Vodacom Group on Friday (23 July) reported a 5.2% rise in service revenue for its South Africa business, in a quarterly update ended June 2021, “reflecting sustained demand for connectivity services and strong growth in new services”.
Group revenue of R24.8 billion was up 9%, as strong normalised growth of 14.2% was partially offset by the rand’s recovery, it said.
Normalised group service revenue growth was 7.8% as International growth accelerated.
For South Africa, mobile contract customer revenue increased by 4.1%. The group said it added 8,000 contract customers and increased average revenue per user (ARPU) by 1.4%. In the prepaid segment, mobile customer revenue increased by 1.8%.
Strong quarterly net additions of 532,000 underpinned prepaid customer growth of 15.1%, as did the year-on-year impact of customer acquisition challenges at the onset of Covid-19 related lockdowns. Prepaid ARPU declined 14.1% reflecting the material increase in the average customer base over the period and the lapping of usage growth related to lockdowns, Vodacom said.
On a quarter-on-quarter basis, ARPU declined 3.5% as a result of price transformation and incremental pressure on consumer wallet, Vodacom said. Adjusting for these impacts, ARPU was up 0.5% quarter-on-quarter.
Data traffic increased by 8.1%. Vodacom said that it has 21.1 million data customers on its network, with smart devices up 13.3% to 23.5 million and 4G devices increasing 26.8% to 16.4 million.
Shameel Joosub, Vodacom Group CEO, said: “Since the beginning of the quarter, South Africans have benefitted from a further 14% price reduction in the 1GB 30-day data bundle – marking a cumulative 43% cut since April 2020 – and our significant investment into infrastructure and technology of R2.9 billion to support network capacity and resilience.”
He said that Vodacom Business revenue was up 14.1%, reflecting this connectivity demand and the integration of new digital service offerings, such as Internet of Things (IoT). “Financial services in South Africa remained a strong performer, delivering revenue growth of 19.1%.”
Financial services customers increased by 14.3% to 13.3 million. Revenue growth, it said, was underpinned by the group’s Airtime Advance product, where the operator advanced R3.2 billion in airtime during the quarter, an increase of 17.3%.
The number of Airtime Advance customers increased 14.8% to 10.7 million and insurance policies also increased by 14.8% to 2.2 million. “We are progressing well on the development of our super-app, VodaPay, and have signed up over 70 businesses so far.
“We have also invited developers and businesses to join the VodaPay ecosystem by building their own ‘mini programs’ to accelerate their digital engagement and increase access to market,” said Joosub.
Vodacom Business service revenue increased by 14.1% to R3.6 billion, supported by its work-from-home solutions and, sector leading SD-WAN connectivity, IoT, cloud, hosting and security capabilities.
IoT remains an important new service growth driver, said Joosub with connections up 4.4% to 5.7 million and revenue growth at 45.5% to R0.3 billion.
Vodacom said capital investment of R2.9 billion was up 9.3%, while temporary spectrum was allocated until 31 August 2021 and has assisted the group in supporting network capacity requirements.
Vodacom said its international operations reported a service revenue decline of 6.3% to R5.5 billion, as the rand’s recovery and resultant translation impact eroded 20 percentage points of growth.
“Customer growth across international operations is an important driver of our 2025 ambition of improving the lives of the next 100 million customers. Our customer base increased by 7% to 40.3 million, with net additions of 573,000 in the quarter,” said Joosub.
Data customers increased 4.5% year-on-year to 20.9 million, with net additions of 207,000 in the first quarter. Data traffic grew 27.3% due to more affordable data-bundles and our focused smartphone penetration strategy.
Smartphone users increased by 8.4%, with the penetration of our one-month active base at 31.8 %. Reported data revenue declined 4.9% due to adverse currency translation but was up 13.9% on a normalised basis, Vodacom said.
“Looking forward, while we expect disposable income to remain under pressure, our ‘System of Advantage’ will deliver diversified, differentiated offerings to our customers, further strengthening and growing our relationships with them.
“Also, we eagerly anticipate the outcome of the legal processes underway pertaining to the auction of high demand spectrum in South Africa and hope that the impasse will be quickly resolved in the best interests of consumers,” Joosub said.