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Monday, Feb 17th

A challenging last quarter for Vodacom Group

A challenging last quarter for Vodacom Group.

Vodacom Group has posted results for the period ended 31 December 2014 and CEO Shameel Joosub confirmed a 1.1% dip in Group revenue , based on a year-on-year quarterly comparison.

This was attributed to a 50% decline in mobile termination rates in South Africa, increased competition and increased pressure on consumer spending.

"Revenue in South Africa declined 3.1%; excluding the impact from MTRs revenue would have remained flat. The international operations posted a 6.6% increase in revenue," said Joosub.

International service revenue, which incorporates the Group's operations in Africa, grew by 7.6% to and now contributes 25.1% of Group service revenue.

The Group's international customer base increased 18.6% to 29.7 million and outgoing voice traffic grew 49.8%.

"The slower growth in service revenue reflects the on-going price competition and regulatory pressures in our key markets. Tanzania experienced severe pricing pressures since Q3 last year, but during the course of this year pricing repair has led to more stable pricing. Growth in the DRC reduced due to slower than anticipated network rollout and competitive pressures. Mozambique and Lesotho continue to grow strongly," Joosub added.

M-pesa revenue grew 28.2% contributing 9.4% of service revenue. M-pesa customers increased 29.7% to 7.6 million.

Data growth has been a driver for the company, according to statistics and makes up 27.4% of service revenue. The number of active customers now stands at 26.5million and data traffic growth is 62.2% in South Africa.

Internationally, data revenue grew 24.8% to R804 million. In a media statement the Company explained that excluding m-pesa, mobile data revenue grew 22.1% supported by a 30.7% growth in active data customers to 9.7 million and an almost threefold increase in data traffic.

"To support this boom in data demand as well as increase our coverage footprint, we continued with our accelerated capital expenditure programme. In South Africa, Vodacom's LTE service now covers 34% of the population through 2 194 sites, while 3G population coverage is 94% through 8 407 sites. In our international operations, we've increased the number of 3G sites by 52.7% in comparison to last year, and the number of 2G sites is up 27.2%," Joosub continued.

He reiterated that the Group is continuing to invest in networks and business, with specific reference to the Neotel acquisition process.

"South Africa's fixed broadband penetration level is 1/10th of that seen in developed economies, which impacts our competitiveness as a nation. If the transaction goes through, our ambition is to add at least one million fibre connections to homes and businesses to address this shortfall,"

In November 2014 Vodacom experienced a 5% drop in first-half earnings, attributed to the impact the impact of a local reduction in interconnection rates according to a Reuters Africa report.

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