Vodacom added 2.3 million more active customers in the last six months, with the bulk coming from South Africa. This as the group reports its interim results for the six months ended 30 September.
Active customers in SA grew by 1.5 million in the first half of the year, reaching 35.7 million. This as changes in customer registration processes slowed customer acquisitions in Vodacom's international operations.
In SA, active prepaid customers increased by 1.4 million to 30.6 million. The mobile operator also added 131 000 contract customers, reduced contract customer churn to 5.1% and increased contract average revenue per user (ARPU) by 5.4% to R408.
"In SA, data remains a key contributor to growth, driven by a high demand for data services. We are actively driving down the cost of data, encouraging more customers to use bundles in order to maximise the value they receive for their money," Vodacom CEO Shameel Joosub says.
Service revenue grew 5.6% to R25.5 billion, aided by strong customer net additions and increased data demand. Overall SA revenue grew 3.8% to R31.4 billion, impacted by a 5.2% decrease in equipment revenue as a result of lower sales volumes, as consumer spending remained under pressure and the pricing of devices was impacted by the weaker performance of the rand against foreign currency.
Group headline earnings per share (HEPS) were flat at 440c per share. These were negatively impacted by a tax adjustment in Tanzania and foreign currency impacts. Vodacom also declared an interim dividend of 395c per share. Group revenue was up 4.1% and group EBITDA (earnings before interest, taxes, depreciation and amortisation) rose 4% to R15.3 billion.
Vodacom invested R5.7 billion in its networks in the first half of the year, and over the last three years, across all its operations, the total investment was R37 billion.
"With prices coming down and data usage growing rapidly, networks require continuous significant capital investment to provide greater capacity and coverage," says Joosub.
Data is falling
Vodacom says customers experienced a 13% reduction in the price per megabyte of data in the period and data prices have declined 61% over the last four years.
"Prepaid voice bundle purchases increased 26.8% to 447 million bundles, reducing the pace of voice revenue declines for the past four quarters."
Vodacom says its personalised 'Just 4 You' offers also resulted in a 15.4% reduction in the prepaid effective price per minute during the six months and voice prices per minute declined by 52% over the past four years.
Interim data revenue grew 19.5% to almost R9.9 billion and comprises 38.8% of service revenue, up from 34.3% a year ago. This has been supported by active data customers increasing 4% to 18.2 million and increased data traffic, which grew 38.4%.
"This growth was a result of increased bundles sold, greater data coverage and customers migrating to 3G and 4G devices," Vodacom says.
Over nine million data customers are now purchasing data bundles, with 47% growth in data bundle sales to over 223 million bundles in the six-month period.
Active 4G customers on the network increased almost 89% to 3.6 million, with the average monthly data usage on smart devices increasing 14.4% to 629MB. This has resulted in an overall ARPU uplift of 23.7% as customers migrate from 3G to 4G and 17.9% as customers migrate from 2G to 3G.
In SA, the telco spent over R4 million on widening its 3G and 4G data coverage, improving voice quality and increasing data speeds. 3G coverage has increased to over 99% of the SA population and 4G coverage is up from 46.8% a year ago to 68.7%. Internet of things connections increased 27.7% to 2.6 million.
Joosub says Vodacom's enterprise segment continues to deliver strong revenue growth, up 8.9%, and now contributes 24% of service revenue.
"We have won significant contracts from corporate customers and in the public sector. A major highlight includes securing the national and provincial government departments' mobile voice and data communications contract for a period of four years," he says.
International operations
As SA reported strong customer growth, the international operations saw active customers decrease 11% to 27.9 million, as a result of disconnections during the second half of the prior year. New customer acquisitions were impacted by changes in customer registration processes. However, the monthly customer acquisition trend did improve, with net customer additions turning positive and recovering during the second quarter, resulting in net additions of 791 000 customers in the six-month period.
Besides SA, Vodacom also operates in Mozambique, Lesotho, Tanzania and the Democratic Republic of the Congo (DRC).
"Our network advantage has provided us with flexibility when navigating our international operations through these short-term pressures and we remain squarely focused on the long-term potential of our international businesses. Nonetheless, I would note the deterioration in the macro-economic conditions both in the DRC and Mozambique which we are monitoring closely," Joosub adds.
International service revenue increased 5.4% to R8.7 billion but was impacted by customer registration requirements and exchange rate volatility. Despite the tough operating environment, the international operations benefitted from increased voice revenue of 5%, as well as 15.5% growth in data revenue - which now comprises 24.7% of international service revenue.
M-Pesa revenue continues to grow strongly at 36.8%, fuelled by continued success in Tanzania and boosted by strong uptake in Mozambique, DRC and Lesotho. DRC has more than doubled the number of customers, and in Mozambique 38.4% of customers are now using the service. Joosub says there are now 10.9 million customers using M-Pesa in its international operations. Vodacom South Africa, however, pulled the plug on the mobile money offering locally in July.
Capex of R1.6 billion was invested in international operations and represents 17.9% of revenue.
"We continue to invest significantly in all our markets to strengthen network and service differentiation and to support data growth and wider voice coverage," the group says.
Vodacom says it is preparing to list on the Dar es Salaam Stock Exchange (DSE). This after the Parliament of Tanzania in June passed the Finance Act, 2016 which amends listing requirements under the Electronic and Postal Communication Act. The Act effectively required licensed telecommunications operators to list 25% of their authorised share capital on the DSE within six months from 1 July 2016. Vodacom says it has communicated its intention to list Vodacom Tanzania on the DSE and proposed changes to the listing requirements to the government and the Capital Markets and Securities Authority.
"We are also reviewing our current shareholding structure to ensure a successful listing."
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