SA data pricing transformation key to future growth – Vodacom

31st May 2019

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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A successful data pricing transformation and reducing the cost to communicate will be key for the future growth of telecommunications giant Vodacom.

The initial financial impacts of further reducing the cost to communicate in South Africa, combined with costs associated with concluding its new R16.4-billion black economic empowerment ownership deal, resulted in subdued operating profit during the year ended March 31.

However, the availability of more affordable data bundles with shorter validity periods is driving increased demand and growth in service revenue.

Data bundle purchases have increased 13.1% to 866-million and, despite the low economic growth environment in South Africa and the group’s deliberate actions to reduce prices for all segments, service revenue in South Africa rose by 2.1% during the year under review.

“We are particularly encouraged by the noticeable rise in new contract customers in the fourth quarter in both the consumer and enterprise segments,” says Vodacom Group CEO Shameel Joosub.

Vodacom has reported a sharp reduction in out-of-bundle tariffs, contributing to the 37% decline in effective data prices since the end of March last year.

Over a three-year period, data prices have fallen by 57%, while the effective price per megabyte has reduced 23.3% and out-of-bundle rates decreased by a further 50%, following the implementation of the Independent Communications Authority of South Africa’s End-User and Subscriber Service Charter regulations in March.

“Data pricing transformation continues, to the benefit of our customers, with a number of changes that increase affordability and improve spend control. “This has helped our more than 43-million customers get connected more affordably and in a way that is most suitable to their needs,” he says.

Joosub assures, however, that, while the pricing transformation efforts will continue to create short-term pressure on data revenue growth in South Africa, the underlying demand remains strong.

“Overall data usage drivers were encouraging,” he continues.

Data revenue grew 3.9% to R24.3-billion, contributing 43.5% to service revenue, and data traffic was up 35% during the 12 months to March.

The number of active smart devices on the network increased 7.6% to 19.9-million, of which 10-million are fourth-generation devices, with the average use on the smart devices improving 23.2% to 966 MB.

Overall, Vodacom posted strong operational performance, with service revenue growing 5%, led by strong performance in the group’s International portfolio.

Further, customer revenue increased 1.3% to R47.4-billion, supported by growth in the customer base of 3.7% to 43.2-million, with positive net additions of 1.5-million.

“We connected an additional six-million customers to the Vodacom and Safaricom networks, a 5.8% increase to 110-million in total,” he says.

The company also reported continued significant capital investment of R13-billion to improve the quality and coverage of all its networks and strengthen its information technology capabilities.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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