Vodacom SA adds 2.5 million new customers despite economic slowdown

Vodacom on Monday reported a 5.6% rise in interim revenue to R42.7 billion for the six months ended September 2018, while adding 2.5 million new customers in South Africa.

Group service revenue was up 6.1% (5.8%) to R36.8 billion.

Operating profit was up 0.8% to R11.1 billion, but headline earnings per share (cents) declined 13.5% to 387 cents per share.

“In South Africa, underlying growth has weakened as the country’s economic slowdown increasingly weighs on consumer spending in the market. Still, service revenue rose 4.6% as anticipatory measures driven by the use of big data machine learning in more areas of the business has contributed to countering some of these pressures.

“The 2.5 million increase in customers in South Africa since March shows that our sustained effort to deliver greater value is working across prepaid and contract and is evidence that our personalisation through big data is delivering results,” said Shameel Joosub, Vodacom Group CEO.

Additional highlights:

  • Vodacom added 4.8 million customers in the six months, up 10.7%, comprising 2.5 million in South Africa and 2.3 million in our International operations.
  • Safaricom added 373,000 customers. “In combination, we now serve over 109 million customers across the group,” Vodacom said.
  • South Africa service revenue increased 4.6% to R27.9 billion, supported by strong customer growth.
  • An interim dividend per share of 395 cents, was up from 390 cents.

Vodacom said it added 2.3 million prepaid customers during the first six months resulting in strong customer growth of 10.9%.

“This has been partly offset by lower prepaid ARPU, down 6.9%, as we attract new customers with lower spend levels than the current base and also as a result of customers opting for shorter validity periods for data bundles at a lower price.”

The company said that data traffic grew strongly at 28.6%, while active smart devices on the network were up 10.5% to 19.1 million, of which 9 million are 4G devices with overall data customers up 3.2% to 20.5 million.

“We have seen strong growth in the number of bundles sold, up 26.0% or 437 million data bundles, driven by our ‘Just 4 You’ personalised offers, as we continue to migrate customers to more in-bundle usage.”

Enterprise

Vodacom said that the enterprise segment is performing particularly well with good growth in mobile customer revenue, up 7.7%, resulting from good customer growth of 9.7%. In addition, fixed line service revenue grew at 29.2% to R1.3 billion, with IPVPN services such as IP connect Fibre and Broadband connect showing good growth.

Cloud and hosting revenue grew 14.2% with strong growth both in ‘infrastructure as a service’ and ‘platform as a service’ offerings.

“We continue to drive our ‘Own the home’ strategy resulting in good traction on fibre to the home/business, more than doubling the connections in the period,” the operator said.

During the period, Vodacom said it invested over R4 billion into its network.

“We invested R4 billion in South Africa alone in the past six months and at the same time we reduced effective voice and data prices by 8.5% and 16.4% respectively.

“We continue to accelerate our rural coverage expansion programme to bridge the digital divide and will prioritise an additional 200 villages this year to add to the 101 communities that we connected during the first quarter of this year.”

“Looking ahead, the relative economic and currency stability in most of our International markets is pleasing and we will continue to invest heavily in our networks, artificial intelligence and Big Data analytics to drive financial inclusion, further enhance customer experience and progress Vodacom’s digital telco strategy,” said Joosub.

“While we are encouraged by the significant progress in recent times regarding the licensing of 4G spectrum in South Africa, there are still a number of areas of concern with the current draft Electronic Communications Act as well as inconsistencies in the proposed policy and policy directions to ICASA on licensing unassigned high demand spectrum.”


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