Vodacom revenue falls as pressures grow - TechCentral

Vodacom revenue falls as pressures grow

Shameel Joosub

Shameel Joosub

Vodacom’s normalised revenues in its third financial quarter ended 31 December 2014 fell by 1,1% year on year to R20bn, with service revenue down by 2,7% to R15,8bn, despite the group adding 5,1m customers since last year.

When currency fluctuations are taken into account, the decline in revenue was a steeper 2,2%, with service revenue declining by 3,9%.

CEO Shameel Joosub says it’s been a “challenging quarter”, with a “significant impact” from the 50% decline in mobile termination rates in South Africa, increased competition and growing pressure on consumer spending in a weak economy.

Termination rates, which have been forced down in recent years by communications regulator Icasa, are the fees operators charge each other to carry calls between their networks.

Excluding the impact of the decline in termination rates, revenue at Vodacom’s South African operation would have remained flat. Group revenue would have increased by 1,5% and service revenue by 0,6%.

The average cost of a call placed on the Vodacom network in South Africa in the period was 63c/minute, down by 21,3% on a year ago. Outgoing voice traffic volumes grew by 10,1%, not enough to offset the decline in the effective price per minute.

Data was again a bright spot, however, with group data revenue increasing by 19,9% to R4,3bn — that’s 27,4% of service revenue. Data traffic grew by 62,2% in South Africa and by threefold in the international operations.

The number of active smartphones and tablets on the South African network grew by 23,6% to 9,5m. Average monthly data usage was up by 41,1% to 358 MB on smartphones.

“To support this boom in data demand as well as increase our coverage footprint, we continued with our accelerated capital expenditure programme,” says Joosub. “In South Africa, Vodacom’s LTE service now covers 34% of the population through 2 194 sites, while 3G population coverage is 94% through 8 407 sites. In our international operations, we’ve increased the number of 3G sites by 52,7% in comparison to last year, and the number of 2G sites is up by 27,2%.”

Mobile payments platform M-Pesa, which was relaunched in South Africa in August 2014, now has 700 000 registered users. The company has not disclosed how many of those are active.

Despite the tough trading condition, Vodacom says it is continuing to invest in its network and its business. “We believe it supports our network quality and growth aspirations, which will deliver positive returns for our shareholders,” says Joosub.  — (c) 2015 NewsCentral Media

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