Vodacom Group Ltd Ord

Welcome to our strategy update and interim results highlights for the period ended 30 September 2024. As we celebrate Vodacom's 30th birthday, I am particularly proud of the impact we have made on inclusion in Africa. Vodacom connects 206 million customers and provides financial services to 83 million customers, each representing significant milestones in our history. These milestones were achieved in a financial period characterized by significant currency headwinds on the one hand and a resilient operational response on the other, to ensure that we continue to deliver on our medium-term financial targets. While Vodacom has adapted to evolving regulatory pressures and customer needs, our purpose was unchanged for the past three decades, which is to make sure that everyone is connected. To achieve this purpose, we are focused on empowering people and protecting the planet, while maintaining trust in everything we do. At the International Telecommunications Union's recent event at the UN General Assembly, we emphasised the urgency of empowering people through digital and financial inclusion. In low-income countries, only 35% of the population have access to 4G. We have adopted a holistic approach to address inclusion across our footprint that leverages Vodacom's scale and partnerships. From new rural sites to fibre to space, we are expanding our coverage to close the digital divide. The commitment is evident in the 1,133 new 4G sites added across the group over the last six months. As pioneers of mobile financial services, we also contribute significantly to Africa's financial inclusion. Our products are designed to support both consumers and merchants. Over the last 12 months, we added another 9 million financial service customers. In the DRC, our Je Suis Camp and Paysa initiative empowers women living with disabilities, reintegrating them into society and lifting them out of poverty by helping them establish their own businesses. Beyond our initiatives in connectivity and financial services, we empower people by supporting communities and SMEs. Whether it's through our various foundations or our Tech for Good platforms, we play a critical role in supporting agriculture, education, energy, health, and water initiatives across our markets. We continue to scale our technology-based free emergency transport system, known as AirMama, in partnership with governments, USAID and the Vodafone Foundation. This life-saving maternal transport system is now rolled out nationwide in Tanzania and the SUTU is on track to launch in Kenya and Malawi. One of our other key medium-term initiatives is to digitally upscale 1 million young people across Africa through our Tech Start program, building on the success of our Code Like a Girl program, which has trained over 23,000 young girls in Africa. We recognize the urgent need for digital future-ready skills in Africa. In response, we are creating multiple academic programs in collaboration with other leading tech companies such as AWS. For the planet, we have committed to net zero for scope one and two greenhouse gas emissions by 2035. In addition to this commitment, we partner with governments and other stakeholders to provide solutions to meet Africa's environmental challenges, including the impact of climate on agriculture, the need for renewable energy, and the scarcity of water. Vodacom Business, Mezzanine, and IoT.Next are pioneering solutions to improve the access and quality of water, while also reducing leakages and unauthorized usage. By leveraging our existing Tech for Good platforms, we are well-placed to support governments with water management, including South Africa's RT29 National Treasury Smart Metering Project. On 1 June 1994, we signed up our first customer in South Africa. Fast forward to 2024 and our passion to connect is unwavering. As part of our Vision 2025 ambition, we launched the System of Advantage. This multi-product strategy is aimed at diversifying and differentiating our offerings to our customers and strengthening our relationships with them. We now serve 206 million customers across a footprint that includes the DRC, Egypt, Ethiopia, Kenya, Lesotho, Mozambique, South Africa, and Tanzania, and covers 517 million people. This geographical reach diversifies the group and unlocks exciting long-term growth opportunities. As Africa's population thrives, we will relentlessly drive inclusion and focus on reaching the 300 million customer milestone. With connectivity at the core of our offerings, we want to connect our customers via land or space. Our infrastructure scale supports this ambition. With almost 47,000 sites across the continent, we are one of Africa's largest tower owners. Our connectivity reach is a key enabler of digital inclusion. Another critical element to inclusion is affordable access in our services and smartphones. While smartphone penetration is at 62%, I'm passionate about connecting the other 18 million of our customers to a digital world. Our groundbreaking prepaid device financing bundles can help bridge this gap and will be a key focus as we move beyond our 2025 strategy. This model allows a customer to repay the phone daily as they generate income. For us, prepaid handset financing provides scope to reshape our prepaid proposition into a form of annuity or contract-like revenue. In addition to the progress in connectivity and geographic reach, we have also driven product diversification as part of Vision 2025. At the heart of this evolution is our financial service business, which already has 83 million customers. We plan to grow this number towards 120 million by 2030. As I reflect on our strategic progress under Vision 2025, I'm very pleased on the shape of our group from a geographic and product perspective. But in my case, the word pleased will never mean I'm satisfied. As we look forward to Vision 2030, it is critical that we position Vodacom's strategy to deliver double-digit growth. Combining our innovative mindset with healthy markets will power this opportunity. A healthy market is characterized by its pricing dynamics and ability to generate strong returns. I look forward to unpacking this concept and our 2030 vision at an investor day early next year. We have made significant progress in diversifying our product revenue mix. Prepaid voice makes up 18.9% of service revenue and declined 3.4% in the period. We expect Prepaid Voice to remain an important contributor to the group and will manage its contribution over the medium term. In fact, there are pockets of growth across the portfolio, including DRC, Egypt, and Tanzania. To deliver on our high single digit growth target, our other product segments are well positioned for growth. Prepaid data makes up 28.2% of service revenue and grew 21.8% in the period. We remain excited about this segment's growth prospects. We continue to compliment the structural growth in data traffic demand with network coverage, increased smartphone penetration, and improved data monetization. Our contract revenue is largely from South Africa and contributes 26.3%. While all our customers demand the best-in-class experience, this is a non-negotiable focus area for our contract customers. Our value proposition in contract is further enhanced with loyalty and content offerings. Shifting to our fastest growing product segment, our Beyond Mobile News service. In the Fibre space, we are working on co-investment models to accelerate rollouts across our international markets. In South Africa, we were disappointed that the massive transaction was prohibited by the competition tribunal, especially given that it had received support from ICASA, our competitors and the South African government. As we assess our options in South Africa, we remain of the view that fibre cobalt is better than overbilled. In financial services, which is the pillar of Beyond Mobile, we are growing across our markets with products that cut across consumers and merchants. But income success in this segment is a function of strategic focus. In the next slide, I will talk through our roadmap for financial services, which we believe will see this revenue compound at a healthy rate. Pulling together our mobility and new service offerings, we partner with businesses to accelerate their growth and with governments to drive efficiencies. We are transforming the ways of working through digital technology in high-growth areas like cloud, hosting, managed security, managed services, and IoT. A key focus area for us in the business segment is SMEs, which are prevalent across our markets. This slide sets out our growth roadmap for financial services and how we leverage our dual-sided ecosystem to deliver exceptional and personalized experiences to consumers and merchants. Vodacom Financial Services and PESA and Vodacash make a meaningful contribution to financial inclusion across our footprint. Once financially included, we provide customers with an ecosystem that deepens their access to financial services with products like international remittances, global payments, bill payments, savings, lending and insurance. Tanzania is a prime example of how we have deepened inclusion. Today, only 43% of our base revenue is from peer-to-peer and cash-out. Whereas three years ago, this number was 83%. Further evidence of Tanzania's success is its contribution of M-Pesa to service revenue. This now stands at 38.2% and is just behind Kenya. Looking ahead, the next step in our group's roadmap is unlocking economic growth through financial services. We want to partner with like-minded companies to create a savings culture for consumers through wealth products and an environment for SMEs to thrive. This is where our super apps play a critical role. They create an open platform where we can integrate our own products with thousands of external service providers. The apps remove the barrier of physical limitations for both consumers and merchants, allowing them to expand well beyond their geographical boundaries. As we execute on this roadmap, we expect to meaningfully scale our financial services customer base and revenue. Across our consolidated markets, we target around 20% compounded annual growth to FY2027, supporting the group's earnings profile. In this slide, we provide proof points of our dual-sided financial service strategy. Our M-Pesa merchant base increased 22% to 1.2 million merchants. This growth helps expand our addressable commission pool beyond peer-to-peer payments and withdrawals into both online and offline commerce. In South Africa, our merchant acquiring business is also growing quickly with over 11,000 merchants. Our super apps are scaling across the group. Abesa app users are up almost a million year-on-year to 5.3 million. This channel is supporting higher output. In Egypt, Vodafone Cash is the go-to mobile wallet in the country with over half the customer base using the Anna Vodafone app. In South Africa, we successfully merged our telecommunications app, MyVodacom, into Vodapay during the period. Vodapay users buying something on the platform or what we refer to as transacting users reached 1.4 million in the period. A key use case of the one app strategy is the distribution of airtime. In Vodapay, we have doubled our direct airtime sales to 8%. As users come into the app to top up, we leverage the rest of the marketplace to sell one more service. On the right-hand side of the slide, we call out key growth drivers for financial services in FY25. Across our M-Pesa markets, it is services that deepen financial inclusion. For our international markets, these have reached 40% of M-Pesa revenue. In Egypt, growth is underpinned by user adoption. We added 2.9 million customers over the last 12 months to reach 9.6 million customers. Given the extent of the unbanked population in Egypt, this growth looks set to continue. South Africa's growth was fuelled by insurance, ATOM Advance, our payments and lending marketplace businesses. Insurance policies were up 10.2% to 2.9 million policies, a key growth driver of the revenue growth. As we diversify into new growth factors beyond peer-to-peer payments, our financial service product suite continues to broaden across global payments, e-commerce, payments, lending, insurance, and savings. As a group, including Safaricom, we have grown our financial service customers by 12.7%. The scope for future growth is material with penetration of our base at just 40%. The scale of our financial service business is reflected in the transaction value and volumes process through our mobile money platforms. We processed more than 421 billion US dollars in the last 12 months, which equates to 1.2 billion US dollars a day. Our financial service revenue from our consolidated entities reached 6.7 billion in the period, up 7.8% in rands. The underlying growth trend of 17.6%, which adjusts for foreign exchange, confirms how quickly we are scaling the dual-sided ecosystem. With an additional 10.8 billion generated by Safaricom, this implies a total fintech footprint that is annualizing at 35 billion rand. This is a formidable business. Overall financial services contributed 11.4% to the group service revenue, up from 10% last year. This was supported by the rapid revenue growth in Egypt. At Safaricom, which is an associate, the contribution increased again and reached 43%. then looking at the contribution to profit before tax, which includes Safaricom, the weighting is around 20%. This bottom line contribution of financial services means that the Vodacom investment case offers something quite different to a typical emerging market telco. Turning to the group's results, over the last two years we have absorbed significant hikes in interest rates and major currency shocks in Egypt and Ethiopia. Pleasingly, our Egyptian business is already delivering hard currency bottom line growth, just six months after 60% devaluation. In Ethiopia, we are navigating through the recent devaluation, having already seen market price increases. With that said, these devaluations had a material impact on our reported results, especially earnings. Our HAPS declined 19.4% to 353 cents. Nisebe will fully unpack the impact of the currency moves in her slides. Whilst I'm not satisfied with our REN-based outcomes in the period, I'm particularly pleased with our commercial momentum, which is reflected in our normalized growth rates. Revenue grew 10.4% on a normalized basis to 73.5 billion REN. Normalized group service revenue grew 9.9% at the high end of our medium-term target range. This result reflected excellent growth from Egypt of 44.1% in local currency, comfortably above inflation levels in the market, and good growth in our Beyond Mobile services across the Group. Group EBITDA was R26.6 billion and declined 2.7%. The result was impacted by the translation effect of the Egyptian Pound devaluation in March. On a normalized basis, group EBITDA growth was 8.5%, in line with our target range. Egypt delivered a particularly impressive local currency result with EBITDA growth of 65.1%. South Africa's EBITDA grew 2.3%, supported by cost initiatives, which contained cost growth well below inflation. Our international business had a disappointing result with EBITDA down 20%. Excellent growth in Tanzania of 18.6% was offset by one soft cost in the DRC and revenue pressure from repricing in Mozambique. We expect a better performance from the international segment in the second half of the year with Mozambique stabilizing. We remain committed to spending within our capital intensity framework of 13 to 14.5% of revenue over the medium term. In the first half of the year, we spent a little below this intensity target at 12% or 8.8 billion rand. This was a function of phasing and the stronger end. For FY25, we will end closer to the lower end of our capital intensity range. And then looking at the dividend, the board declared an interim dividend of 285 cents per share, which represents an 86% payout of headline earnings. This is above our dividend floor of a 75% payout as the board considered the phasing of Ethiopia losses for the full financial year. Naisibe will unpack this more in her presentation. Vodacom's geographic mix balances growth opportunities and cash generation. A look at our customer split shows that we have four similarly sized segments. Of our 206 million customers, 76% are now outside South Africa. From a revenue perspective, South Africa remains the largest component. Revenue in South Africa grew 2.4%, impacted by pressures in the wholesale segment. International revenue of 15.4 billion rand was up 1.5% on a reported basis, impacted by stronger rand. The normalized growth was 6.4%, supported by good growth in data and M-Pesa. Egypt delivered revenue growth of 14.3 billion rand, contributing almost 20% to the group. On a reported basis, growth was down 3.9% due to the pound devaluation in March. In local currency, revenue growth was up an impressive 52.9%, well ahead of inflation. Safaricom had an excellent period of revenue generation, up 21.9% in rands. This was driven by double-digit growth in Kenya and accelerated commercial momentum in Ethiopia. Turning to operating profit, the devaluation in Ethiopia had a material impact on the results in the period. This is flagged on the slide as 1.1 billion rand. Excluding the impact of foreign exchange movements, our group operating profit was up 9.8%. In South Africa, operating profit growth was 2.4%, consistent with the revenue and EBITDA result. A flat operating margin in South Africa is a positive trend change from recent years. This was helped by moderated investment into energy-resilient capex, with the heavy battery investment now hopefully behind us. In our international business segment, operating profit for this segment declined by 53%, a disappointing result. In addition to repricing pressure in Mozambique, we faced once-off costs in the DRC and felt the impact of the Ethiopian devaluation. Our direct 5.7% stake in Ethiopia is housed within the international segment. Egypt delivered a stellar result. Operating profit growth was 11.7% in Rands, with normalized growth of 90.8%. This was a really encouraging trend and provides good momentum for Rand-based growth as we lap the March devaluation. Finally, to Safaricom. The contribution of our associate stake in Safaricom of 1.3 billion Rand was impacted by the devaluation in Ethiopia and hyperinflation accounting. Like the Egypt result, when the noise from the foreign exchange is removed, Safaricom's underlying result was excellent. In fact, Safaricom's group's net income growth was 10.3%, excluding foreign exchange and hyperinflation adjustments. Now shifting to a product lens and looking at our contribution of our Beyond Mobile services to each of our geographic segments. We target a Beyond Mobile service revenue contribution of 25% to 30% of group service revenue over the medium term. These high-growth services include financial and digital services, IoT and fixed. In South Africa, 17.7% of service revenue is now attributable to Beyond Mobile, up from 16.6% in the prior period. Egypt's Beyond Mobile contribution is scaling quickly due to Vodafone Cash, digital and fixed services. At a 16.9% contribution, these services are collectively growing more than 60% year-on-year. Across our international business, the contribution of Beyond Mobile was 30.4%, while Safaricom continues to set the benchmark at 47.4%. We intend to scale each of these Beyond Mobile revenue streams into successful businesses. Turning now to our four segments. Service revenue was up 1.3% to R31.1 billion, supported by the consumer contract segment, prepaid mobile data, and Beyond Mobile services, but impacted by pressure in the wholesale segment. The headwind from wholesale was 2.3 percentage points in the period. So this pulls the underlying growth trend between 3 and 4%, not quite where we want it, but better than the reported result. Customers were up a healthy 4.2% in the period to 49.2 million. Financial services customers had strong growth of 13.5% to R15.6 million due to growth of insurance policies and voter-based transacting users. Beyond mobile services were up 8.1% and contributed R5.5 billion. This result was supported by financial services growth of 9.5% and fixed growth of 16.7%. Mobile contract customer revenue grew by 3.6% to 12.1 billion rand, supported by the consumer segment and contract price increases in the first quarter. Prepaid mobile customer revenue increased 2.2% to 13.4 billion rand. The result was also supported by price adjustments, but also faced a headwind from a strong competitive period last year, which was associated with high levels of load shedding. Vodacom business service revenue was up 4.9% excluding wholesale. Cloud hosting and security supported this growth with revenue for the segment up 48.9%. Overall, Vodacom business revenue declined by 4% to R8.3 billion, reflecting the pressure on wholesale revenue. Despite the subdued revenue performance, South Africa delivered EBITDA growth of 2.3%. This was a function of excellent cost control with cost growth contained well below inflation. Egypt delivered service revenue of 13 billion rand, contributing 22.1% to the group. Service revenue was up 44.1% in local currency, supported by market share gains in connectivity and stellar growth in Vodafone cash. Egypt ended the period with 48.3 million customers up 5.9%. Smartphones on the network were up 10.8% with strong traction on Egypt's flex bundle offerings and integrated content offerings. Egypt's beyond mobile service revenue growth was 61.3% supported by financial services and fixed. Financial services grew 94.4% in local currency and was supported by growth in users and volumes of transactions. Vodafone Cash customers was up 43.1% to 9.6 million customers. The 10 million customer milestone is now within touching distance. Egypt delivered 6.2 billion rand of EBITDA and made up 23.4% of the group's result. EBITDA growth was an impressive 58.3%, with margins improving to 43.4%. This growth rate would have been even higher were it not for some trading forex impacts in the period. In October, we announced a $150 million investment into a 5G license in Egypt and extended our existing licenses to 2039 for $17 million. As is the case in South Africa, 5G will not result in a sudden capex spike. Instead, we see 5G as an incremental opportunity to support the insatiable appetite for data in Egypt. Service revenue for our international business increased 1.3% on the reported basis to R14.9 billion, with strong growth in data and in PESA partially offset by foreign exchange transition headwinds. On a normalized basis, service revenue growth was 6.2%. From a market perspective, we delivered 19.1% local currency growth in Tanzania, 11.2% in Lesotho, and 9% US dollar service revenue growth in the DRC. Mozambique year-on-year performance remained under pressure in the period, declining 15.1% due to repricing. Encouragingly, the month-on-month trend stabilized in the second quarter due to improved commercial positioning. Customers were up 4.5% to 56.1 million, supported by double-digit growth in Tanzania. This commercial traction supported voice revenue growth in Tanzania and DRC in the second quarter. We added 3.2 million data customers with data traffic growth of 30.5%. Our prepaid handset financing trials in DRC, Mozambique and Tanzania progressed well in the quarter with smartphone users up 15%. Our PESA revenue was up a healthy 10.4% on a normalised basis to R4 billion. Our PESA customers grew 13.3% to R23.8 million. Our international business EBITDA was R4.3 billion and declined by 20%. This was a disappointing result given the segment's commercial momentum and reflected foreign exchange pressures, once-off costs in the DRC and the year-on-year revenue pressure in Mozambique. The once-off costs in DRC included bad debts and ad hoc supply escalations exacerbated by inflationary pressures. We expect a clear EBITDA improvement for international in the second half of the financial year. Safaricom delivered an excellent performance in Kenya, while commercial momentum in Ethiopia accelerated. Service revenue increased 13.1%, supported by strong growth in Kenya of 12.9%. The Kenyan growth was broad-based, and PESA was up an impressive 16.6%. Safaricom together with M-Pesa Africa continue to develop products that deepen financial inclusion. Our first wealth product in the market, Mali, is a prime example, with assets under management reaching 3 billion Kenyan shillings. Kenyan mobile data revenue grew 20.2% supported by customer and traffic growth with strong adoption of all 4G services. Fixed service revenue grew 14.7% supported by fiber to the home, with homes sparse reaching 640,000 in the period. In Kenya, EBITDA grew 13.7% with best-in-class margins of 55.1%. This excellent performance supported an incremental 4% upgrade for Kenya's EBIT guidance. EBITDA for Safaricom Group was impacted by the devaluation of the Ethiopian BIR in the second quarter and declined 5.8% in Kenyan shillings. Excluding this devaluation, EBITDA growth was 14%. Ethiopia EBITDA losses actually reduced by 7.7%, excluding the devaluation impact, providing comfort that the business is starting to scale. On that note, Ethiopia reached 6.1 million customers, up 47.1%, with total sites built exceeding 3,000. As a result of the devaluation, Safaricom revised the EBITDA break-even target for Ethiopia to FY2027 from FY2026 and increased the expected EBIT losses for FY25 by 15 billion Kenyan shillings. The medium-term 15 to 20 million customer target was reiterated, supported by the strong commercial momentum in the business.

In this video, I will unpack our results for the six-month period ended 30 September 2024. My opening slide sets out our group highlights. We achieved a 1% revenue growth for the period, driven by strong commercial momentum despite facing significant foreign exchange headwinds. Given that the Egyptian pound devalued by more than 60% in March 2024, achieving revenue growth of 1% was a pleasing result. The impact of foreign exchange movements was an important theme in this reporting period, but more on that as we progress through my slides. Group service revenue and EBITDA, which declined 1.2% and 2.7% respectively, were also impacted by foreign exchange headwinds. Our Beyond Mobile services continue to grow pleasingly underpinned by financial services. We are well on track to meet our medium-term target of a 25% to 30% contribution from Beyond Mobile. The group EBITDA margin was 36.1%, down one percentage point year on year, owing to a soft performance in our international business. However, pleasingly, the EBITDA margin in South Africa was stable, while Egypt, we improved the margin by 1.5 percentage points to 43.4%. Headline earnings per share was impacted by a devaluation in Ethiopia and a once-off cost in DRC, which I will unpack later in my slides. Our balance sheet position remains robust as we limit exposure to foreign currency debt. In this period, we also favorably refinanced nearly 14 billion rands of M&A-related debt, which should save us at least 300 million rands in finance costs. From a shareholder perspective, we declared an interim dividend of 285 cents per share. While this was down marginally year on year, we have largely absorbed material macro shocks, including significant currency volatility. Moving to our income statement, we have set out reported as well as normalized growth to help provide better insights into our underlying trends. Normalized growth presents performance on a comparable basis, adjusting for foreign currency fluctuations on a constant currency basis. On a normalized basis, group service revenue growth was 9.9% and at the top end of our medium-term target range. This result reflected strong growth from Egypt of 44.1% in local currency and good growth in our beyond mobile service across the group. Group reported EBITDA was 26.6 billion rand with normalized growth of 8.5% also within our target range. Egypt's strong performance was the main contributor and supported by excellent revenue momentum and cost containment. The net profit from associate and joint ventures declined 39% to 0.8 billion rand. The result was impacted by a more than 100% devaluation of Ethiopian beer in the second quarter. On a normalized basis, and excluding this devaluation impact, associates declined by 2.9%. Net finance charges increased 15.5% to 3.4 billion rands, largely as a result of losses on the re-measurement of financial instruments related to foreign exchange rate movements. Net profit attributable to equity holders of 6.8 billion rands was down 18.4%. The decline, which I will unpack later, was attributable to Ethiopian devaluation, higher finance costs, and once-off costs related to DRC. The group delivered excellent commercial momentum in the interim period and in the second quarter. Normalized service revenue growth was 9.7% in the quarter at a similar level to recent quarters and at the top end of our guidance. South Africa's service revenue grew 1.3% to 31.1 billion rands in the first half. Pressure in the wholesale segment was a key drag on our growth. This headwind amounted to 2.3 percentage points, so the rest of the business is running at closer to 3 or 4% growth. In the second quarter, service revenue eased to 0.7%, reflecting a strong prepaid comparative. On a normalized basis, our international business accelerated service revenue to 6.6% in the second quarter. The result was driven by an excellent performance in Tanzania and strong growth in DRC. Egypt delivered local currency growth of 44.3% in the second quarter, comfortably above inflation levels in their market. Growth was supported by strong customer engagement in connectivity and excellent growth in voter phone cash. Shifting focus to cash, our operating free cash flow decreased 18.3%. This was a result of lower EBITDA and working capital absorption. The working capital swing was exaggerated by the currency situation in Egypt. In March, devaluation of the pound materially improved access to foreign exchange, facilitating a repayment of foreign payables. Working capital is expected to improve meaningfully into the second half, consistent with prior years, supporting a significant improvement in free cash flow. CapEx remains a key capital allocation priority, and we invested almost 9 billion rands in the period to support network resilience and maintain our competitive edge across the markets in which we operate. From operating free cash flow, we paid cash of 4.7 billion rand and incurred slightly higher net finance costs. We were net payer of dividends to non-controlling shareholders in our subsidiaries after dividends received from associates. More simply, the dividend paid to Egypt's minorities was largely offset by a receipt from Safaricom. This slide provides a bridge from EBITDA to the net profit decline of 21.1%. Our depreciation and amortization charge and Safaricom Kenya were tailwinds for profitability. Pleasingly, the rate of depreciation and amortization in South Africa substantially moderated in the period as we leapt our investment into energy resilience and the new spectrum. Unfortunately, these tail ends were more than offset by the devaluation loss from Ethiopia, which amounted to 1.1 billion rands. This resulted in our operating profit declining 5.2% to 16.1 billion rands. Below the operating profit line, higher finance costs and taxation weighed on net income. Our effective tax rate was unusually high in this period, and I will peg this in my next slide. The tax expense of 4.9 billion rands was up 18.7%. This increase was as a result of DRC, where we made one of top-up tax accrual, having had our assessed losses depleted. This means going forward, 100% of our DRC income is now considered taxable. The effective tax rate at 38.4% was well above our statutory rate of 27%, but this was largely a function of timing and one-offs. In the period, withholding taxes on the subsidiary and associate dividends was a key reconciling factor. While we expect some dividend receipts in the second half, these are unlikely to be as material as the first half. We also face pressure on our tax rate from a non-deductibility of the finance costs associated with the purchase of Egypt and the funding of our operation in Ethiopia. Having refinanced this debt late in the first half, we expect this tax rate headwind to moderate into the second half. Finally, the DRC top-up increased the effective tax rate by 4.3 percentage points and was once off in its nature. Given the timing and nature of these reconciling items that I have discussed, we expect a substantial improvement in the effective tax rate into the second half of the financial year. This slide provides the key drivers of our headline NXP share decline. Firstly, Mozambique's performance remained under pressure in the period and contributed 11 cents to the result. Mozambique's performance is stabilizing month on month, so we expect this headwind to moderate into the second half. The material headwinds to earnings were related to DRC and Ethiopia's devaluation. DRC once-off includes the tax payment, as I mentioned earlier, and separately, supplier escalations and some bad debts. For Ethiopia, the devaluation of the BA in the second quarter resulted in the re-measurement of foreign-denominated assets and liabilities in Safaricom Ethiopia. The business was in a net dollar liability position, and hence the impact was adverse. After the minorities, the impact on net income was one billion rands, or 53 cents per share. More importantly, the prevailing beer exchange rate provides scope for ending stale wind into the second half of the financial year, given that Ethiopia is currently in a loss-making position. Another positive call-out was Egypt, which also faced a currency devaluation in March 2024. This segment posted net income growth of 75.1% in local currency and 10.1% in rents, and it contributed 30 cents per share despite the devaluation. This highlights the assets growth trajectory and scope for strong rent returns over the medium term. If we remove the impact of foreign exchange to our headwinds, our headline earnings per share would have been 11.4%. Looking back over the last couple of years, the macro cycle has had a material impact on our earnings, but fortunately not a devastating one. Critically, our geographic and product revenue diversification, our largely localized cost structures, and balance sheet position meant that we have been able to weather this adverse macro cycle with limited impact on cash generation or leverage. On the left-hand side of the slides, we quantify the impact of our higher interest rates and foreign exchange shocks. Post-COVID, with inflation surging, South Africa followed global central banks and increased the prime rate from 7% in the financial year 21 to 11.7% in the last financial year, 2024. This materially impacted our finance costs, as almost 90% of our debt is rent-based to avoid balance sheet exposure to hard currency. Then more recently, the Egyptian pound and Ethiopian pair faced material devaluations. These events impacted earnings by at least 50 cents per share, respectively. Cumulatively, higher finance costs and foreign exchange devaluations have impacted our earnings by 241 cents per share. While we cannot discount higher for longer rates and foreign exchange volatility, our competitive periods now include material shocks. Our leverage position at 1.1 times net debt to EBITDA remains comfortable. The ratio is up slightly on the prior year due to Spectrum payments over the last 12 months. Looking at the composition of our borrowings, as already mentioned, we are largely rent-based. This high weighting of rent debt is deliberate and helps limit our exposure to foreign exchange risk. From an interest rate perspective, our financial debt is 86% floating rate. This debt mix provides us with an opportunity to benefit from stabilizing and even falling interest rate expectations when the cycle turns. For example, our average cost of debt was 10.4% in the period, having been just 7.7% three years ago, and having started to settle the refinance of some of the most expensive debt, we are hopeful that the new interest rate cycle will be beneficial to our business. Vodacom offers one of the highest dividend payouts on the JSC, reflecting our excellent cash generation. In the period, the board declared an interim dividend of 285 cents per share. This represents an 86% payout of headline earnings, higher than our typical minimum payout of 75%. The payout was adjusted higher to exclude the devaluation loss from Ethiopia, which is weighted on the first half. The prevailing ETB exchange rate provides scope for lower translated losses from Ethiopia in the second half to help offset the devaluation losses of 53 cents per share that we incurred in the first half of the year. Given this dynamic for Ethiopia, the payout ratio was adjusted to reflect the potential phasing of losses for the full year of 2025. The board expects the total dividend for the year ended 31st March 2025 to be at the 75% payout of headline earnings. This implies a payout ratio below 75% for the second half of the year. From a position of balanced strength, we are well positioned to accelerate our growth. Diversifying our beyond mobile services is a key priority for the group and improving our customer proposition. On a consolidated basis with South Africa, Egypt, and international business in scope, we saw our beyond mobile services revenue contribution continues to steadily increase from 19.8% in the first half to 21.1% in the first half of 2025. Looking ahead, our ambition is to increase this to around 25 to 30% in the medium term. The largest weighting within Beyond Mobile is our financial services portfolio. We see this scaling to a mid-teen contribution to group service revenue as we deepen financial inclusion across our markets. In this slide, we set out our capital allocation priorities. Our first priority is investment into organic growth, which includes our core connectivity business and new growth areas. This investment is supported by our big data capabilities, which help us generate best return for each rent that we have invested. Our dividend policy means that we do not need to compromise on our organic investments. With a payout of 75% of headline earnings, we are left with room to fund our capital intensity framework and also deliver our balance sheet in due course. In my concluding slide, I set out our medium term targets. The strong commercial momentum of the current financial year supports an unchanged outlook for group service revenue and EBITDA at high single digit growth. Our group capital intensity ratio is unchanged at between 13% and 14.5% of revenue. These targets are on average over the next three years based on prevailing economic conditions. These targets are not without challenges. Notably, the macro outlook remains uncertain with both global growth concerns and local factors. For our international segment, we expect an improved performance in the second half and return to EBITDA growth supported by a gradual recovery in Mozambique. Separately, our associate Safaricom updated its guidance for the financial year 2025. And building on an excellent first half, Safaricom upgraded its guidance for Kenya and Ethiopia guidance was also reviewed given the currency move. At a group level, Safaricom is still guiding to grow for the full year. On that note, I will conclude and thank you for your attention.

Over three decades, we have built Vodacom Group into a purpose-led business with a footprint reaching 40% of Africa's population. We are a market leader across our markets with a unique opportunity to drive inclusion. Our asset-rich portfolio is another point of differentiation as we own most of our towers and mobile infrastructure. The combination of our connectivity and financial services scale means we are constantly delivering returns above our cost of capital. Looking ahead, with these attributes in place, we will continue to scale and execute on our system of advantage to capture growth. We will focus on accelerating the penetration of our existing connectivity services with new spectrum unlocking 4G, 5G, and fixed wireless opportunities across our markets. Across our digital ecosystem, we have growth opportunities ahead of us as we drive smartphone adoption and deepen financial inclusion, helping unlock our customer growth potential. We are scaling our new prepaid device financing model. Transforming our business will include the optimising of our assets through sharing and to this end, we aim to unlock benefits through partnerships in both rural coverage and fibre across our footprint. As we pull together the levers of our strategy, we are now positioned to accelerate our growth profile, and this is reflected in our guidance. Finally, we will always prioritize our contribution to societies in which we operate and our purpose-led ambitions. Our drive to empower people encompasses several elements, including higher female representation at the management level, driving financial inclusion, closing the digital divide, and supporting communities. ProPlanet, in addition to reducing our greenhouse gas emissions, we are leveraging our good platforms to support our markets in agriculture, energy and water. We look forward to engaging with you over the coming weeks on our Investor Roadshow. This concludes my presentation. Thank you for your attention. Welcome to the highlights for our interim period at the end of 30th of September 2024. We've also added a comprehensive strategy and results update video onto our Investor Relations website. I'm joined by our Group CFO, Naisive Morati, as well as our Head of Investor Relations, JP Davids. As we celebrate Garukom's 30th birthday this year, I'm particularly proud of the impact we have made on inclusion in Africa. Garukom, now connects 206 million customers and provides financial services to 83 million customers, each representing significant milestones in our history. While Vodacom has had to adapt to evolving regulated pressures and customer needs, our purpose has remained unchanged for the past three decades, which is to make sure that everyone is connected. To achieve this purpose, we are focused on empowering people and protecting the planet while maintaining trust in everything that we do. At the International Telecommunication Union's recent event at the UN General Assembly, we emphasized the urgency of empowering people through digital and financial inclusion. In low-income countries, only 35% of the population have access to 4G. We have adopted a holistic approach to address inclusion across our footprint that leverages both our scale and partnerships. From new rural sites from fibre to space, we are expanding our coverage to close the digital divide. This commitment is evident in the 1,133 new 4G sites added across the group over the last six months. As pioneers of mobile financial services, we also contribute significantly to Africa's financial inclusion. Our products are designed to support both consumers and merchants. In just the last 12 months, we added another 9 million financial service customers. Beyond our initiatives in connectivity and financial services, we empower people by supporting communities and SMEs. One of our key medium-term initiatives is to digitally upscale 1 million young people across Africa to programs such as Code Like a Girl. This is an ambitious target, and we'll see as part of it what Amazon Wireless Services to scale digital skills are. For the planet, we've committed to net zero greenhouse gas emissions for scope one and scope two by 2035. Whether it's to our various foundations or tech for good platforms, we provide solutions to meet Africa's environmental challenges, including the impact of climate on agriculture and the need for renewable energy and the scarcity of water. Our purpose is enabled by our strategy called the System of Advantage. A prime example of the overlap between our strategy and purpose is how we are driving down barriers to smartphone ownership. With our current smartphone penetration at 62%, I'm passionate about connecting the other 80 million of our customers to a digital world. Our groundbreaking prepaid device financing bundles can help bridge this gap. This model allows a customer to repay the phone in daily installments or as they generate income. For us, prepaid-enhanced financing provides scope to reshape our prepaid proposition into a form of annuity or contract-like revenue. As I reflect on our strategic progress over the last few years, I'm very pleased with the shape of our group from a geographic and product perspective. But in my case, the word pleased will never mean I'm satisfied. As we look ahead to the next five years, it's critical that we position Loricon's strategy to deliver double-digit growth. Combining our innovative mindset with healthy markets is the key to empowering this opportunity. A healthy market for us is characterized by its pricing dynamics and ability to generate strong returns. I look forward to unpacking this concept in our 2030 vision that we'll invest today in February next year. Switching gear from our strategy to the results. Over the last two years, we have absorbed significantly higher interest rates in major currency shocks in Egypt and Ethiopia. Pleasingly, our Egyptian business is already delivering high currency bottom line growth just six months after 60% devaluation. As we lap the March devaluation in Egypt, we are well-placed to meaningfully accelerate RAND-based earnings. Ethiopia, we are currently navigating through the recent currency reforms, having already seen market prices increase. With that said, both these evaluations have had material impact on reported results in the period, especially on earnings. At a group level, the revenue of 73.5 billion was up 1% impacted by the Egyptian devaluation. On a normalized basis, the equivalent constant currency measure Group sales revenue increased 9.9%. This compares favorably to our target of high single-digit growth over the medium term. Group EBITDA decreased 2.7% to 26.6 billion rand, impacted by the Egyptian devaluation and foreign exchange advance of pressures in international that I will unpack later. On a normalized basis, EBITDA growth was up 8.5% in line with our median total. Our headline earnings per share declined 19.4% to 353 cents per share. The decline was largely attributable to the currency reforms in Ethiopia and wants of operating costs and taxation in the DRC. The devaluation in Ethiopia resulted in the restatement of foreign liabilities and negatively impacted HAPS by 53 cents. As we look into the second half of the year, this week of exchange, they provide scope for lower translated losses from Ethiopia, hoping to offset the negative earnings impact in the first half of the year. Given this phasing impact, the board declared an interim dividend based on 86% payout ratio, or 285 cents per share. While the dividend is down 6.6% year-on-year, it is flat with the final dividend of FY2024. Looking into the second half, we are optimistic about our earnings growth prospects, particularly as we lap the impact of the Egyptian pound devaluation. Shifting the discussion now to our performance at a product level. Beyond mobile, which we had previously referred to as new services, reached 21.1% of group service revenues. Beyond Mobile includes fixed, IoT, digital, and financial services, and we target a 25% to 30% contribution in the medium term. Financial services is key to our global ambitions and the largest component of Beyond Mobile. We remain Africa's leading fintech operator with $421 billion of transactions, or $1.2 billion per day, processed through our mobile money platforms over the last 12 months, including Safarico. Our financial service business was up 7.8% in rents, was 17.6% on a normalized basis, and made up 11.4% of group service revenue. The scaling of this business is important to our earnings and return outlook, given the low capital intensity of financial services. And then moving on to our geographic sectors. In South Africa, we delivered modest top-line growth, but improved the shape of our P&L with flat EBIT margins. Service revenue grew 1.3% to $31.1 billion. The result was negatively impacted by 2.3% percentage point headwind from wholesale services. So this puts the underlying growth trend between 3% and 4%. It's not quite what we want, but better than the reported result. Mobile prepaid revenue grew 2.2% in the half, supported by pricing adjustments implemented in the first quarter. In the second quarter, prepaid revenue growth eased to 1% as we lapped a strong competitive quarter associated with high levels of low churning. Mobile contract customer revenue increased by 3.6% to drop with 1.9 billion, supported by good growth in our consumer segment. We also reported good growth now beyond mobile services. Fixed service revenue was up 16.7%, excluding low-margin wholesale transit revenue. Service revenue generated from financial services was up 9.5% to 1.7 billion land, driven by very good growth in our insurance portfolio. The EBITDA margin was stable at 37%, while operating profit increased 2.4% as we moderated our investment into energy resilience. We were disappointed that the massive transaction was prohibited by the competition tribunal, especially given that it had received support from Mikasa, our competitors, and the South African government. As we assess our options in South Africa, we remain of the view that fiber cobalt is better than overall. Egypt's performance was stellar and fully absorbed the currency devaluation. Service revenue in local currency was up 44.1%, well above inflation. The result was broad-based with strong growth in consumer mobile and fixed business and Vodafone Cash. In the second quarter, growth accelerated marginally to 44.4%. Vodafone Cash revenue grew 94.5% and increased its contribution to 7.6% of Egypt's service revenue. EBITDA in Egypt was 6.2 billion rand. broadly flat year over year, with the margin improving to 43.4%. Given the extent of the currency devaluation in March, this was an excellent outcome and supported by margin expansion. The bottom line result from Egypt was even more impressive. That income growth was 75.1% in local currency and translated to a 10.1% growth in lands, despite the devaluation. Our international business reported good service revenue growth, but had a disappointing EBITDA performance. International business service revenue was $14.9 billion, up 1.3% or 6.2% on a normalized basis. From a market perspective, we delivered 19.1% local currency growth in Tanzania, 11.2% in Lesotho, and 9% U.S. dollar service revenue growth in the DRC. Both the bigs year-on-year performance remained under pressure in the period, declining 15.1% due to repricing. Customers across international was up 4.5% to 56.1 million, supported by double-digit customer growth in Tanzania. This commercial transaction growth supported an improved voice performance for the international business in the second quarter, with Tanzania and DRC both delivering local currency voice revenue growth. International business EBITDA was 4.3 billion and declined by 20%. This was a disappointing result given the segment's commercial momentum and the reflected foreign exchange pressures, reflected foreign exchange pressures, once of results in the DRC, once of costs in the DRC and year on year revenue pressure in Mozambique due to the repricing. Once of costs in DRC included bed nets and ad hoc supplier escalations exacerbated by inflationary pressures. By contrast, Tanzania delivered local currency EBITDA growth of 18.6%. a clear improvement in international EBITDA in the second half. Our fourth business segment and important earnings driver is our associates at Varicom. Varicom's results were impacted by the European devaluation but delivered excellent growth in the core Kenyan operation. Service Avenue increased 13.1% with Kenya delivering a service revenue growth of 12.9%. Kenya's growth was broad-based, with M-Pesa up 16.6%, mobile data growing 20.2%, and fixed IR by 14.7%. EBITDA in Kenya grew 13.7%, with margins at 55.1%. This excellent performance supported an upgrade of Safaricom's EBIT guidance for Kenya by 4%. EBITDA for Safaricom Group was impacted by the devaluation of the Ethiopia PER in the second quarter and declined 5.8% in Kenyan shillings. Ethiopia EBITDA losses actually reduced by 18%, excluding the devaluation impact, providing comfort that the business is starting to scale. On that note, Ethiopia customers reached 6.1 million, up 47.1%, a total side spill exceeded 3,000. At the net income level, Safaricom reported decline of minus 17.7%, but encouragingly net income growth was 10.3%, excluding the foreign exchange and hyperinflation adjustments. As a result of the devaluation, Safaricom revised the EBITDA break-even target for Ethiopia to FY27 from FY26, and increased the expected EBIT losses for FY25 by 15 billion Canadian shillings. The medium-term 15 to 20 million customer target was reiterated, supported by the strong commercial momentum in the business. As I mentioned earlier, there are some early signs of progress in pricing in the market. That concludes my review. The ICB and I are now ready to answer any questions you may have.

Yes, so good afternoon again, everyone. Sorry about that technical glitch. The good news is you haven't missed much, so we did press pause when we found out about it. We are now ready to move into the live Q&A session, which I will moderate and ask Rosebi and Shamil to jump in with the answers. Just to reiterate or just to confirm that if you didn't miss any of the messaging, our videos are available on our website to watch on demand, both Shamil's video and Rasevi's video. But with that, let me kick off the Q&A. And Shamil and Rasevi, we've had, I guess, several questions around similar themes. So I'm going to try and bucket them together. Prashendran from Nedbank, Rohit from Citi, Maddy from HSBC, asking similar questions around prepaid in South Africa. And I guess there are a couple of elements to the question, but the overall remark is perhaps 1% a little bit below expectations. So what's driving that? What's the outlook? And then As we talk through that, what does the voice dynamic look like within that trend, that 1% trend? So, Shamil, I'll ask you to kick off the discussion there.

Sure. So I think on the prepaid revenue, I think firstly, we had a strong second half last year because of low churning. So we are betting against a very strong quarter last year. In terms of the underlying trends and so on, very much similar. to the first quarter with data revenue in the half growing over 90%. So you're seeing good, strong growth in data revenue, offset a little bit by pre-point voice decline, where we managed to curtail the overall for the half to around about 3.5%. uh voice decline but one percent in the first in the first quarter and and five percent in the second quarter but it's also coming from us pushing more and more customers into into bundles and into integrated offers specifically which uh which will then help with uh you know an improved performance uh into the future super and perhaps just staying with

South Africa, there are a number of different questions, but related to the same topic being CIBH. So again, Prashendran asking a couple of there, and also Jono from APSA asking around CIBH, and maybe I'll read off a few of them. So I guess, firstly, reaction to the Competition Tribunal's decision. would be question one. Question two would be, you know, what's plan B or plan, you know, what's the plan if the deal is ultimately prohibited? And just more broadly, I guess, what is the strategy of fibre to the home in South Africa from here?

Yeah, so look, I think, you know, so for me, it's a travesty for South Africa more than it's a travesty for Vodacom that the fibre deal wasn't approved because I think the pro-competitive benefits of the deal far outweighed any potential competitive issues. And that said, all competitors that were interveners were actually in support of the deal at the end and recommended to the tribunal to approve. So that's why it was disappointing. In terms of the deal itself, I think where we are, firstly, of course, one option would be to appeal, which we're currently considering. We'll have to do that before the reasons actually come out. We will, of course, use the opportunity to also lock in a new set of terms and conditions, including pricing. and long stop dates and all of those type of things. Because it can take as much as six to nine months for the application process. Actual yearning is one day and the results come on fairly quickly after that. So that's the one option that we are looking at. Further to that, of course, we do have other options. Most importantly for me, the money is still in the bank. We have opportunities both locally and in the rest of our markets where, as you know, we have a lot of different fiber opportunities where fiber to the home, fiber to the business is a nascent opportunity in all our markets. So, yeah, we're not short of opportunities and we will make the appropriate changes to it. I think for fiber in South Africa, I think it's a travesty because I think the level of investment could have shaped Fiverr in South Africa differently. And frankly speaking, the logic escapes me because we only have 2.5% market share in Fiverr. So that's important. What we're clear on, though, is that we prefer That will be the dominant feature of how we pursue fiber, both locally and internationally.

Staying with South Africa, but switching gear maybe more to the margin side. Maybe you can take this one. I think we've a couple of different questions, but maybe Maddy is asking it the best way, which is, is there more to be done around

uh the margins in south africa and and maybe just to explain some of the cost initiatives that we were able to deliver on in the first half of the year to deliver the avatar results good afternoon everyone um so yeah in terms of margin um so we just mindful that the mix in our business is changing so uh from a um an enterprise perspective as we do some of the transactions like in the cloud and so on, those come at low margins, but they are still very strong opportunities contributing to service revenue and from the bottom line perspective, they continue to be strong. A little bit of that effect is to be expected, but in terms of the long-term look, of course, we continue with our for growth program. It's an old program that has been in Boracom for a very long time and we continue to identify opportunities where we renegotiate some of the terms with the suppliers, where we issue RFPs for areas that need to be refreshed, package the services differently, manage the demand side to make sure that we buy right and we obviously care because there are necessary. We also had some reduction in headcount in SA, where we've had 80 voluntary exits. And whilst we have frozen headcount in terms of the new vacancies or deferred some of the vacancies, et cetera. So lots of initiatives, how we manage leave, as an example, So there's a lot of initiatives and deep sharing, as you call it, to manage the costs. So we're very pleased with the performance in terms of costs in this season. And we expect to continue that journey for the rest of the year. And of course, it's not just in South Africa, but across all our markets and managing costs very tightly. So in terms of that cost contribution, we do believe that it will continue to support margin. So margin at levels that we reported, roughly around 86%, that is sustainable.

And then just sticking with the theme of margins and costs, Maddy's got some follow-up questions on the international markets. So I guess firstly, just to help everyone understand, these one-off costs we called out in DRC, if you can provide a little bit more context there. And I guess his general observation is that the international margin stuck in the high 20s, low 30s seems quite low versus some other markets across sub-Saharan Africa. Is there opportunity to improve here?

So, starting with the one-offs in DRC, there are components that I will call out. So firstly, we are talking about some supplier contract renegotiations where we were negotiating some of the terms that we were unhappy with the pricing of a particular contract. And by the time we closed out, I would say that we walked away, both ourselves and the supplier, slightly unhappy, but which is a good thing that, you know, we ended up in a much better structured contract. Unhappy from our side in that we obviously picked up a bit of extra costs that we have reported in September. But, you know, from the supplier's perspective, we managed to solve that needed to be solved. And as a result, we fixed the contract, not just for the one year, but for the next couple of years so we're quite pleased with the outcome but obviously you know we ended up with the picking that one off so clearly it will not repeat in the second half the second part is relating to bad deaths so here i need to point out that apart from South Africa that has a post-paid market that is quite big the rest of our markets are 99% prepaid So, however, in that small slice of post-paid, and in particular, if I'm talking about DRC, the post-paid will cover, there's a lot of mining entities, quite large companies, banks, and a few corporates, and also government. And as you know, governments in the emerging markets, in general, they tend to be slow payers. So we could not extend our services to the Ministry of Finance, Ministry of anything in government. But unfortunately, there are slow payers. So once you know that they will pay us, they just have delayed payments. And of course, from a technical accounting perspective, in running the models, it was necessary for us to make some provisions because in terms of the necessary accounting statements that is required. So as a result, we took those provisions, which we do believe that they will account for that on recovery basis. So it will be cash accounted as the government pays us. So that is really mainly the main issue. Again, I don't expect that to come through in the second half. So the other one off, which is below the line, is related to tax. And here, In DRC, we had assessed losses for a better part of the last many years, but we have now fully utilised that assessed loss. And noting that there is a diminished principle in that even when you have assessed loss, you still pay tax, you have used the other particular year. So we have now completed that, so obviously then in terms of the tax that you pay, misses the benefit of that access loss. Secondly, as you do the provisional tax payments, like you do in all other markets, when the assessment is done in the following year, then you do the catch-up payment. So our tax included that catch-up, which relates to the prior period. So that will also not repeat. And we also have the withholding taxes, and in paying the dividend from M-Pesa entity to the GSM entity, there's a withholding tax of 10%. In some markets, that will wash its face because it is within the same group, but that doesn't work like that in DRC. So that is also somewhat not something that will repeat in the second half. So our outlook for saying that DRC will look better in the second half is based on those number of one-offs. And we are encouraged by the fact that the top line growth was fairly strong at roughly close to 10% in dollars. So margins from the IB market's perspective in large affected by this DRC situation. So 20% is definitely not the run rate for margin in this environment. So we expect that to normalize post this period where we have gone through the one of similar DRCs.

Thanks, Rasevi. A couple of questions from Nadim. I might take one or two and then ask Shamil to jump in on one or two. So Nadim from SBG asking a couple, let me start with the ones I'll ask, answer, excuse me, is what drove the acceleration in fixed service revenue in 2Q? And then what percentage of SA recharges are from airtime advance? So just quickly the answers there being, Fixed service revenue took out a very good performance in fiber to the business, so a nice strong result in the enterprise segment there. And then what also helped in that segment was cloud hosting and security, a really excellent quarter for cloud hosting and security, supporting the fixed results in the quarter. Percentage of SA recharges from airtime advance in Q2 for South Africa, that's around 50%, about half of recharges. I'll hand over to Shamil for the second part of that question is, could it go higher from here? I'll let him chat to that. Then also, Nadim has asked a separate question around the 5G investment and opportunity in Egypt. You know, referencing the $150 million we were investing into the 5G license, any color we can add around the 5G market potential in Egypt?

Yeah, so on Airtel Advance, to be honest, there is always opportunity, but we are reluctant, of course, to push too much because effectively what then happens is you start to increase your NPL rate. So we carefully manage it. and make sure we only provide credit to those who can afford it. What we instead focus on is trying to get the customers that are using it to either to increase the amounts that they utilize, but also looking at opening up new opportunities that might not be related to opportunities that use similar kind of capabilities that we use in HIT and with Vance, but beyond HIT for vouchering and so on. In terms of Egypt, basically where we are is we've now obtained the 5G license. The opportunity is huge because of the strong data belt. Your data is doing between 35% and 40% consistently. So effectively, what that means is that if you can divert some of that into 5G, effectively what will happen is it gives better network optimization in terms of how you utilize it because on 5G, let's say the costs are lower. It also opens up more of the fixed wireless opportunity going forward. So given the big growth of data generally in the Egyptian market and the price stability, that helps us because of the regulated pricing, that gives you a nice opportunity to further expand your revenue growth.

Okay, spot on. Then just staying with Egypt, again, I'll probably just quickly take these ones. So Prashendran is asking about just the split from NetBank is just asking about the split of service revenue between some of the components being you've pulled out voice and data. So data makes up more than 50% of the revenues in Egypt and voices in the teams. And you just wanted clarity of whether that growth rate for data of 46.9% was the growth rate for data for the quarter. And yes, that is the case. I mean, data in that market is growing at that sort of level, high 40s, close to 50%. Then perhaps a couple of questions back to you, Rasebi, in terms of firstly on free cash flow, and then we're going to talk a little bit about TAPs. On the free cash flow side, Jono's just pulling out the working capital outflow in the first half of the year, noting that there was a step up relative to this time last year. It calls out a 1.3 billion rand delta. So asking if we can expect a similar unwind in free cash flow working capital into the second half of the year, as we've seen in prior years. And then separate to the free cash flow question, asking around the tax rate for the second half of the year. Based on the discussion you were running us through earlier, could we see the effect of tax rate normalised back into historic levels of, call it between 27% and 30%?

So in terms of the free cash flow, the working capital, this is likely as a result of the acceleration of payments in Egypt. So just a reminder that the devaluation in Egypt happened on the 6th of March, and soon thereafter, liquidity started coming into the market, and the payment of... kind of the backlog of suppliers and so on, continued progressively for the next couple of weeks. So part of that is closing out of that as liquidity became available. And again, as FX became available, liquidity became available with the banks, for as long as you had been waiting, you were obliged to take, and of course the suppliers would also be waiting for those payments. So that acceleration comes from Egypt in that sense. And it is not expected to repeat because it was dealing with those particular circumstances. In terms of the second half, therefore, the second half we expect it to be normal as per usual. And in fact, the shape in terms of our cash flow tends to be more strong cash flow in the second half than in the first half, because in the first half, we normally would have been paying things like capex and so on. So for that reason, we do not expect that to be any different. So the next question about tax, yes, the effective tax rate was high at 38%. There are a few factors that show that. So I spoke about taxes in DRC. The second and however the bigger contributor to that is the withholding tax with the dividend that we received from Egypt. So there is a 10% withholding tax. So obviously that will be in that line. And then we also, as per usual, receive the dividend from Safaricom. So that also includes the withholding tax, which is also 10%. We also call out the non-deductible costs and that buckets into the finest costs. So I'm glad to say that that has been de-risked because in the first six months, we managed to refinance part of the debt that was not acceptable, as well as pay back some of that, as we had indicated that we would be looking to optimize our debt structure and to reduce the burden of finance costs. So in the line in terms of what contributed to the 38%, we also include that. And lastly, normally one of the key offsets for the tax rate is the contribution from associate income. So given that Safaricom included a fairly tiny piece of the losses from Ethiopia, so as a result, we lost out on that offset. But the long-term picture is that our effective tax rate, we're guiding at levels of roughly around between 28 and 30 percent, not the 38 percent. 38 percent is inclusive of the one in DRC as well as this withholding taxes that did not have a base, particularly the one from Egypt did not have a base. So the normalization is expected.

Supan, while you've got the microphone, there's a question here from Prashendran just to follow up on the please call me matter. He's asked for an update then specifically around whether we do or don't provide in our balance sheet for this. And if so, if you can just provide a little bit of color around that.

So this is a contingent liability as we indicated in terms of the whole court process. And obviously, once the Supreme Court judgment came out, the fact that we have lodged our appeal, suspended the execution of that, and therefore crystallized as a contingent liability. But in our notes, we do say that we hold an immaterial

And then perhaps next steps in terms of the, please call me matter, court dates, et cetera.

The court date, thank you. The court date, so the constitutional court has given a date of the 21st of November where they will debate the merits of the case. the judgment will not be issued on the same day. So normally after, you know, going through that rating of the matter, they need time to go and document their verdict. So we'll be waiting for that. Obviously, the pause, it's never definitive how long it will take, but hopefully a couple of weeks or months from the time that they would hear the matter on the 21st of November.

Okay, super. So I think, you know, in short, a lot of the themes today around the CIBH transaction, around prepaid growth in South Africa, the international margin, the tax rate, I think Rusevi's covered of those last two, but Shamil, we're done with the Q&A. So maybe just in your closing to reiterate a couple of messages around, you know, the growth outlook for South Africa, and I guess where to from here on SA5A.

Yeah, so I think, look, so maybe a couple of messages. I'll do it a bit broader than that. I think, firstly, on the international side, I think a better second half is anticipated. We'll see some abatement of the repricing in Mozambique, so that should help as well in terms of a better overall result, both in revenue and EBITDA for the second half. Also in the international numbers is the day one impacts of Ethiopia. And then that, of course, will improve in the second half because you divide the losses by lower exchange rates. So that will also improve some of the numbers. So that's the one part. Then, of course, Egypt will continue to trajectory, growing strongly. Currency is a lot more stable, so that will help. to do well and Ethiopia outside of the of the Ethiopia is gaining quite a nice traction as well in terms of customer numbers and we have seen some price adjustments already so I think you know that is that is definitely improving In terms of South Africa, well, firstly, we do see a better second half performance. coming from essentially lapping of stronger Q2 results last year. So we should see a better Q3, Q4, but also a continued focus on the cost containment will deliver a better result in SA in the second half. In terms of the Fiverr deal, I think, you know, well, I think really I've said it all, but essentially we are considering our options and whether we should appeal, but also using the opportunity to make sure that the the value equation is correct and will help what will stand stand the test of time, if I can put it that way, you know, that takes into account that the process lasts for six to nine months. So we need to make sure that whatever the pricing is reflects that weight and so on. So that's part of what we're busy negotiating.

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