Vodacom Group has reported marginal gains in its trading update for the third quarter of the 2024 financial year, with group revenue growing 1.6% to R39.5 billion, impacted by a stronger rand.
According to its financial results, released this morning, group service revenue growth accelerated to 11.6% on a normalised basis, above the medium-term target.
South African service revenue growth improved to 3.2%, supported by prepaid, while Tanzania and Democratic Republic of the Congo (DRC) were significant contributors to the normalised 7% growth in its international business.
According to the operator, the improved Vodacom South Africa performance was underpinned by several factors, including successful seasonal campaigns, an improved consumer environment in the prepaid segment and a 40.6% increase in data traffic.
Service revenue from ‘beyond mobile’ was another highlight, increasing by 11.3% and contributing R2.8 billion to SA’s total of R16.2 billion. Having invested R3.2 billion in the quarter, the telco says it expects to invest between R11 billion and R11.2 billion of capital expenditure in the current financial year, to further enhance customer experience.
Shameel Joosub, Vodacom Group CEO, comments: “Key trends from Vodacom Group’s third quarter results support the confidence we communicated in November last year that the organisation is poised for a stronger second-half performance.
“While currency headwinds continue to impact various markets where we operate, the focused execution of our strategy has resulted in a resilient operational response, to the extent that we remain well on track to deliver on our medium-term financial targets.
“Additionally, the recent currency market stability, particularly in Egypt, bodes well for the group’s performance in the year ahead. The quarter was positively impacted by accelerated growth in SA’s prepaid market, in addition to another stellar performance in Egypt and Tanzania, while network operators in Mozambique, including Vodacom, have been hampered by post-election tensions since October 2024.
“On a normalised basis, which removes the impact of currency fluctuations, group service revenue accelerated to 11.6%, which is comfortably ahead of our stated medium-term target.”
The operator says it is well on track to reach its medium-term target of a 25% to 30% contribution to group service revenue from what it calls ‘beyond mobile services’.
Previously billed as ‘new services’, beyond mobile encompasses digital and financial services, fixed and internet of things, and now makes up 21.4% of the group total, with the unit having delivered R6.6 billion in service revenue in the quarter.
According to Joosub, the financial services business – a strategic priority for the group and the largest contributor to beyond mobile – has seen the value of mobile money transactions facilitated by its platforms increase 19.1% in US dollars. The business now processes an average of $1.2 billion a day.
“This highlights the scale of the financial services business and solidifies our position as Africa’s largest mobile money platform by transaction value processed. Excluding Safaricom, the group generated R3.6 billion in service revenue in the quarter, up 5.7%, or 17.2% on a normalised basis. Across our geographic segments, Egypt remains a star performer, having grown service revenue at 44.3% in local currency, well above the rate of inflation.”
The group highlighted several milestones during the reporting period, including partnering with Orange in the DRC to accelerate rural coverage, launching M-Wekeza in Tanzania to make investments more accessible, and introducing a cloud-based handset to reduce the cost of smartphone access in SA.
As part of its digital and financial inclusion drive across its footprint, including Safaricom, Vodacom serves over 210 million customers, with an aim to connect the next 100 million Africans to the digital economy.
Ethiopia, the continent’s second most populous country, is expected to play a significant role in this and is already making progress, with the customer base increasing 63.6% to 7.1 million, says the operator.
From a mergers and acquisitions perspective, Vodacom has appealed the decision handed down by the Competition Tribunal in October regarding the proposed acquisition of a joint control stake in South African fibre operator Maziv.
“We remain firmly of the view that this transaction will accelerate fibre reach in South Africa, fostering economic development and helping bridge South Africa’s digital divide,” says the operator.
“Looking ahead, the continued execution of our strategy has the potential to create immense economic value in the markets where we operate, which in turn will help address inequality.
“In particular, we will continue to drive access to smartphones, financial services, healthcare and education to every person across our markets.”
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