Vodacom Group sees drop in Q3 revenue on competition, connection rate cut

4 Feb 2015

South Africa’s Vodacom Group said normalised revenue for its fiscal third quarter ended 31 December 2014 declined by 1.1% year-on-year to ZAR19.993 billion (USD1.744 billion), with service revenue down 2.7% to ZAR15.815 billion, impacted by the 50% decline in mobile termination rates (MTRs) in South Africa, increased competition and growing pressure on consumer spending in a weak economy. Further, taking into account currency fluctuations, the fall in revenue was an even steeper 2.2%, while service revenue was 3.9% lower, it said. The fall in turnover came despite it adding a net 5.1 million new customers over the past twelve months, prompting its CEO Shameel Joosub to say it had been a ‘challenging quarter’ for the group.

In its home market, Vodacom reported a 3.1% y-o-y fall in revenue to ZAR15.987 billion, mainly down to a drop in service revenue relating to the regulator Icasa’s ongoing phased reduction in MTRs. ‘Service revenue declined 5.8% due to the 50% cut in MTRs in April 2014 and by increased competition and weaker consumer spending. Excluding the impact of MTRs, service revenue declined 1.7%,’ Vodacom said.

On a more positive note, Vodacom reported strong growth in mobile data revenue, which climbed 19.9% on an annualised basis to ZAR4.3 billion – equivalent to 27.4% of total service revenue. Data traffic in South Africa surged by 62.2% (and active data customers increased to 16.8 million) and climbed threefold across the group’s international operations (Democratic Republic of Congo, Lesotho, Mozambique and Tanzania). In addition, Vodacom said the total number of active smartphones and tablets on the South African network rose by 23.6% in the year to 9.5 million, generating average monthly data usage of 358MB, up by 41.1% y-o-y. Data revenue expanded by 18.8% to ZAR3.526 billion and accounted for 29.7% of group service revenue. The CEO noted that in order to support South Africans’ demand for data it has continued to expand its 4G Long Term Evolution (LTE) network and ramped up its CAPEX programme. ‘In South Africa, Vodacom’s LTE service now covers 34% of the population through 2,194 sites, while 3G population coverage is 94% through 8,407 sites. In our international operations, we’ve increased the number of 3G sites by 52.7% in comparison to last year, and the number of 2G sites is up by 27.2%,’ said Joosub. Mobile payments platform M-Pesa, which was relaunched in South Africa in August 2014, now has 700,000 registered users, he added.

Congo, Dem. Rep., Lesotho, Mozambique, South Africa, Tanzania, Vodacom Congo (DRC), Vodacom Group, Vodacom Lesotho, Vodacom Mozambique, Vodacom South Africa, Vodacom Tanzania, Vodafone Group