Vodacom Group: solid growth in South Africa offsets 8% fall in international service revenues

2 Feb 2017

Johannesburg-based Vodacom Group has reported its results for the quarter ended 31 December 2016, showing that consolidated service revenue increased by 1.3% year-on-year to ZAR17.443 billion (USD1.296 billion) and total revenue rose 1.2% to ZAR21.222 billion, while normalised growth for service and total revenue – i.e. excluding currency translation effects – was 4.4% and 3.9% respectively. The Group reported a strong performance at its domestic business where a strong surge in sales – up 5.5% to ZAR13.410 billion – was driven by a 22.0% rise in data revenue. Indeed, the carrier notes that data revenue now accounts for 37.5% of service revenue, or ZAR6.533 billion, up 18.4% when compared to the year-ago quarter. However, international service revenue declined by 8.2% to ZAR8.206 billion, attributed to customer registration process in certain markets and currency volatility. Operationally speaking, the Group added 1.6 million net new (active) customers during the three months under review, including 690,000 in its home market and 876,000 in its international operations, to reach a total of 65.2 million active customers at 31 December 2016.

Shameel Joosub, Vodacom Group CEO commented: ‘Strong growth in South Africa was delivered through our strategy of sustained investment in network infrastructure, growing data demand and successful execution of our pricing strategy. This includes the continued impact of our segmented pricing offers, a key highlight of this quarter. Combined with our network advantage and delivering value for money propositions, this contributed to almost 700,000 new customers joining our network in South Africa this quarter, showcasing the success of our focus on bundle adoption through ‘Just 4 You,’ our youth proposition under the NXTLVL banner and our summer campaign.’ He went on to add: ’To support continued growth and to strengthen our network and service differentiation, we invested ZAR2.7 billion in our infrastructure, including ZAR2.1 billion in South Africa where we expanded 4G coverage to 70% of the population [up from 54.1% a year before] and 3G to 99%.’

On a less positive note though, the CEO confirmed that while Vodacom had some success in adding new customers at its international operations, disconnections from the prior year still had a negative impact on the group. ‘The effect of customer disconnections in the fourth quarter of the prior year still impacted the group’s performance,’ he said. The company identified the Democratic Republic of Congo (DRC) as one of those that proved particularly difficult for its operations after it was forced ‘to weather consecutive storms’ in the country. The DRC government had imposed disconnections of unregistered SIM cards, with Vodacom losing an approximate 3.3 million subscribers in the process.

South Africa, Vodacom Congo (DRC), Vodacom Group, Vodacom South Africa