{"id":31651,"date":"2013-02-13T00:06:31","date_gmt":"2013-02-12T22:06:31","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=31651"},"modified":"2013-02-13T09:25:46","modified_gmt":"2013-02-13T07:25:46","slug":"vodacoms-role-within-vodafone-group","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/31651\/vodacoms-role-within-vodafone-group\/","title":{"rendered":"Vodacom’s role within Vodafone Group"},"content":{"rendered":"

Paul Theron<\/a>, equities asset manager and CEO of Vestact has highlighted Vodacom<\/a>\u2019s increasing role within Vodafone<\/a>, which owns a 65% in the South African operator.<\/p>\n

\u201cVodacom now nestles safely in the Vodafone global group. Its function is to do a good job and to make lots of cash flow, dividends, and to pay them upwards to London,\u201d Theron said, speaking as a guest on CNBC Africa\u2019s show Hot Stoxx last week.<\/p>\n

In financial results reported on February 6, Vodafone reported a decline in both revenue and Group service revenue, with Europe particularly hard hit. Vodafone also reported a decline in subscribers in several key markets.<\/p>\n

Vodacom reported only a 2.2% rise in revenue for its South African operation to R15.5 billion for the quarter ended 31 December 2012, driven by a 27.2% growth in equipment revenue from smartphone and tablet sales. Service revenue, however, declined marginally.<\/p>\n

Active customers in SA increased 11.7% year on year to 30.6 million, while group active customers increased 12.2% to 51.0 million.<\/p>\n

Vodafone Group data revenue, meanwhile, grew 12.8%, reflecting an increase in European smartphone penetration to 33.4%.<\/p>\n

Theron said he suspected that it was only a matter of time before the group was totally rebranded within the Vodafone group, although he quickly added that the colours of the group didn\u2019t much matter.<\/p>\n

LTE, data and smartphones<\/strong><\/p>\n

The analyst said key to Vodacom\u2019s continued success would be its handset deals to increase average revenue per user and to encourage customers to make use of data led services on its new “4G” LTE network.<\/p>\n

Vodacom stressed that smartphones remain a key strategic growth\u00a0driver with active smartphones increasing 29.2% to 5.8 million devices.<\/p>\n

Smartphone net additions increased in the quarter compared\u00a0to prior quarters, adding over 500,000 to its network, largely supported by the group\u2019s working capital investment in handset financing.<\/p>\n

Smartphone data usage increased 36.1% to 138MB per smartphone customer, per month.<\/p>\n

Vodacom said it extended its\u00a0LTE<\/a>\u00a0coverage in South Africa to reach Johannesburg, Pretoria, Durban and Cape Town, with 542 active sites. Vodacom launched the commercial service of its LTE offering in October last year.<\/p>\n

Hot stock<\/strong><\/p>\n

With a market cap of R173.42 billion, P\/E ratio of 4.91, and dividend yield of 5.87%, analysts have put Vodacom as a \u2018hot stock\u2019. The group has also recently committed to paying 90% of earnings as dividends.<\/p>\n

Investment analyst at\u00a0Investment Solutions<\/a>, Chris Hart\u00a0believes that the group\u2019s dividend yield is secure, \u201cand is something that will grow over time\u201d.<\/p>\n

He said the dividend rate when compared against cash on inflation, meant that Vodacom remains a good investment.<\/p>\n

He noted, however, that Vodacom\u2019s missing element remained its lack of footprint outside of South Africa, particularly in emerging markets. \u201cBut it is in the dominant position in the dominant economy of Africa,\u201d he said.<\/p>\n

Aside from its leading operation in South Africa, Vodacom also has networks in Tanzania, the\u00a0Democratic Republic of Congo,\u00a0Mozambique\u00a0and\u00a0Lesotho.<\/p>\n

Theron opines that, while Vodacom\u2019s operation in the DRC remains a concern, \u201cthey do have nice businesses in Tanzania and Mozambique”.<\/p>\n

M-Pesa<\/strong><\/p>\n

In its recent results announcement, Vodacom heralded increased penetration of mobile financial services in Tanzania.<\/p>\n

\u201cM-Pesa is progressing well in Tanzania, with active customers increasing 72.6% to 4.7 million and M-Pesa revenue now accounts for 74.6% of Tanzania\u2019s overall data revenue and 14.1% of service revenue. We launched M-Pesa in DRC in the period and expect to expand the service to Mozambique and Lesotho before year end,\u201d it said.<\/p>\n

Vodafone outlook<\/strong><\/p>\n

Following the announcement of Vodafone\u2019s results, Emeka Obiodu<\/a>, principal analyst at Ovum<\/a> said that Vodafone\u2019s results reflected the challenging economic environment in its core market.<\/p>\n

\u201cGiven Europe\u2019s economic woes in 2012, we expect telcos that rely on Europe for the majority of their revenues to struggle.\u00a0 Customers feel the pinch in their pockets before they reduce their telecoms spend.<\/p>\n

\u201cThe challenge for Vodafone and other European operators is to stabilize their performance and ensure that their share of the customer’s wallet holds firm.<\/p>\n

\u201cFor Vodafone in particular, Ovum warned in 2009 that its emerging market operations must not be relied on to perpetually offset poor performance at home. This has proved to be a prescient warning. Growth in its emerging markets operations has slowed and Vodafone is now relying on Verizon Wireless,\u201d Obiodu said.<\/p>\n

The analyst stressed that there is hope for Vodafone. \u201cOpportunities exist for telcos to play a bigger role in the \u201cconnected future\u201d. Better pricing design can also unlock additional value, and telcos should look to become active enablers of the digital society.\u201d<\/p>\n

More on Vodacom and Vodafone<\/h3>\n

Vodacom slides on flat earnings<\/strong><\/a><\/p>\n

Vodacom lifted by smartphone and tablet sales<\/strong><\/a><\/p>\n

Foreigners eye MTN and Vodacom<\/strong><\/a><\/p>\n

Vodacom profits beat Vodafone UK<\/a><\/strong><\/p>\n

Vodacom shares up 2.3% on H1 results<\/strong><\/a><\/p>\n

We have appetite to grow: Vodacom<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Paul Theron, equities asset manager and CEO of Vestact has highlighted Vodacom\u2019s increasing role within Vodafone, which owns a 65% in the South African operator.<\/p>\n","protected":false},"author":9,"featured_media":23325,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[1859,26,5140,525,1415,2296,5141,27,737],"class_list":["post-31651","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-chris-hart","tag-headline","tag-investment-solutions","tag-lte","tag-m-pesa","tag-ovum","tag-paul-theron","tag-vodacom","tag-vodafone"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/31651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=31651"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/31651\/revisions"}],"predecessor-version":[{"id":31675,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/31651\/revisions\/31675"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/23325"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=31651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=31651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=31651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}