Vodacom doubles fibre roll-out in South Africa amid solid revenue growth

Vodacom Group on Tuesday (18 May) reported results for the year ended March 2021 showing an 8.3% rise in group revenue up 8.3%, to R98.3 billion, supported by service revenue growth of 5.8%.

Service revenue for South Africa grew 7.0%, with consistent growth through the financial year, it said.

The mobile operator reported a 3.7% rise in headline earnings per share, while the group declared a final dividend of 410 cents per share.

It added 8.2 million customers, to serve a combined 123.7 million customers across the group, including Safaricom.

South Africa

Strong service revenue growth of 7.0% in South Africa was fuelled by increased demand for connectivity, particularly in prepaid and Vodacom Business and new services such as IoT and financial services, the group said.

Revenue increased by 10.3%, underpinned by service revenue growth, a recovery in equipment sales and growth in tower sharing revenue.

Mobile contract customer revenue increased by 5.0% to R20.8 billion, it said. Within the mobile contract segment, Vodacom Business continued to deliver growth in the fourth quarter while consumer contract revenue remained broadly unchanged year-on-year.

Vodacom said it recorded positive contract customer net additions of 133,000 in the year while ARPU increased by 2.1% and 7.0% in the year and the fourth quarter, respectively.

In the prepaid segment, mobile customer revenue increased by 8.5%, with 2.6 million new customers. ARPU increased 13.0% to R61 supported by increased usage by customers, of connectivity and digital services and the accessibility of airtime via the group’s Airtime Advance product.

In the fourth quarter, Airtime Advanced amounted to 43.0% of total prepaid recharges in the quarter (4Q20: 35.9%), Vodacom said.

Data traffic increased by 55.6%, as the growth trend normalised in the last two quarters of the financial year as lockdown restrictions eased. Data customer net losses were 0.2 million in the year, ending on 21.7 million customers.

Smart devices on Vodacom’s network were up by 9.5% to 23.2 million, while 4G devices increased by 22.0% to 15.7 million. The average usage per smart device increased by 38.9% to 2.1GB per month, Vodacom said.

The group said it accelerated its fibre roll-out during the year, more than doubling the total number of homes and businesses connected to 126,765. “Our own fibre passed 146,401 homes and businesses as at 31 March 2021,” the group said.

Service revenue generated from Financial Services was up by 18.9% to R2.4 billion, while customers increased by 15.4% to 13.3 million.

“Our Financial Services’ result reflects our execution capability in this space. Revenue growth was underpinned by our Airtime Advance product, where we advanced R12.0 billion in airtime during the year, an increase of 21.1%. The number of Airtime Advance customers increased 17.3% to 10.8 million. Insurance policies increased by 8.3% to 2.1 million,” Vodacom said.

Shameel Joosub, Vodacom Group chief executive officer, said the group invested R13.3 billion in network infrastructure during the year, including R10.1 billion in South Africa.

“Given the sudden shifts in customer behaviour patterns, we invested heavily in the resilience of our networks to cope with significant increases in mobile data traffic volumes to keep families connected, enable businesses to operate, facilitate online learning and assist governments in providing critical services.”

Looking forward, Joosub said that in South Africa, the allocation of temporary spectrum has supported network capacity and highlights the urgent need for high demand spectrum to be allocated through ICASA’s ITA process.

“We continue to see the assignment of high demand spectrum as instrumental to data pricing.

“We are excited about our partnership with Alipay and the imminent launch of our single lifestyle app, VodaPay, in South Africa. Our super-app will offer services ranging from loans and savings, seamless QR and person-to-person payments, to entertainment and personalised shopping experiences, promoting greater financial inclusion.

“We see this super-app as a precursor to M-Pesa’s evolution, supporting accelerated growth across our financial services’ businesses and assisting us in connecting the next 100 million African customers so that no one is left behind.”

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