Vodacom increases revenue on strong customer growth, cheap data deals

Mobile services operator Vodacom on Tuesday said it increased group data revenue by 9.6% in the quarter to end-June 2018 on the back of increased customer numbers.

The group said in a trade update that it added 2.5 million customers - 1.5 million in South Africa and 1.0 million in its International operations - to reach 76.5 million. This excludes Safricom customers.

Apart from South Africa, Vodacom has operations in Tanzania, the DRC, Mozambique and Lesotho. Through Vodacom Business Africa, the group offers business managed services to enterprises in 30 countries across the continent.

Locally, Vodacom grew service revenue by 4.9%, supported by customer growth of 9.5% to 43.1 million customers, this "despite the dire economic environment in South Africa".

Vodacom CEO Shameel Joosub said this growth was driven by the company's 'Big Data'-led innovations, which contributed to robust demand for personalised bundles.

According to the trade update Vodacom sold over 600 million bundles in the quarter under review, resulting in an effective price reduction of 10% on voice minutes and 17% for data megabytes.

"This is evidence of our commitment to lowering the cost to communicate," said Joosub.

Other cost cutting initiatives for consumers include the new Vodacom Ticket, which allows customers to save up to 50% on data for social media, video, music and gaming, he added.

Joosub said data revenue contributed more than 44% to service revenue.

Group service revenue, excluding currency translation effects, grew 4.2% compared to the previous quarter, with South Africa service revenue climbing 4.9% to R13.8bn, and International service revenue increasing 4.1%to R4.3bn.

Joosub ascribed the growth in International service revenue largely to M-Pesa and data adoption. "M-Pesa continues to grow strongly and we now have 12.7 million customers, (excluding Safaricom) using this service," he said.

M-Pesa revenue growth, excluding currency translation effects, was up 18.1% compared to the previous quarter.

Looking ahead, Joosub said Vodacom expects the implementation of the ICASA End-user Subscriber Charter Regulations, in relation to out-of-bundle usage, to have a modest impact on data revenue growth.

"We expect this to be mitigated in the short term by continued uptake of data bundles and strong elasticity in demand for these services."

Vodacom shares were trading 1.23% lower at R127.28 by 09:05 on the JSE.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER