1.

INTRODUCTION
1.1 Background and profile of the
company
Vodacom Tanzania Public Limited Company is Tanzania’s leading
telecommunications company providing a wide range of services for
consumers and enterprise including voice, data, messaging, financial
services and Enterprise solutions to over 14.9 million customers. It plays a
significant role in the country’s telecommunications sector, contributing to
connectivity and digital communication infrastructure, It was listed on the
Dar es Salaam Stock Exchange on 15 August 2017.
 Products and services offered
Vodacom stands out for introducing new products and services for the country as their as follows,
Below is a range of Vodacom Tanzania products offered to customers and those still on the
pipeline.
Consumer products and digital services.
• Voice (Mobile: They offer unlimited Vodacom to Vodacom and Vodacom to other network voice calls for
activity period of the bundle)
• Data (Mobile broadband, fiber, fixed and Mobile internet). They provide the fastest mobile network; they also
have a wide range of ultra-fast broadband products and solutions.
• Messaging (SMS and social media applications)
• Value added services. Involves entertainment and sports such as gaming, video, music, IVR services and trivia
games. Also offers education through news, religious and digital advertisement. Provides selfcare (My
Vodacom app, website, airtime advance). Health issues (Elimika and Afya call). They also provide transport
services and market places through Paisha.
• Customer Care Includes; call Centre, service-desks, Vodacom shops, selfcare (my Vodacom app, USSD Code
and Mpesa App), DigiCare (customer support through social media, website, WhatsApp and a live chat app),
Customer alerts (flash messages).
• M-pesa Deposits and withdrawal (through over 125000 agents and bank transfers), Person to person
transfers (In country and international money transfer IMT), Self-Care (M-Pesa Super-App), Electronic
payments (Virtual M-pesa Visa Card, Merchants, C2B, B2C, B2B),Financial services (M-Pesa overdraft
’songesha’, savings and loans ‘M-pawa, mgodi’).
• Group savings (M-Koba, changisha)
• Mobility solutions (voice, small medium enterprises packages, data, IoT (machine to machine platform),
Reverse charge services, bulk messaging, SIM manager, Value added services)
• Fixed and whole sale solutions (internet services, inter-branch capacity, hosting/co-location, cloud solutions,
SIP services, digital solutions including M-Kulima and connected schools)
 Changes in the product or service provision in the past five years
• Basing on the reports for the past three to five years there has been a change in the provision of products and
services from the Vodacom company in Tanzania. For example,
• On July 2021 Vodacom Tanzania had launched VodaBima a service that allows customers to access
insurance products through their Mpesa app for the first time. On April 2022 Vodacom opens new digital
campaign known as VodacomDigital Accelerator, the program empowers startups that have innovative solutions
by facilitating them to realize their aspirations.
• On September 2022 Vodacom Tanzania, part of Vodafone group launched the first ever 5G mobile network
in the country which enables advanced digital services and enhanced customer experience also offers customer
fast speeds, lower latency and will support the development of emerging technologies in Tanzania such as
Internet of Things.
• Also, on August 2023 Vodacom launched digital campaign targets individuals and merchants to keep up
with the advancement in digital economy. The campaign that aimed to benefit money agents, vehicle owners and
drivers as merchants from both new and improved products like ‘M-pawa’, ‘Songesha’, ‘wakala songesha’ and
‘wezesha wakala’.
Branches
• Vodacom remains as the market leader with many branches across the country, also as of June 2023 with over
19.1 million subscriptions and a 30 percent market share of subscriptions. By the June 2023, the total number of
mobile cellular subscriptions in Tanzania amounted to over 64 million.
Organizational structure
• Vodacom Tanzania has a unitary board of 12 directors of whom
• Four (including the chairman) are independent non-executive directors
• Six are non-executive (but not independent as they represent major shareholders) and
• Two are executive directors.
 FINANCIAL HEALTH OF THE COMPANY
Nature of auditors that audited the company
• In the annual reports of Vodacom Tanzania Public Limited Company and its
subsidiaries for the past three years, the auditing function has been undertaken by
Ernst &Young Certified Public Accountants. It is one of the big accounting firms
renowned for its global expertise in auditing and assurance services. Their role as
outlined in the independent auditor’s report, includes:
• Auditing the consolidated and separate financial statements of Vodacom Tanzania
Public Limited Company (the ‘Company’) and its subsidiaries.
• To obtain reasonable assurance about whether the consolidated and separate financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes auditors’ opinion.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
and the Company’s ability to continue as going concerns.
 Number of days taken to release financial statements
• In assessing the financial reporting efficiency of Vodacom Tanzania Public Limited Company,
it is noteworthy that the company consistently demonstrated consistency in the time taken to
release its financial statements over the past three years. According to the annual reports for the
year 2021, 2022 and 2023 the financial statements were released within 89 days after the close
of fiscal year. This consistency provides stakeholders with timely insights into the company’s
performance. Also, indicate the improved internal processes.
Type of audit opinion
• In each of the past three years Ernst & Young Certified public Accountants has issued an
unqualified audit opinion on Vodacom Tanzania Public Limited Company’s financial
statements. An unqualified opinion indicates that in the auditor’s professional judgment, the
financial statements present a true and fair view in accordance with the applicable accounting
standards. This consistent issuance of unqualified opinions reflects a high level of confidence
in the accuracy and completeness of the financial information presented by Vodacom Tanzania
Public Limited Company. Stakeholders can rely on this unqualified opinion as a positive
assurance regarding the company’s financial transparency and adherence to accounting
principles, providing strong foundation for trust in the reported financial results.
Number and nature of key audit matters (KAM)
• Upon studying the auditor’s report, it is evident that the auditors Ernst & Young Certified
public Accountants have highlighted key audit matters in their examination of the Vodacom
Tanzania Public Limited Company’s financial statements for the year 2021, 2022 and 2023.
These key audit matters represent areas that in the auditor’s professional judgments, required
significant attention and posed potential risks of material misstatement
• Accounting for uncertain tax positions: The Group is required to
comply with a number of taxes including income taxes, Value
Added Tax, excise duty and payroll taxes, among others. As
disclosed in Note 33 to the consolidated and separate financial
statements, the Group had open tax assessments as at year-end.
The open tax assessments were significant to our audit because
the amounts involved are significant to the consolidated and
separate financial statements. Furthermore, determination of
the related provisions and contingent liabilities requires
management and the directors to make significant judgements
and estimates in relation to interpretation and application of tax
laws and regulations. We also considered that the disclosures on
uncertain tax positions in Note 33 are significant to the
understanding of the Group’s and the Company’s tax positions.
• KAM for year 2022
• Accounting for uncertain tax positions: The Group is required
to comply with a number of taxes including income taxes, Value
Added Tax, excise duty and payroll taxes, among others. As
disclosed in Note 32 to the consolidated and separate financial
statements, the Group had open tax assessments as at year-end.
The open tax assessments were significant to our audit because
the amounts involved are significant to the consolidated and
separate financial statements. Furthermore, determination of the
related provisions and contingent liabilities requires
management and the directors to make significant judgements
and estimates in relation to interpretation and application of tax
laws and regulations. We also considered that the disclosures on
uncertain tax positions in Note 32 are significant to the
understanding of the Group’s and the Company’s tax positions.
• KAM for year 2023
 – Compensation (remuneration) to directors
• In analyzing the directors remuneration from the financial report, it is evident that the total
remuneration has remained the same from the past three years, where the disclosure of
executive and non-executive directors’ remuneration is 477000 USD each year in which the
payments are made on a quarterly basis. This consistence might have been influenced by the
company performance. The components of the remuneration including salary and bonuses
play a significant role in the overall structure.

• In 2023 - Continued to make good progress this year in promoting gender equality, ensuring
effective succession planning, and digitizing our internal processes. Also, the Company’s
excellent safety performance, with an eleventh year of fatality-free performance.

• In 2022 - Increased the female representation at Executive level to 38.5%., also received the
Top Employer certification in Tanzania for the fifth consecutive year, reaffirming their role as
part of a global community of forward-thinking organizations

• In 2021 - Three new Exco members were appointed, all of whom are Tanzanians, bringing the
level of local representation of Exco members to 72.7%, up from 30.8% four years ago.
• In conclusion, the director’s remuneration should be scrutinized not only for its numerical
value but also for its alignment with company performance and adherence to industry norms,
ensuring transparency for stakeholders.
 – Main source of revenue
• The primary source of revenue for Vodacom Tanzania Public Limited Company has evolved
over the past three years as outlined in the income statements of year 2021, 2022 and 2023.
The main contributors to the company’s revenue include:

• Mobile voice revenue, M-Pesa revenue, Mobile data revenue, Digital & VAS revenue, Mobile
incoming revenue, Messaging revenue, Fixed revenue and other service revenue

• Note: M-Pesa and mobile voice remain the first and second highest sources of revenue for
Vodacom Tanzania respectively over the past three years of the income statements in the
annual report.

• Notably, understanding the composition of the main revenue sources is pivotal for
stakeholders to assess the company’s business model and resilience. The variation in revenue
streams provides insights into the company’s ability to adapt to market dynamics and
capitalize on emerging opportunities. Additionally, it is essential for stakeholders to evaluate
the sustainability and diversification of these revenue sources as part of comprehensive
analysis of the company’s financial health.
 MAIN EXPENSES TYPE
• After studying Vodacom Tanzania Public Limited Company’s financial reports for
the past three years, it is evident that the company’s main expenses are categorized
into several types. These include direct expenses that involve Business managed
services costs, M-Pesa Commission, Regulatory fees, Acquisition costs, Retention
costs and other costs; staff expenses covering Wages and salaries including other
termination benefits, Pension costs, restructuring costs, Skills and Development
Levy and Bonus expense; and other expenses, covering Other operating expenses,
Depreciation and amortization, and Impairment charges.
Accounting policies for revenue and expenses
• Expenses: Expenses are recognized as they are incurred. Prepaid expenses are
deferred and recognized in the periods to which they are related.
• Revenue: Vodacom Tanzania Public Limited Company identifies separate
performance obligations for goods and services in agreements with customers,
determining the transaction price based on contractual amounts.
• Revenue is recognized when the respective obligations in the contract are
delivered to the customer and payment remains probable. Revenue for the provision
of services, such as mobile airtime and fixed line broadband, is recognized when the
Group provides the related service during the agreed service period.
 – Analysis based on our ratio analysis
• Ratio analysis is a procedure of obtaining a look into a firm’s functional efficiency, liquidity,
revenues and profitability by analyzing its financial records and statements.

• To conduct ratio analysis on the financial statements of a company, you compare different
financial metrics in order to gain insights into a company’s performance. The key ratios can be
calculated in various ways the following below are some of the ratio calculations we used in
order to conduct ratio analysis in the case of Vodacom Tanzania Public Limited Company’s.
Type of ratio Formular Year (ratio) Interpretation
Liquidity Current assets / 2023 – 0.906 In 2021 The company had enough current assets to
 Current ratio current liabilities 2022 – 1.046 cover its current liabilities, indicating good short-term
2021 - 1.055 financial health.
In 2022 the ratio slightly decreased but it still remained
above 1, which shows the ability for the company to
meet short-term obligations.
But in 2023, the ratio dropped. This is a significant drop,
and a ratio below 1 indicates that the company may be
struggling to cover its short-term obligations with its
current assets.

 Quick ratio (Current assets- 2023 – 0.903 In 2021 The company had a quick ratio above 1,
inventory) / 2022 – 1.043 suggesting a strong ability to cover short-term
current liabilities 2021 - 1.050 obligations with its most liquid assets (excluding
inventory). In 2022 the ratio decreased, but remained
above 1, it shows the company continued to maintain a
good level of liquidity in the short term. In 2023 there
was a drop to 0.9 which is concerning. A quick ratio
below 1 implies potential challenges in covering short-
term liabilities with readily available assets, and it
warrants a closer examination of the company's liquidity
position.
• DISCUSSION
– Opinion about financial performance and financial position of
the company
• So due to the decrease in Current Ratio and Quick Ratio over the three
consecutive years raises concerns about the company's short-term
liquidity. A current ratio below 1 and a quick ratio below 1 in the last
year suggest potential difficulties in meeting immediate obligations.
Also, the drop in both ratios, especially the quick ratio, indicates a
possible challenge in covering short-term liabilities with readily
available assets. This may affect the company's ability to respond to
unexpected financial demands. When we consider on risk management
of the company depending on the analysis of the ratios, the company
should carefully manage its liquidity, monitor cash flow, and assess the
composition of current assets to address potential liquidity challenges
and maintain financial stability.
 – Areas of weakness and areas of strength
• Areas of weakness
• Liquidity Concerns, this is the most seen weakness which is the declining trend in both current
and quick ratios, which in fact it reached to the point of below 1 in the last year. This signals
potential liquidity challenges and difficulty in meeting short-term obligations.
• Working Capital Management: A closer look at working capital management is warranted,
as the decrease in these ratios may indicate issues with managing current assets and liabilities
efficiently.
• Also, the decline in liquidity ratios could be indicative of cash flow problems. It's important to
examine the company's ability to generate sufficient cash to cover operational needs.
• Areas of Strength
• Past Stability: In the past years, the company gave out a current and quick ratio above 1,
indicating a historically stable ability to cover short-term obligations.
• Responsive Management: The company's ability to maintain ratios slightly above 1 in the
earlier years suggests a level of responsiveness to changing financial conditions.
 RECOMMENDATION

• After the study we did and further analysis on the financial statements
of Vodacom Tanzania Public Limited Company we would recommend
the following regarding the financial performance of the company
basing on the ratio analysis calculated:

• To conduct a detailed analysis of cash flows to identify and address any

underlying issues affecting liquidity. Strengthening working capital
management to optimize the balance between current assets and
liabilities is crucial. Risk Mitigation: Implement risk mitigation
strategies to enhance short-term liquidity, potentially through
renegotiating payment terms with suppliers or optimizing inventory
levels. Also, Given the fluctuations, consider scenario planning to
prepare for potential unexpected events that could impact liquidity.