Vodacom yesterday reported a 6.4percent increase in South African service as demand for data spiked during the national Covid-19 lockdown. Picture: Leon Nicholas
Vodacom yesterday reported a 6.4percent increase in South African service as demand for data spiked during the national Covid-19 lockdown. Picture: Leon Nicholas

Vodacom reports increase in data demand due to Covid-19 lockdown

By Dineo Faku Time of article published Jul 24, 2020

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JOHANNESBURG - Vodacom yesterday reported a 6.4percent increase in South African service as demand for data spiked during the national Covid-19 lockdown.

The group, whose operations include mobile networks in Tanzania, the DRC, Mozambique, Lesotho and Kenya, said South African service revenue jumped to R13.3 billion from R12.5bn a year earlier after benefiting from the strong demand for data and connectivity services.

The demand overshadowed the reduction in tariff charges - of up to 40 percent - that were implemented in April, following recommendations by the Competition Commission.

Vodacom said international service revenue lifted 10.7percent on the rand devaluation, resulting in a 7.6percent increase across the group, despite tougher economic trading conditions in most of the company’s markets.

It said group revenue increased 5.6percent and 1.3percent on a normalised basis to R22.7bn from R21.5bn a year earlier.

Chief executive Shameel Joosub said underlying growth in Vodacom’s international portfolio declined 5.3percent, excluding currency gains, as economic activity declined across operations.

Joosub said Vodacom also reduced pricing on a temporary basis on a number of M-Pesa transactions to assist customers in contactless payment in light of the social distancing initiatives.

“While I am particularly pleased with the performance of our South African business, we remain cautious about the impact of Covid-19 on our operations and uncertainty about the pace of economic recovery in each of the countries where we operate as disposable income will increasingly come under pressure as a result of rising unemployment and reduced economic activity, said Joosub.

He adding that the group was fully focussed on delivering great value and an exceptional experience to its customers “and committed to a prudently sustainable investment programme that continues to yield positive results.”

Joosub said Vodacom was also able to fast track the launch of its 5G network during the period under review, following the decision by the Independent Communications Authority of South Africa to temporarily allocate spectrum in the March quarter.

He said the company switched on its 5G in May in Johannesburg, Pretoria and Cape Town.

The rival MTN rolled out 5G a month later in Johannesburg, Cape Town, Bloemfontein, and Port Elizabeth.

Africa Analysis director for pricing research Ofentse Dazela said the telecommunications sector had benefited tremendously from the current state of national disaster.

“The surge of data traffic reported by Vodacom is not only driven by employees working from home, but also students, that have been undertaking online studies and sharing information via online platforms to engage fellow students and teachers,” Dazela said. “Leisure activities such as gaming and content streaming (music and movies) should also be credited for this growth as families remain home bound.”

Dazela emphasised that the revised pricing structure had inevitably influenced consumer choice in favour of this well-established brand, considering that there was little price difference in the prepaid market among the four largest mobile operators at the moment.

“In the post-paid market, Vodacom has also been very aggressive through its ‘Red hot data deals’ promotions, that have played a major role in the reported revenue growth numbers, as well as to entrench this operator’s dominant position in South Africa’s telecoms landscape,” said Dazela.

Vodacom shares declined 1.69percent on the JSE yesterday to close at R126.01.

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