Despite a sharp reduction in average voice tariffs in the past year, Vodacom South Africa managed to grow service revenues by 0,6%, with lower prices offset by a 23,3% surge in voice traffic and a 31,2% growth in data revenue.
Competitive pricing pressures — Vodacom credits its “pricing transformation strategy” — meant that the average prepaid tariff fell by 25,3% to just 56c/minute and the average effective price per megabyte of data declined by 16,2%.
The numbers, which appear to show a strong correlation between lower prices and higher call volumes, are contained in the mobile operator’s latest quarterly filing, for the three months ended December 2013. Vodacom is benefiting from robust demand for data and good growth in its international operations.
For the quarter, group revenue rose by 10,5% to R20,2bn (7,9% when the effect of exchange rate fluctuations are stripped out). Service revenue was R16,2bn.
Data revenue was the standout, though, growing by 40,7% group-wide to R3,6bn, representing 22,2% of service revenue. Group active customers grew to 56m, up by 12,3% from a year ago. Active data customers climbed by 27,9% to 23,7m.
South African service revenue was up by 0,6%, though this would have been higher by 3,4% if termination rates — wholesale inter-network call fees — had not been reduced.
Vodacom intends challenging new regulations, announced by the Independent Communications Authority of South Africa (Icasa) last week, that guide what will happen to termination rates over the next three years.
Icasa has proposed the rates be cut from 40c/minute now to 20c/minute, 15c/minute and 10c/minute respectively in the next three years. It has also proposed aggressive “asymmetry” in the rates that favours smaller market players, including Cell C. Both Vodacom and MTN say Cell C does not deserve to benefit from asymmetry as it has been in the market for more than 13 years.
“Vodacom is supportive of a mobile termination rate glide path which should be determined in accordance with the procedures as set out in the Electronic Communications Act, which requires that the rates be cost based,” the operator says.
“Cost-based rates are important to sustain our ongoing investment strategy. We have concerns about the process used to determine these published rates. We intend to challenge the legal validity of the process.”
For the December quarter, Vodacom’s data revenue in South Africa was 31,2% higher than a year ago.
It now has 7,2m active smartphone users, an increase of 600 000 over the September quarter. The average volume of data used by each smartphone soared by 83,5% to 254MB/month.
International active customers increased by 22,8% to 25m, or 44,7% of overall group active customers. International data revenue more than doubled, with data traffic now three times higher than a year ago. — (c) 2014 NewsCentral Media