Vodacom reports solid performance in six months to end-September

Vodacom Group reported revenues for the six-months to the end of September rose by 7.6 per cent to ZAR31.75 billion (US$4 billion), while net profit was up by 2.8 per cent to ZAR4.39 billion.

South Africa delivered a decent performance with service revenue growing 4.7 per cent to ZAR23.5 billion (7.0 per cent excluding the impact of cuts in mobile termination rates). Equipment sales were particularly strong, growing 20.3 per cent.

Gross connections increased sharply to approximately eight million, with the brand refreshed and numerous promotions and handset deals the primary drivers of the 56.5 per cent year-on-year change. Customers increased 21.1 per cent year-on-year to 28.9 million, a net increase of 2.4 million in the six month period. This was achieved despite the accelerated disconnection of approximately 537, 000 SIMs that were locked at the RICA (Regulation of Interception of Communications and Provision of Communication-Related Information Act) deadline. This Act was put in place by the South African government and requires, amongst other things, for customer information to be recorded and verified.

Churn also increased in the second quarter as a result of the RICA disconnections. Total ARPU was down nine per cent to ZAR141, largely due to lower interconnect rates and the higher prevalence of lower usage customers in the mix.

Data revenue now represents 15.8 per cent of service revenue. Active data customers grew 32.3 per cent to 10.5 million, representing 36.2 per cent of customers.

Active smartphones on the network increased by approximately 870,000 in the six months to 4.1 million.

Outside of South Africa, service revenue increased by 13.3 per cent to ZAR4.39 billion due to strong growth in customers and relatively stable macro environments. Customers increased 22.5 per cent year-on-year to 19 million, adding two million in the six months.

While still a relatively small portion of overall revenue, data revenue growth was very strong at 71.4 per cent as Vodacom witnessed more customers using data and mobile financial services. Active data customers increased 82.4 per cent to 1.9 million as the operator expanded network coverage and introduced more affordable data offerings. Take up of the M-Pesa service in Tanzania accelerated with active customers reaching 2.2 million, penetrating 21.0 per cent of the customer base.