Vodacom group in the green with 10.5% revenue increase - CNBC Africa

Vodacom group in the green with 10.5% revenue increase


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A house painted in Vodacom's colours and logo in Mozambique. PHOTO: Senorhorst Jahnsen/Flickr

Group revenue increased 10.5 per cent to 20.2 million rand from 7.9 per cent in the previous comparative period. Group data revenue also increased 40.7 per cent to 3.6 million rand, which now accounts for 22.2 per cent of service revenue.

“This quarter highlights once again that our strategy of sustained network investment is key to allow us to grow our overall business while still driving down the cost to communicate,” Vodacom Group CEO Shameel Joosub said in a statement.

“In South Africa as an example, we have continued with our pricing transformation to drive the adoption of price plans that offer more value to customers which has reduced the prepaid average price per minute by 25.3 per cent to 56 cents and the average effective price per megabyte of data by 16.2 per cent.”

Vodacom is a South Africa-based mobile communications company which is majority owned by international company Vodafone Group Plc. Vodacom is present in Tanzania, Mozambique, Nigeria and Lesotho, among others.

Group active customers grew 12.3 per cent to 56.0 million, and active data customers grew 27.9 per cent to 23.7 million.

South Africa service revenue grew 0.6 per cent (3.4 per cent excluding MTRs), driven by data revenue growth of 31.2 per cent.

International service revenue was also up 32.6 per cent from 15.1 per cent in the previous comparative year. This was supported by strong customer growth as we continued to expand network, improve distribution and offer attractive bundles.

 “Despite this significant pricing movement, service revenue in South Africa grew 0.6 per cent with lower prices offset by 23.3 per cent higher voice traffic, and a 31.2 per cent growth in data revenue,” Joosub explained.

“The number of smartphones on our network in South Africa is now 7.2 million up 600, 000 from the previous quarter and the average amount of data used by each smartphone increased 83.5 per cent to 254 megabytes per month.”

Total revenue for [DATA VOD:Vodacom's] South Africa operations grew 6.6 per cent to 16.5 million rand, which was boosted by a 26.9 per cent growth in equipment revenue. This has made an overall 21.6 per cent contribution of revenue from 18.1 per cent a year ago.

In January this year, South Africa’s Independent Communication Authority of South Africa (ICASA) announced plans to cut mobile termination rates from 1 March 2014. South Africa mobile network rates are among the highest in the world, and cuts are expected to be a welcomed change.

Vodacom however plans to challenge the legal validity of the cutting process.

“Vodacom is supportive of an MTR 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. Cost based rates are important to sustain our on-going investment strategy. We have concerns about the process used to determine these published rates,” the group explained.