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Despite a 9.1% year-on-year rise in the number of active customers on its network, telecommunications giant Vodacom on Wednesday posted a 1.1% drop in group revenue and a 2.7% fall in service revenue owing to the 50% cut in mobile termination rates (MTRs), increased competition and rising pressure on consumer spending.
In the three months to December 31, Vodacom’s year-on-year group revenue decreased 1.1% to R19.9-billion, while service revenue was down 2.7% to R15.8-billion.
“It has been a challenging quarter. There was a significant impact from the 50% decline in MTRs in South Africa, [as well as] increased competition, and we are seeing increased pressure on consumer spending,” Vodacom Group CEO Shameel Joosub said in a quarterly update to shareholders.
Excluding the impact of the MTRs, group revenue increased by 1.5% and service revenue by 0.6% year-on-year.
Revenue generated from Vodacom’s South African operations declined 3.1% to R15.9-billion, with a 5.8% decrease in service revenue to R1.8-billion, while the international operations posted a 6.6% increase in revenue to R4.09-billion, and a 7.6% increase in service revenue to R3.97-billion during the quarter under review.
Compared with the prior corresponding quarter last year, the group added 5.1-million customers, bringing its total customer base to 61.1-million.
The South African operations registered a 1.3% year-on-year rise in active customers to 31.3-million, while the company’s international customer base expanded by 18.6% year-on-year to 29.7-million.
The group’s active data customers jumped by 16.4% to 26.5-million.
“Data was, once again, a key highlight, with data traffic growing 62.2% in South Africa and [delivering] an almost threefold increase in the international operations. Data now makes up 27.4% of service revenue,” Joosub added.
In line with the rapid data growth – and to increase its coverage footprint – Vodacom accelerated its capital expenditure programme. During the December quarter, 15% of group revenue was invested in speeding up the deployment of long-term evolution (LTE) and to expand third-generation (3G) coverage.
In South Africa, Vodacom more than doubled its LTE-enabled sites to 2 194 and increased the number of 3G sites to 8 407, covering 34% and 94% of the nation’s population respectively.
Internationally, Vodacom hiked the number of 3G sites by 52.7% and increased the number of second-generation sites by 27.2%.
“Despite difficult trading conditions, we are continuing to invest in our networks and business, because we believe it supports our network quality and growth aspirations, which will deliver positive returns for our shareholders,” Joosub concluded.