Vodacom upbeat despite data threat

By Sandile Mchunu Time of article published Jul 25, 2018

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JOHANNESBURG - Vodacom said yesterday that the planned implementation of the Independent Communications Authority of South Africa (Icasa) end-user subscriber charter regulations on out-ofbundle usage would modestly impact data revenue growth. 

The group said it expected the regulations to be mitigated in the short term by continued uptake of data bundles and strong elasticity in demand for these services. Chief executive Shameel Joosub said the company was already refining its customer offering ahead of the implementation of the regulations. 

“We have also launched some exciting consumer propositions, including our new Vodacom Ticket, which allows customers to save up to 50 percent on data for social media, video, music and gaming,” Joosub said. 

“Data revenue grew close to 10 percent, a pleasing performance off a bigger base, contributing more than 44 percent to service revenue.” 

Vodacom said its revenue growth, excluding currency translation effects, rose 5.2 percent in the quarter to end June, adding 1.5 million customers in South Africa and 1 million internationally. 

The group reported R20.7bn in revenue growth, assisted by a 9.9 percent rise in data sales. Joosub said the strong momentum from its annual results has carried Vodacom into a pleasing first quarter. 

He said group revenue and service revenue increased 5 percent and 5.2 percent respectively. 

“We were delighted to add 2.5 million customers over the quarter, reaching 76.5 million across the group, excluding Safaricom,” Joosub said. 

The group said it sold more than 600 million bundles in the quarter under review, resulting in an effective price reduction of 10 percent on voice minutes and 17 percent for data megabytes. 

Joosub said this was part of Vodacom’s commitment to lowering communication costs. 

The group said service revenue rose 4.9 percent in South Africa, supported by customer growth of 9.5 percent to reach 43.1 million customers. 

“This was driven by our ‘Big Data’ led innovations, which contributed to robust demand for personalised bundles, offering customers better value for money,” Joosub said. 

International operations, service revenue increased 12.4 percent to R4.3bn, driven largely by M-Pesa and data adoption. 

“M-Pesa continues to grow strongly and we now have 12.7 million customers, excluding Safaricom, using this service,” Joosub added. 

The group remains focused on network investment as a key competitive differentiator, expanding its 4G coverage to 81.5 percent, up from 75.9 percent last year. 

Peter Takaendesa, a portfolio manager at Mergence Investment Managers, found Vodacom’s June quarter numbers weaker than expected. 

Takaendesa said the outlook statement was clouded by the imminent implementation of new mobile data regulations. 

“The key drivers of the softer June quarter revenue numbers are weaker mobile data revenue growth in South Africa and the impact of a stronger rand relative to currencies of their rest-of-Africa operations. However, normalised group service revenue growth of 5.2 percent is still in line with the company’s mid-term growth guidance of ‘mid-single digit’ as provided in their March full year results,” Takaendesa said.

 Vodacom shares closed 2.60 percent lower on the JSE yesterday at R125.51.


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