JSE-listed telecommunications giant Vodacom’s group service revenue and group revenue grew 7.6% and 5.6% respectively during the quarter ended June 30, on the back of strong growth in South Africa.

While the group benefited from customer demand increasing during the lockdown period in South Africa, the International operations were negatively impacted by lower economic activity as a result of the Covid-19 pandemic.

“In South Africa, the combination of increased demand for data following significant tariff reductions of up to 40% effected on April 1 and more people working and being educated remotely, resulted in a significant increase in mobile and fixed traffic in the first quarter,” said Vodacom Group CEO Shameel Joosub.

During the June quarter, the South African operation’s service revenue increased 6.4%, supported by strong demand for data, connectivity and financial services.

While the International service revenue grew by 10.7% owing to the rand devaluation, the underlying performance was subdued with a 5.3% decline, owing to lower economic trading activity, free M-Pesa services and customer registration requirements.

“While I am particularly pleased with the performance of our South African business, we remain cautious about the impact of Covid-19 on our operations and uncertainty about the pace of economic recovery in each of the countries where we operate as disposable income will increasingly come under pressure as a result of rising unemployment and reduced economic activity,” he added.

Vodacom’s network infrastructure spend increased to R2.7-billion in the first quarter.

It had also used the temporary assignment of spectrum by the Independent Communications Authority of South Africa (Icasa) to rapidly increase network capacity and fast-track the launch of a mobile fifth-generation (5G) network and fixed 5G commercial service.

“Looking ahead, the long anticipated award of high-demand spectrum in South Africa remains instrumental in the data pricing dynamic in our largest market. Lengthy delays in completing the digital migration and allocating fourth-generation spectrum continue to curb the pace at which data prices could have fallen,” Joosub commented.

Icasa is expected to complete its spectrum allocation process by December 2020.