Vodacom SA revenue under pressure

The cellular group now has more than 50m customers across the territories in which it operates. By Duncan McLeod.

Vodacom now has more than 50m customers across all of the African territories in which it operates. The cellular operator’s customer base increased by 29,2% in the first quarter of its 2013 financial year, ended 30 June 2012. But the latest numbers show growing pressure on revenue in SA.

Growth in subscribers was strong both in SA and its other operating markets. In SA, the number of active customers on its network increased by 29,1% to 31m. The number of active smartphones increased by 40,9%, to 4,9m. However, SA revenues declined on a quarterly basis.

In its international operations, customers grew by 20,4% to 19m.

In the first quarter, Vodacom SA’s service revenue grew by only 1,8%, to R11,8bn, as lower termination rates — the fees mobile operators charge one another to carry calls between their networks — acted as a dampener. With termination rates excluded, service revenue would have grown by 4,6%, a 0,6 percentage point deterioration on the previous financial quarter.

This was as a result of a slowdown in data revenue growth. Voice revenue remained stable, with growth of 1,5%. Despite 6,9% growth in contract customers, contract voice traffic declined because of reduced out-of-bundle use by customers and the reduction in termination rates.

Quarter-on-quarter, Vodacom SA’s total revenue fell by 2,6%, although it still grew by 3,5% year on year. Service revenue declined by 3,3% on a quarterly basis, with average revenue per user (Arpu) dipping to R130/month, down from R144/month in the financial fourth quarter. Over 12 months, Arpu in SA is down by 20,7%.

Active data customers climbed by 28,6% year-on-year to reach 12,4m in SA. Data bundle users rose by 48,5% to 4,5m. Competition, however, forced down the cost-per-megabyte for data by an average of 26,1%, resulting in an increase in data revenue of just 10,1%.

Smartphone users doubled their consumption of data over the past year, with the average now at 120MB/month.

Vodacom’s international operations fared much better than SA, with service revenue up by 46,7%, or 23,4% when normalised for changes in exchange rates. Group wide, service revenue was up by 8,7%, or by 5,7% when currency fluctuations are accounted for.

The group says positive macroeconomic environments and successful commercial execution helped lift its international businesses. Data revenue is soaring, up by 150% over a year ago, driven by increase mobile Internet take-up and strong growth in M-Pesa, the mobile payments platform, in Tanzania, Vodacom’s second biggest market, where acting M-Pesa customers climbed by 120,7% to 3,6m. M-Pesa contributes 70,8% of Vodacom Tanzania’s total data revenue and 12,3% of service revenue.

The Democratic Republic of Congo’s subscriber base grew strongly quarter on quarter, up by 10,6% to 6,2m. Tanzania and Mozambique fell by 6,2% and 3% respectively, to 9,1m and 2,7m, but still managed strong annual growth of 18,4% and 31,5%.  — (c) 2012 NewsCentral Media