Vodacom closed lower for a third straight day on the JSE on Tuesday (12 March) as an analyst pointed to continued investor concerns over the operator’s recent interim results, particularly its performance in South Africa.
Vodacom lost R2.30 or 1.93% to R116.70 on Tuesday, and is down 5% over the past 10 days. The group is also down from a year-best figure of R129.83, achieved in early January.
The analyst from PSG Konsult said that that the local market is a worry for Vodacom. For the quarter ended December 2012, Vodacom reported a drop in service revenue, by 1.7% year on year to R12.5 billion.
The analyst said that with average revenue per user (ARPUs) set to continue to fall, Vodacom’s potential growth in SA could stagnate. “And if its other territories in Africa don’t come through either, then it could be a concern,” he said.
In February, Vodacom said it grew its active customers in SA by 11.7% year on year to 30.6-million.
Pre-paid 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 pre-paid ARPU declining 15.6% to R81, Vodacom said.
And while contract customers increased 6.0% to 5.9 million, a continued reduction of out-of-bundle voice spend contributed to the 9.1% decline in contract customer ARPU to R329, the operator said.
The analyst said that MTN’s ARPUs were also a shock to the market, when the group delivered its final results for the year ended December 2012, while it also suffered currency knocks.
MTN reported that for its SA unit, blended ARPU declined by 9% to R122 from R134 in December 2011.
Shares in MTN declined 1.21% or R2.15 to R175 on Tuesday, some way off its year to date high of R183.79, achieved in early February.
The analyst said however that if the company can turn its currency woes around in the next reporting period, MTN should deliver much healthier earnings. “It has its operations in Africa which still offer plenty of value.”
Market research and advisory firm, Frost & Sullivan said that MTN’s end-year results for 2012 showed a substantial growth of 15% of its overall subscriber base. “This is a solid result for the group given the subsidiaries are operating in highly competitive countries, with on average three mobile operators,” it said.
“In South Africa, the mobile communication sector was rocked by intense competition, with Cell C trying to gain market share from MTN and Vodacom,” said Frost & Sullivan ICT research analyst, Mervin Miemoukanda.
“Being able to grow its subscriber base in such market conditions, is a robust achievement for MTN SA. However, most of these new subscribers come mainly from low-end customers, enjoying promotional campaigns from MTN.”
With the aggressive marketing campaigns from Cell C and 8ta, Frost & Sullivan believes it will be difficult for MTN to keep the new subscribers on its networks.
However, the group believes that the future looks bright for MTN Group as it has increased its focus on data services, specifically targeting corporations and consumers.
Frost & Sulliven expects MTN will continue to increase its focus on enterprise data services in other markets.