Cuts to wholesale mobile call termination rates led to a 1,3% decline in Vodacom’s service revenues in South Africa in the six months ended September 2014. Without the cut to the rates, which mobile operators charge each other to carry calls between their networks, the company’s service revenue would have grown by 2,9%.
Communications regulator Icasa has been chopping termination rates in an effort to bring down retail prices and foster competition.
For the group, revenue increased by 2,3% and service revenue by 1,7%. Excluding the impact of the 50% cut in termination rates earlier this year, both group revenue and service revenue would have increased by 5%.
Pressure on voice revenues was, however, countered by strong growth in group data revenue of 24,7%, with active data customers climbing by 27,6% to 25,9m.
In the six-month period, Vodacom grew its group active customers by 13,3% to reach 61m.
The group said it made “strong progress” in its accelerated capital expenditure programme, spending R5,9bn in the period – 15,7% of group revenue – on expanding its 3G and 4G broadband networks. R4,1bn of that spend was directed to the South African network.
Shameel Joosub said in prepared remarks that Vodacom has “performed well” by adding 7,2m customers and increasing revenue to R37,5bn given the tough macroeconomic conditions, increased competition and cuts to termination rates.
“In order to help offset the impact of lower MTRs we have continued to implement a range of cost management programmes,” Joosub said.
“Our commercial strategy centres on offering better value to customers in each market segment. In the prepaid market, our low-cost bundles have proven extremely popular with more than 40m sold per month. The post-paid approach has been to offer integrated packages covering all voice, data and SMS needs at a fixed price, allowing customers to more effectively manage their spend. This strategy has allowed us to reduce our blended average effective price per minute by 19%. This resulted in a 17,6% increase in total outgoing traffic.” — © 2014 NewsCentral Media