Vodacom eyes international growth

Vodacom Group CEO, Pieter Uys believes the operator can grow its service revenue for territories outside of South Africa to account for between 25-30% of total revenue over the next few years.

For the year ended March 2012, Vodacom noted that South Africa delivered a strong performance with service revenue growing 4.4% to R48.427 billion, while outside the SA border, service revenue improved as much as 27.5% to R10.143 billion, due largely to customer growth.

For its year-end results, customers increased 35.5% year-on-year to 18.9 million, adding 4.9 million in the year, driven by competitive pricing, improved distribution and extra site coverage, Vodacom said.

While its rival MTN Group has GSM licences in 21 countries, the lion’s share of Vodacom’s  revenue is still derived in South Africa, with an additional footprint in Mozambique (2.7 million customers), Lesotho (966,000), Democratic Republic of the Congo (6.240 million), and Tanzania (9.065 million).

Uys told BusinessTech in a telephone interview that he had a team constantly assessing opportunities outside of SA to help diversify Vodacom’s portfolio.

“It’s good to have a spread in your portfolio. We have smaller opportunities that we are looking at,” he said, adding, however, that there was nothing he could report on at this stage.

Service revenue

In its most recent results update for the quarter ended June 2012, Vodacom reported a 29.2% rise in customers, hitting the 50 million mark for the first time.

In SA, customers increased 29.1% year-on-year to 31 million and internationally, customer growth improved 29.4% to 19.0 million.

Group service revenue growth was up 8.7% to R14.74 billion. South Africa’s service revenue grew 1.8% to R11.769 billion.

Uys said he was particularly pleased with the sustained high growth delivered by the International operations.

“The primary driver has been solid commercial execution, supported by a healthy macroeconomic environment. Service revenue from these businesses now accounts for 21% of group service revenue, compared to 14.5% two years ago,” Uys said.

The chief executive put the group’s success down to a number of factors. He said that, as a result of increased competition and declines in tariffs (in some cases by almost 80-90%), “[Vodacom] had to look at how we do business” – Uys said that the group introduced locally-relevant products.

Looking ahead, Uys said that there is “still a lot of headroom for growth” in its territories, particularly outside of SA. “For these markets, we know how to run the business better. Data is also taking off and we have 3G licenses in all our businesses.”

M-Pesa

Uys also underlined the importance of M-Pesa as a driver for data growth in the territories outside of South Africa.

For the quarter ended 30 June 2012, data revenue showed significant growth in the International operations, up 150.0% in comparison to the prior year.

Year-on-year data customer growth accelerated to 151.9%, with 3.3 million customers now actively using data. According to Vodacom, data growth was driven by a combination of increased take up of mobile internet services as well as increased M-Pesa usage in Tanzania.

“M-Pesa is progressing well in Tanzania, with active customers increasing 120.7%, to 3.6 million. M-Pesa revenue accounts for 70.8% of Tanzania’s overall data revenue and 12.3% of service revenue,” Uys said.

Next move for Uys

Vodacom announced on 5 July, that Uys will leave Vodacom, and is to be replaced by Shameel Joosub, the current CEO of Vodafone Spain.

Uys said he was committed to staying in South Africa.

“I am keen to stay in South Africa,” he said, noting that, had he stayed on at Vodacom, he would have likely had to take up a post internationally. The chief said he believes he still has value to add in SA, but would not divulge where his next move would be.

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Vodacom eyes international growth