Vodacom lifted by smartphone and tablet sales

Vodacom has on Wednesday (6 February) reported a 2.2% rise in revenue for its South African operation to R15.5 billion for the quarter ended 31 December 2012, driven by a 27.2% growth in equipment revenue from smartphone and tablet sales.

Group revenue increased 1.7% to R18.3 billion. Revenue was impacted by the sale of Gateway Carrier Services on 31 August 2012 as well as movements in foreign exchange.

On a normalised basis, group revenue increased 4.8% due to the growth in data services and International operations, partially offset by the impact of mobile termination rate (MTR) cuts, competitive pricing pressures and continued economic weakness in South Africa.

Vodacom said that smartphones remain a key strategic growth driver with active smartphones increasing 29.2% to 5.8 million devices. Smartphone net additions increased in the quarter compared to prior quarters, adding over 500,000 to its network, largely supported by the group’s working capital investment in handset financing.

Smartphone data usage increased 36.1% to 138MB per smartphone customer, per month.

“The appetite for data services amongst our customer base remains strong, with active data customers increasing 20.9% to 13.8 million representing 45.2% of our customer base,” Vodacom said.

“Customers purchasing data bundles are growing at 31.6% to 5.1 million, as we execute on our strategy to move customers to bundles. Continued network investment is an important differentiator for Vodacom,” the group added.

Service revenue, however, declined 1.7% year on year to R12.5 billion. Excluding the impact of regulated cuts in MTRs, service revenue increased 1.4% driven by the continued expansion of the customer base and increased data revenue offsetting the downward pressure on voice and messaging services.

Customer numbers

Active customers in SA increased 11.7% year on year to 30.6 million as Vodacom continued to attract new customers through value offers and network investment.

Prepaid active customers increased 13.2% to 24.7 million but overall usage was lower than
expected as customers benefited from various promotional offers resulting in prepaid ARPU declining 15.6% to R81, Vodacom said.

Contract customers increased 6.0% to 5.9 million, adding almost double the net connections reported in each of the prior two quarters to approximately 120,000 customers.

The continued reduction of out of bundle voice spend contributed to the 9.1% decline in contract customer ARPU to R329, the operator said.

Group active customers increased 12.2% to 51.0 million as Vodacom said it attracted new customers through compelling value offers, superior network quality and network expansion.

LTE coverage

Vodacom said it extended its LTE coverage in South Africa to reach Johannesburg, Pretoria, Durban and Cape Town, with 542 active sites. Vodacom launched the commercial service of its LTE offering in October last year.

The operator also continued to invest in its 3G network adding 317 base stations in the quarter to 5,855.

Shameel Joosub, Vodacom Group CEO said: “It’s been a quarter with strong performances in data and our International operations tempered by some challenges in our South African business.

“During the quarter our investment activities were focused on maintaining network leadership, most clearly demonstrated by the commercial launch of Vodacom’s LTE service – the first in South Africa.”

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Vodacom lifted by smartphone and tablet sales