Vodacom’s strong international operations offset South Africa’s lagging performance

24th January 2019

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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JSE-listed Vodacom’s international operations have boosted the group’s financial performance in the quarter ended December 31, 2018, after a dip in the South African operations.

The group’s revenue was up 1.5% to R23-billion and service revenue increased by 2.4% to R18.9-billion, while group data revenue edged up 2.2% to R6.8-billion during the quarter under review.

“A strong performance in our international operations helped to offset the slowdown in South Africa during the quarter,” Vodacom group CEO Shameel Joosub said on Thursday.

The South African operations recorded a 0.9% decline in service revenue to R13.9-billion, owing to pricing transformation, customers optimising promotional data bundle allocations and a subdued consumer spending environment.

“We implemented a number of generous promotions in the quarter, including our SummerGigs campaign, in addition to the introduction of lower-priced bundled offers during the course of 2018,” he explained.

The strategy failed to yield the expected elasticity given a tougher-than-anticipated consumer spending environment; however, Joosub believed the efforts to keep customers in-bundle reduced the company’s future exposure to out-of-bundle revenues.

Internationally, Vodacom’s operations performed well, with improved trends in Tanzania and strong growth in Mozambique and the Democratic Republic of Congo.

The international operation’s service revenue increased by 13.2% to R5.2-billion, driven by strong commercial execution, the continued success of M-Pesa and a significant increase in customers during the quarter under review.

The December quarter saw group customers increasing by 7.1% to 79-million – up 5.4% in South Africa to 43.8-million and 9.3% to over 35-million in the international operations.

“Excluding Safaricom, we added 198 000 customers in the three-month period and now serve 79-million across the group, having added a healthy 5.2-million customers to the Vodacom network in the past year,” Joosub noted.

International data revenue grew by 25.4%, driven by a 15.7% increase in data customers to 18.5-million, representing 52.7% of the customer base.

M-Pesa generated revenue of R851-million, with growth accelerating to 30.3% and contributing 16.4% of service revenue.

The international portfolio, excluding Safaricom, now contributes 27.5% to overall group service revenue.

Edited by Creamer Media Reporter

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