Vodacom reveals investment plans

Vodacom CEO Shameel Joosub says that the group aims to accelerate network investment in order to cater for projects including fibre to the home, and fibre to the business.

In announcing improved interim results for the six months ended September 2013 on Monday (11 November), Joosub said: “To cater for continued growth, we plan to accelerate network investment and we are currently in the process of determining the investment allocation per country.”

Joosub said that Vodacom would benefit from Project Spring – a programme initiated by its parent company, Vodafone, after it sold its stake in Verizon Wireless for $135 billion – aimed at establishing “further network and service leadership” through network upgrades and increased capacity.

In a conference call on Monday, Joosub said that Vodacom put together a programme of how it wanted to grow in South Africa, noting that Project Spring helped in getting those projects approved.

“We want to notch that up (capex) a couple of levels…things like fibre to the home, fibre to the business. We are doing something similar country by country,” Joosub said.

In South Africa, Joosub said that the group invested R3.1 billion in the network during the period and increased 3G coverage to 88.9% of the population.

Joosub said that capex on an annual basis amounted to approximately R7 billion, with plans to increase spend to between 14-17% of revenue.

MTRs

Joosub warned that current plans by regulator, Icasa, to slash mobile termination rates, may have an affect on its capital investment plans.

Icasa announced in October 2013, that it aims to cut the costs of terminating a call on a mobile network to R0.10 over the next three years.

A termination rate is the money networks pay to each other for connecting a call. MTRs have declined from R1.25 in 2009 to a current price of 40 cents.

He said that MTRs under current porosals would have “knock on effects in the business” which may force a “rejig”.

Earnings

Vodacom on Monday (11 November) reported a 9.7% rise in group active customers to 53.8 million for the six months ended September 2013, with revenue also up 6.6%, driven by data revenue growth of 29%.

Vodacom pointed to net connections of 949,000 active customers for South Africa and 2.3 million in its international operations for the six months period.

It highlighted an 11.5% rise in operating profit for the six months ended 30 September 2013, from R9 billion in 2012.

Revenue climbed 6.6% to R36.7 billion, from R34.4 billion in 2012, while headline earnings per share was up 10.9% to 439 cents as a result of strong operating profit growth, Vodacom said.

The group’s capital expenditure for the period was R4.850 billion, 2.9% higher than in the prior year.

Vodacom announced an interim dividend per share of 395 cents.

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Vodacom reveals investment plans