Vodacom: the good and the not so good

Vodacom cheered a 28.2% rise in group data revenue in a quarterly trading update on Thursday (18 July) with active data customers 23.3% to 19.4 million amid a continued smartphone drive.

In results for the quarter ended 30 June 2013, active customers increased 5.3% to 51.5 million, but the group also pointed to a marginal decline in SA customers on a yearly comparative base.

Vodacom added 50 cents to R118 in early trade on the JSE, up nearly 27% over the past year.

“Data and the International operations remain key parts of the growth story. Data revenue in South Africa increased 21.8% and now accounts for 21.3% of service revenue, up from 17.5% a year ago,” said Vodacom CEO Shameel Joosub.

“Continued network investment supported the increase in data traffic in South Africa, with 1.3 million additional smartphones active and using on average 75% more data per device than a year ago.”

Vodacom said that South Africa’s growth was driven by higher penetration of smartphones and increased mobile internet usage supported by an increased take-up of integrated price plans.

“Over the past twelve months we added 1.3 million smartphones on our network, bringing the total number to 6.3 million and average monthly usage increased 75% to 216MB. At 30 June 2013, active data customers totalled 14.4 million, up 16.5% from a year ago.”

The group said it continues to see positive results from the recent launch of its Vodacom Smart and Red integrated price plans. “13.5% of our customer base is now on integrated price plans and almost 30% of our contract mobile customer revenue is from these customers,” it said.

Declining SA customers

While Vodacom reported a 5.3% rise in active customers to 51.5 million, as international operations continued to expand their coverage, the situation in South Africa is less rosy.

For its local operation, Vodacom noted that its customer numbers declined 2.3% year-on-year to 29.282 million, from 29.971 million in 2012. On a quarterly basis, customer numbers improved 0.3% to 29.190 million.

In April, rival operator MTN said in a quarterly update for the period ended March 2013 that, while its customer base exceeded 195 million people in 22 countries, its operation in South Africa experienced a 1.9% decline to 24.950 million from 25.421 million in Q4 2012.

South Africa’s third operator, Cell C claimed on Wednesday (17 July) however, that its subscriber numbers had swelled to 11.5 million, from nine million over the past 18 months, giving the group an approximate 14% market share.

In June, Telkom’s financial reports revealed that it only had 1,534,265 active mobile subscribers at 31 March 2013, up 3.4% from a year earlier.

Vodacom active customers
Vodacom active customers

Financials

Vodacom said that group revenue increased 3.0% to R17.536 billion, boosted by the strong growth in equipment revenue in South Africa.

Group service revenue was up 2.3% to R14.636 billion due to the 28.2% growth in data revenue and the 1.6% growth in voice revenue, partially offset by the 14.6% decline in mobile incoming revenue.

Vodacom revenue
Vodacom revenue

In South Africa, revenue increased 3.9% to R14.549 billion; however, service revenue decreased 0.2% to R11.678 billion, with a 23.5% decrease in mobile incoming revenue from MTR cuts offset by the growth in mobile customer revenue of 2.5%.

The first quarter service revenue decline of 0.2% is an improvement from the 2.0%
decline reported in the fourth quarter last year. This, Vodacom said, is primarily due to the better performance of voice revenue.

ARPU declined 0.8% year on year to R125 (vs. 9.3% decline in Q4 2013), impacted mainly by the MTR cut, the group said.

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Vodacom: the good and the not so good