Market pressure slows Vodacom revenue

Vodacom on Monday reported a marginal increase in service revenue for the year ended March 2013 to R59.33 billion, from R58.245 billion in the prior period, as the group encountered tough competition across all of its markets.

Operating profit, however, increased 13.7% to R18.897 billion, from R16.617 billion.

Headline earnings per share (HEPS) was up 23% to R8.72, as a result of strong operating profit growth and secondary tax on companies (STC) falling away.

Vodacom delivered a final dividend per share of 430 cents; with total dividends per share for the year of 785 cents, up 10.6%.

Shameel Joosub,Vodacom Group CEO said: “The outstanding features of the years performance were sustained strong growth in data services of 22.2%, with increased smartphone adoption driving demand, and good growth in service revenue in our International markets of 22.3%.”

“In South Africa, poor performance among independent service providers, persistent economic weakness and on-going cuts in MTRs hampered service revenue growth. But strong commercial execution, which included heavily revised pricing and new prepaid and contract offerings helped to offset these factors.”

“Over the past five years, Vodacom has spent R38 billion on network investment, R28 billion of which was in South Africa. In just the last year alone we spent R9.5 billion across the Group and R7.0 billion in South Africa. It’s thanks to this intense investment activity that we’ve got the footprint, capacity and technology to capitalise on the smart device revolution.”

South Africa

Revenue increased 2.9% to R58 607 million driven by the 24.6% growth in equipment revenue from smartphone and tablet sales.

Service revenue declined by 0.4% to R48 234 million, with the growth in data services and the success of our new prepaid offers offset by lower out of bundle usage, impact of less calling card customers on the network, a weaker performance from the independent service providers and continued cuts in mobile termination rates (MTRs).

Excluding the impact of MTRs, service revenue increased 2.4%. Adjusting for the impact of MTRs and leap year/Easter holidays, fourth quarter service revenue growth was stable in comparison with the third quarter.

Active customers were up 4.9% to 30.3 million, increasing by 1.4 million customers in the year.

Data revenue increased 16.3% to R8.882 billion, contributing 18.4% to service revenue compared to 15.8% a year ago.


Vodacom’s International segments service revenue grew 11.0%. Excluding the sale of Gateway Carrier Services, and the impact of movements in foreign currency, service revenue increased 22.3%, driven by a larger customer base and increased take-up of data services.

The International operations now contribute 19.0% to Group service revenue compared to 17.4% a year ago.

Data revenue grew 106.9% supported by 40.9% growth in active data customers to 4.1 million, 19.3% of the customer base.


“In South Africa, where we are competing hard to maintain and grow market share in a market that has reached saturation in mobile voice penetration, our focus is on clear differentiation through best network experience, best service and best value,” Vodacom said.

“In our International markets, where penetration rates remain low and we are competing for customers and building scale, our focus is on expanding coverage and driving penetration through network quality, distribution reach, meaningful products and competitive value,” it said.

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Market pressure slows Vodacom revenue