Vodacom picks up 1.5 million new customers in South Africa

Vodacom said on Tuesday that it added 1.5 million new customers in South Africa – and a million in its international operations to reach 76.5 million customers across the group.

In a trading update for the quarter ended 30 June 2018, the operator said that group service revenue was up 4.2% to R16.77 billion, while group data revenue increased 9.6%,

Service revenue for its South African operation increased 4.9% to R13.8 billion, “supported by the improvement in customer revenue growth trends, despite a subdued macroeconomic and consumer spending environment”.

The group’s local customers increased 9.5% reaching 43.1 million, after adding 1.4 million prepaid customers and 75,000 net contract additions.

“Prepaid customer revenue growth was good at 5.5%. This was supported by continued strong customer growth of 10.0%, which was slightly offset by lower ARPUs (average revenue per user) as we attract new customers with lower spend levels, on average, than the current base,” Vodacom said.

Contract customer revenue growth has recovered from declines in previous quarters, to grow at 0.8%, Vodacom said.

The growth was supported by improved performance in the enterprise segment, reflecting customer and ARPU gains from recent contract sign ups and improved usage. “Overall contract customers increased by 5.9%.

Contract ARPU declined 2.3%, an improvement in trend from the last two quarters, as customers continue to grow into their “more data” contracts and benefits from higher value ARPU customers in Enterprise,” Vodacom said.

Data revenue grew 9.4% to R6.1 billion, contributing 44.1% (2018: 42.2%) of service revenue. “We continue to drive bundle engagement aggressively to ensure a worry free experience for our customers,” the operator said.

“The success of this pricing strategy, making data more affordable for our customers, has resulted in a 32.2% increase in data bundle sales and an overall effective price per MB reduction of 17.1%. We continue to grow our current 4G data users, adding 739,000 4G customers in the quarter reaching 8.1 million customers.”

Vodacom said that fixed-line revenue growth was 22.0% as the group continues to grow connectivity revenue for business and homes. Internet of Things (IoT) connections increased 25.2% to 3.9 million, it said.

“We spent R2 billion on capital expenditure, focusing on new sites, upgrades and capacity to improve network quality and performance. These efforts have resulted in Vodacom leading in data speed benchmarks. This also allowed us to expand our 4G coverage to 81.5%, up from 75.9% a year ago.

“We also expanded our rural coverage and made progress to improve backhaul performance and capacity by increasing the proportion of self-provided high capacity sites from 90.1% a year ago to 92.4%,” Vodacom said.

Shameel Joosub, Vodacom Group CEO, said that the strong momentum from its annual results, carried Vodacom into a ‘pleasing’ first quarter.

He said that customer growth was driven by ‘big data’ led innovations, which contributed to robust demand for personalised bundles. “We sold over 600 million bundles this quarter resulting in an effective price reduction of 10% on voice minutes and 17% for data megabytes,” the chief executive said.

“We remain focused on network investment as a key competitive differentiator, expanding our 4G coverage to 81.5% up from 75.9% a year ago.

“Looking ahead, we expect the implementation of the ICASA End-user Subscriber Charter Regulations, in relation to out-of-bundle usage, to have a modest impact on data revenue growth.

“We expect this to be mitigated in the short term by continued uptake of data bundles and strong elasticity in demand for these services. We are encouraged by the improved performance in our International business,” Joosub said.

Read: Vodacom CEO Shameel Joosub scores R50 million payday

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Vodacom picks up 1.5 million new customers in South Africa