Vodacom reports strong earnings, huge customer growth

South Africa’s largest mobile operator, Vodacom, has reported a 7.8% rise in operating profit to R10.2 billion for the six months ended September 2015.

Revenue for South Africa increased 5.1%, while international operations’ revenue grew 12.6%, representing 21.3% of group revenue.

Vodacom’s operations include networks in South Africa, Tanzania, the Democratic Republic of Congo, Mozambique, Nigeria and Lesotho.

The group declared an interim dividend per share of 395 cents, up 5.3% from 2014.

Group active customers increased 6.8% to 65.1 million, while total active customers reached 33.7 million in SA, with 1.6 million net customer additions in the first half there.

South Africa

Service revenue increased 2.9% to R24 billion billion as the business returned to growth, supported by the lapping of MTR cuts, customer additions, ARPU stabilisation and higher
data usage, it said.

Excluding the benefit of a R325 million accounting estimate change in the prior year, service revenue grew 4.3%, Vodacom said.

Revenue grew faster at 5.1% to R32 billion, due mainly to a 12% increase in equipment revenue with over 5.5 million devices sold in the first half, of which 1.3 million were  Vodacom branded devices.

ARPU of R112 in the second quarter was stronger than R110 in the first quarter
supported by increased voice usage and continued data ARPU expansion as customers traded up their phones.

Active contract customers increased 2.4% to 4.9 million and contract churn fell from 10.2% a year ago to 7.3%, Vodacom said.

Active prepaid customers increased 3.7% to 28.8 million customers, largely due to the success of customer value management programmes.

Data revenue increased 33.4% to R8.3 billion due to strong growth in the demand for data.

The improved affordability of both devices and data bundles supported a 48.0%
increase in data traffic. Data revenue comprises 34.3% of service revenue up from 26.4% a year ago, Vodacom said.

Active data customers increased 6.8% to 17.8 million customers and data bundle sales doubled from last year largely due to the take-up of more affordable daily bundles.

Active smart devices on the network increased 30.9% to 12.6 million and the
average amount of data used per month increased 18.5% to 550MB on such devices.

Tablets on the network increased 126.2% to 1.4 million, the operator said.

“It has been a strong start to the year with sustained growth underpinned by network superiority, customer value management excellence and distribution leadership. We lifted Group capital expenditure 5.8% to R6.2 billion, expanding 3G coverage in all our markets,” said  Vodacom Group CEO, Shameel Joosub.

He said that in South Africa, LTE/4G coverage increased from 32.2% to 46.8%.

“I am most encouraged by the increasing demand for data services as we make devices and data bundles more affordable. We now have 28.3 million data users across the group, driving a 33.5% increase in data revenue.

“Our LTE/4G customers in South Africa, now approaching two million, consume almost three times more data as compared with 3G customers,” Joosub said.

He said  that good opportunities exist in SA,  as only 66% of the group’s monthly active customers are using data.

“The performance of Vodacom Business in South Africa was particularly strong with underlying service revenue growth of 12.8%, underpinned by new customer wins as well as our mobile customers choosing to purchase fixed services from us as they trust our brand and value network reliability,” he said.

“Neotel, which is pending Competition Tribunal approval, will further enhance our ability to contribute meaningfully to the development of fixed-line services, broadband and fibre to homes and businesses in South Africa,” the chief executive said.

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Vodacom reports strong earnings, huge customer growth