[dropcap]D[/dropcap]espite weak economic conditions, Vodacom has delivered an impressive financial performance in the first quarter of its 2018 financial year, with the good numbers underpinned by robust demand for data services.
For the three months ended 30 June 2017, Vodacom grew group revenue by 3.9% to R20.7bn (7.7% when stripping out currency movements), with South African service revenue growth accelerating to 7.8% on the back of stronger device sales.
Group data revenue increased by 15.1% (normalised for currency movements: 18.3%), to R6.7bn, representing 39% of service revenue. The group added 2.5m customers during the quarter, 2.3m of these in South Africa, to reach almost 70m customers across the group.
Vodacom CEO Shameel Joosub attributed the good first quarter performance in South African service revenue to the “consistent and significant investment in our network infrastructure and IT systems, aimed at further enhancing the customer experience”.
He said effective voice and data prices declined by 9.1% and 18.9% respectively over the past year. He hinted that Vodacom will soon reduce out-of-bundle pricing, long a bugbear of consumers. The Just 4 You personalised offerings, which provide services and prices tailored to individual customers, have been well received, he added.
During the quarter, Vodacom South Africa sold 553m prepaid and contract bundles, up 68.3% on a year ago, with the number of bundle users increasing by 25.7% to 17.8m. Prepaid customers increased by 2.2m to 34.2m, driven largely by the personalised offers. Prepaid average revenue per user (Arpu) was down 3.3%. Contract customers increased marginally in the quarter, to 5.1m, with contract Arpu declining by 2%.
Voice
Voice revenue decline in South Africa was “low” at 4.2%, “reflecting the success of our personalised voice bundle strategy through our ‘Just 4 You’ platform, reducing the blended effective price per minute by 9.1%”, Joosub said. Data revenue grew 18.1% to R5.5bn, contributing 42.2% (2017: 37.8%) of service revenue.
Vodacom South Africa now has 5.5m 4G/LTE customers. Active smart devices on the network increased by 18.4% to 16.6m, with the average monthly data used on these devices increasing to 734MB.
The enterprise segment also delivered good numbers, with revenue up 9.4% to R3.3bn, contributing 25.3% (2017: 24.4%) of service revenue. Internet of things revenue was up 28.9% to R192m.
Capital expenditure in South Africa was R1.8bn, with 4G population coverage now at 75.9% and 3G coverage at 99.2%.
Joosub warned, however, that weaker economic conditions could upset the applecart. “We remain cognisant of the weaker economic conditions that prevail in South Africa as well as some of our larger markets and have put measures in place should these conditions deteriorate materially in these markets,” he said. — (c) 2017 Bloomberg LP
