Strong rand weighs on Vodacom

Vodacom chief executive Shameel Joosub. Picture: Simphiwe Mbokazi

Vodacom chief executive Shameel Joosub. Picture: Simphiwe Mbokazi

Published Feb 1, 2017

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 Johannesburg – South Africa’s largest cellular operator,

Vodacom, grew revenue a slim 1.2 percent to R21.2 billion in the three months

to December.

This as the rand strengthened and weighed on its income.

Stripping out currency effects, group revenue would have gained 3.9 percent,

the listed telecoms giant said on Wednesday.

Vodacom, majority owned by the UK’s Vodafone, notes group

service revenue – which is income earned off its network – gained 1.3 percent

to R17.4 billion. On a normalised basis, this was up 4.4 percent.

Income from its South African operation, the bulk of its

business with 36.4 million active customers, gained 4.9 percent to R17 billion

driven by subscriber and data growth.

South African subscribers gained 6.7 percent in the last

quarter of the year.

Its international operations – Mozambique, Tanzania,

Lesotho and the Democratic Republic of Congo – saw overall revenue decline 8.9

percent to R4.3 billion due to the stronger rand and customer disconnections.

Its international operations saw active customers decline

to 7.5 percent to 28.8 million year-on-year because of disconnections

implemented a year ago in compliance with customer registration requirements.

Read also:  Vodacom overtakes MTN as Africa's biggest mobile firm

However, during the quarter, the company started clawing

this back, with 876 000 net additions.

Vodacom has previously said that it wants its

international operations to contribute the same percent to its revenue as they

do to its subscriber base.

Its international operations account for 44 percent of

its customer base, but only 20 percent of overall income.

Commenting on the results, CEO Shameel Joosub expressed

his pleasure with what the company achieved in the quarter. “Performance was

driven by strong customer growth in South Africa and strong data demand.”

Joosub attributed the South African growth to sustained

investment in infrastructure. During the quarter, Vodacom spent R2.1 billion to

expand 4G coverage to 70 percent and extend high-speed transmission to 91.4

percent of its sites.

Over three years, which includes the current period,

Vodacom will spend R40.6 billion, of which R27.4 billion will go into its South

African operations.

Joosub added strong data demand and segmented pricing

offers also helped South Africa gain. Voice prices fell 17.6 percent and data

dropped by 15.4 percent in the 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.”

Joosub also noted strong growth in data demand

outstripped declining voice revenues with service revenue growth of 5.5 percent

to R13.4 billion in South Africa.

Joosub also notes that the unavailability of spectrum,

which is a process that has stalled at government level, “remains a concern”.

“We have been involved in a number of positive

engagements with relevant industry stakeholders as we seek to find a workable

solution to make broadband even more accessible and affordable for

South Africans.”

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