Vodacom data revenue growth surprise

Vodacom South Africa’s (Vodacom SA) 6 monthly mobile data revenue growth is less than half that of MTN South Africa (MTN SA).

Considering that Vodacom has a more extensive mobile data network, superior distribution channel and a larger customer base, the lower growth figures come as a surprise.

According to Vodacom SA’s latest mobile data revenue figures, the company generated R4.034 billion from mobile data in the first six months of 2012, up from R3.793 billion over the last six month of 2011. This translates into revenue growth of R241 million over the two respective periods.

In comparison, MTN SA generated R3.121 billion from mobile data over the first six months of this year. This is up R512 million from the last six months of 2011, when MTN SA made R2.609 million from mobile data.

The following table provides an overview of the data revenue growth from South Africa’s two top mobile operators.

MTN mobile data revenue Jun-11 Dec-11 Jun-12
6 monthly revenue (Rm) 2037 2609 3121
Growth (Rm) 572 512
Vodacom mobile data revenue
6 monthly revenue (Rm) 3544 3793 4034
Growth (Rm) 249 241

Vodacom’s mobile data revenue growth slowed significantly since June 2011, mainly because of mobile broadband price cuts from Vodacom in August 2011 (contract) and September 2011 (prepaid).

Vodacom reduced the price of data by 20% to all its existing subscribers thereby cutting mobile data revenue by 20%.

These price cuts were brought about by increased competition in the market. 8ta launched its 10GB for R199 data promotion in June 2011, and Cell C had already slashed data prices at the time.

Vodacom mobile data revenue growth
Vodacom mobile data revenue growth

The fact that MTN SA’s mobile data revenue growth is more than double that of Vodacom SA’s should be of concern to the country’s largest mobile operator.

Vodacom has a more extensive mobile data network, it has an excellent distribution channel and it has significantly more subscribers which it sells (and can sell) mobile data to.

Analyst explains

One way both service providers seek to grow their data uptake is through device distribution and availability.

Spiwe Chireka, program manager for telecoms at the IDC, said that it is possible that MTN’s success can be attributed to their device strategy for the market.

“MTN has stated in the past that it will be using device distribution to drive its data strategy. Now I notice that they grew their smartphone base by some 70+%, which I am not surprised would translate into high growth in data revenues,” said Chireka.

“Vodacom has only grown its smartphone base by about 40% in the last 12 months to June 2012,” Chireka highlighted.

She added that, while Vodacom has a significantly higher subscriber base than MTN, there is not a significant difference in the number of smartphone users on the two networks.

“Vodacom has 4.9 million smarphone users while MTN has about 4.4 million. This is not a significant difference and it comes down to who is generating more value out off their data customers,” said Chireka.

World Wide Worx MD, Arthur Goldstuck argues that MTN’s strong growth is a consequence of the fact that it entered the mobile data market later than Vodacom.

According to Goldstuck, MTN’s growth is off a far lower base than Vodacom’s.  He further highlighted that despite MTN’s faster growth their data revenue is still significantly lower than Vodacom’s.

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Vodacom data revenue growth surprise