Strong demand for data services, underpinned by an aggressive investment in 3G and 4G/LTE network infrastructure, has led to a strong performance by Vodacom in the financial year ended 31 March 2016, results published on Monday showed.
Headline earnings per share rose by a fairly muted 2,7% to R8,83, but this number was negatively impacted by re-measurement of foreign currency-denominated inter-group loans and once-off black economic empowerment charges.
Despite the weak economy in the group’s biggest market, South Africa, service revenue there increased by 4,9% to R49,3bn, firmly putting the pressures caused by reductions in wholesale inter-network call rates (also known as mobile termination rates) behind it.
Total revenue climbed by 5,2% to R62,3bn, underpinned by a 6,2% increase in equipment revenue, with 10,5m devices sold to South Africans during the year, of which 61,6% were smart devices.
Vodacom South Africa added 2,1m customers, 6,4% up on the prior year’s total. Average revenue per user (Arpu) remained fairly static — a not insignificant achievement in a competitive market.
“The Arpu trend improved largely as a result of lower declines in voice revenue as customers opted into more attractively priced ‘Just 4 You’ offers, coupled with the continued increase in data revenue as customers trade up their devices to either 3G or 4G,” Vodacom said.
“Prepaid bundle purchases increased to over a billion. The success of these offers, as well as the migration to better value price plans, has resulted in improving trends on voice revenue,” it added.
Active prepaid customers increased by 7,6% to 29,3m. Some 85% of contract customers are now on new price plans, with contract in-bundle spend increasing to 71,3% from 69,3% in the 2015 financial year. Active contract customers were flat at 4,9m, while contract churn fell from 9,2% a year ago to 8,5%. Contract Arpu rose by 4,5% to R397.
But it was in data services that Vodacom enjoyed the most revenue uplift.
Data revenue in South Africa increased by 27,7% to R17,3bn on the back of strong data traffic growth of 46,8%. This was underpinned by improved access to more affordable devices — active smart devices on the network increased by 22,8% to 14,1m, driven mainly by the sale of low-cost Vodacom-branded devices, which accounted for 25,7% (2015: 16,8%) of total device sales.
Another factor helping data sales was increased data coverage, with the number of active data users on the network up by 12,7% to 18,7m customers. “Compelling” data offers through the prepaid “Just 4 You” tariff plan led to growth in data bundle sales of 85,9%, with the average usage increasing by almost 50% to 350MB/user.
Vodacom South Africa now claims to offer 99% 3G population coverage, and 58% for 4G/LTE, from 35% in the 2015 financial year. It now has more than 6 000 4G sites across the country.
Service revenue for Vodacom’s international operations, meanwhile, increased by 16,2% (9,6% in constant currency). Voice revenue climbed by 14% and data revenue by 31,9% on the back of R4,1bn of investment in networks.
Active international customers decreased 8,1% to 27,1m, largely due to user registration requirements in the Democratic Republic of Congo and Mozambique.
Vodacom has declared a final dividend per share of R4/share, taking the total dividend for the year to R7,95/share. — © 2016 NewsCentral Media