Photographer: Nadine Hutton/Bloomberg
Photographer: Nadine Hutton/Bloomberg

Vodacom benefits from global portfolio

By Dineo Faku Time of article published Jul 26, 2019

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Vodacom, South Africa's biggest mobile operator, benefited from the strong performance of its international portfolio, despite hurting on data regulations at home in the June quarter.

The group reported yesterday a solid overall group revenue on customer growth from both its international and local operations during the quarter under review.

Chief executive Shameel Joosub said the international portfolio managed to offset the anticipated slower performance in South Africa, where the new data regulations, significant data price cuts, and a subdued economy had weighed heavily on the pockets of constrained consumers.

Joosub said group revenue and service revenue grew by 4.2percent to R21.5billion and 3.9percent at 17.4bn respectively.

“South African service revenue was negatively impacted by the further substantial reduction in out-of-bundle tariffs announced in March as part of our sustained pricing transformation strategy to bring down the prices of our data services,” Joosub said.

It declined to R12.6bn from R12.73bn in June 2018.

Vodacom decided to lower out-of-bundle tariffs mainly as Communications Authority of South Africa’s (Icasa’s) End-User and Subscriber Service Charter Regulations aimed at allowing users to roll over unused data, and putting an end to automatic out-of-bundle billing came into effect.

“The impact from three months of Icasa’s data usage regulations, the transition between national roaming partners and the tough retail operating environment, were other contributors to the 1.2 percent decline in service revenue in South Africa,” Joosub said.

International service revenue increased by 19.6 percent to R5bn, largely driven by a 42.7 percent increase in M-Pesa revenue and data demand.

Vodacom said M-Pesa revenue of R905 million accounted for 17.7 percent of International service revenue, boosted by an overall improved trend in each of its International markets and Tanzania in particular.

The company said it added 1.2 million customers excluding Safricon. It said its total customer base rose to 79 million, with 2.4 million joining its network over the past year.

Ofentse Dazela, director for pricing research at Africa Analysis, said that Vodacom had been aggressive from price-based competition perspective in the past quarter.

“It announced several data deals that probably had a positive impact on the company as revenue base expanded a bit,” Dazela said.

However, he said it remained to be seen whether Vodacom would be able to maintain this revenue growth trajectory going forward, particularly in the local market, given that other operators like MTN have started launching their own promotions.

Vodacom, which was previously lambasted by the Competition Commission for charging higher data prices, previously said that in the year to March operating profit had grown 1percent to R24.5bn, against increasing its overall subscriber base.

The mobile operator also slashed its full-year dividend after issuing more than 100 million shares as part of the R16.4bn black economic empowerment ownership transaction last year.

Vodacom said the full-year dividend had been cut by 2.5 percent to R7.95 a share from R8.15 a share in the year ending March 2018.

Vodacom shares declined 1.58 percent on the JSE yesterday to close at R113.53.

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