Vodacom loses subscribers in SA

Vodacom on Wednesday (4 February) reported a 3.8% decline in active South African subscribers in a quarterly update for the period ended December 2014, along with a 3.1% decline in revenue for its South African unit to R15.99 billion.

Group revenue decreased 1.1% to R19.99 billion with service revenue down 2.7% to R15.8 billion.

The group said that, excluding the impact of the 50% cut in mobile termination rates (MTRs) in South Africa, group revenue increased 1.5% and service revenue increased 0.6%.

Service revenue in SA declined 5.8% due to MTRs in April 2014 and by increased competition and weaker consumer spending, the group said.

Vodacom Group results

  • Group revenue down 1.1% to R19.99 billion
  • Group Service revenue down 2.7% to R15.8 billion
  • Group subscribers up 9.1% to 61.1 million

Vodacom SA results

  • SA revenue down 3.1% to R15.99 billion
  • SA service revenue down 5.8% to R11.85 billion
  • SA subscribers down 3.8% to 31.4 million

Excluding the impact of MTRs service revenue declined 1.7%, Vodacom said.

The company said it reduced its blended price per minute by 21.3% to 63 cents (Q3 2014: 80 cents) and grew outgoing voice traffic by 10.1%.

“We have migrated 74.2% of our contract customers to integrated plans,” Vodacom said.

The group reported a decline in active customers in South Africa to 31.379 million at the end of December 2014, from 32.613 million at the end of September.

However, the group’s overall subscriber base increased by 5.1 million users to 61.1 million.

Active contract customers in SA increased 1.2% to 4.9 million to grow mobile contract customer revenue 1.5% to R5.418 billion after four successive quarters of declines, the group said.

The number of prepaid customers in SA using bundles grew 18.8% to 6.2 million, with over 50 million prepaid bundles sold per month in the quarter.

Active local prepaid customers increased marginally year on year to 26.5 million.

“We took actions to decrease flow of starter packs to the market to reduce rotation of sim cards. This reduced our number of gross connections resulting in a reduction of our prepaid base of 1.3 million customers in the quarter,” Vodacom said.

Locally, data revenue grew 18.8% to R3.526 billion, against strong data growth in Q3 last year, to make up 29.7% of service revenue. Data traffic increased 62.2% and active data customers increased to 16.8 million or 53.4% of Vodacom’s active customers.

“The number of active smartphones and tablets on our network grew 23.6% to 9.5 million devices. Average monthly data usage was up 41.1% to 358 MB on smartphones,” Vodacom said.

The group said it was progressing well with an accelerated capital investment programme. It doubled the number of LTE sites to 2,194 and increased 3G sites by 22.4% to 8,407.

“Our LTE network now covers 34% of the population and our 3G network covers 94% of the population. 77.8% of our sites are now connected to our self-provided high capacity transmission network. We also launched our fibre to the business (FTTB) on a limited basis in September 2014,” Vodacom said.

Shameel Joosub, Vodacom Group CEO, said: “We added 5.1 million customers in comparison to last year, taking our total customer base to 61.1 million. Despite this increase in customers, it’s still been a challenging quarter with group revenue down 1.1%.

Commenting on the pending multi billion rand deal with Neotel, Joosub said: “We’re continuing to work through the approvals process for the acquisition of Neotel. South Africa’s fixed broadband penetration level is 1/10th of that seen in developed economies, which impacts our competitiveness as a nation.

“If the transaction goes through, our ambition is to add at least one million fibre connections to homes and businesses to address this shortfall.”

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Vodacom loses subscribers in SA