particular.
Its service revenue growth of 5.2% was supported by a 10.4% increase from its international portfolio and 9.3% growth from its financial services business, Joosub said.
The growth rate in financial services was dampened by mobile-money levies in Tanzania, he added. If the growth rate were adjusted for this impact, it would have been an estimated 19.7%.
"Positively, subsequent to the quarter-end, the levies were reduced further. This marks a cumulative 60% reduction of the levies since implementation in July 2021," Vodacom said.
Service revenue in South Africa grew 3% on the back of sustained investment in network technology.
($1 = 17.0740 rand)