Vodacom boosted capex by R500-million as pandemic hit

Vodacom pumped an additional R500-million into its network in the first quarter of its 2021 financial year to help cater for surging demand for voice and data services during the Covid-19 lockdown.

In a quarterly update to the market on Thursday, Vodacom Group CEO Shameel Joosub said the combination of increased demand for data following tariff reductions on 1 April and more people working and being educated remotely resulted in a “significant increase in mobile and fixed traffic”.

“As a result, we accelerated network infrastructure spend by R500-million to R2.7-billion in the first quarter (April to June 2020) and used the temporary assignment of spectrum from Icasa (the communications regulator) to rapidly increase network capacity to ensure that we continue to deliver a high-quality experience to customers,” Joosub said.

Some of the spending also went into fast-tracking the launch of its 5G network.

Vodacom said group service revenue in the first quarter was up by 7.6% (2.6% normalised), benefitting from strong growth in South Africa with customer demand increasing during the lockdown period. The international operations were negatively impacted by lower economic activity from the effects of Covid-19.

South Africa service revenue growth was 6.4% for the quarter, supported by strong demand for data and connectivity services.

Data traffic increased by 97.7% for the quarter. Data customers climbed, with 13.2 million using 4G, up 29.4%.

Customer base shrinks

However, the overall customer base shrank by 9.9%, driven by reduced gross connections in the prepaid segment during the period of restricted movement. “We are, however, encouraged that our 30-day active prepaid customer base grew by 0.9%. The contract customer base increased, benefiting from enterprise customers extending more data lines.”

International service revenue grew by 10.7%, benefiting from the rand’s devaluation. Underlying performance was subdued with a 5.3% decline because of lower economic trading activity, free M-Pesa services and customer registration requirements, Vodacom said.

“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. – © 2020 NewsCentral Media