While its South Africa operation experienced a 1.2% drop in service revenue to R12.6-billion, Vodacom recorded international service revenue growth of 19.6% to R5.1-billion supported by M-Pesa and data, according to the company's trading update for the quarter ended 30 June 2019.
In a statement the company explained that its service revenue in South Africa was negatively impacted by the further substantial reduction in out-of-bundle tariffs announced in March as part of its sustained pricing transformation strategy to bring down the prices of our data services.
"The impact from three months of ICASA's data usage regulations, the transition between national roaming partners and the tough retail operating environment, were other contributors to the 1.2% decline in service revenue in South Africa. Acceleration in the growth in data traffic of 52%, and the 45% jump in revenue from our Financial Services business were among the key highlights in South Africa from the quarter," reads an excerpt of the statement.
Among the results highlighted by the company: solid group revenue growth of 4.2% (normalised 1.9%) to R21.5-billion and service revenue up 3.9% (normalised 1.2%) to R17.4-billion, 608 000 customers added in South Africa in the quarter, with 522 000 added in prepaid and contract customer base grew by 8.9%.
The company said it added 560 000 customers in its international operations, up 5.3%, with group data customers increased to 38.9 million adding 1.3 million in the quarter.
M-Pesa revenue increased 42.7% (normalised 28.4%) to R905-million, representing 17.7% of international service revenue.
Shameel Joosub, Vodacom Group CEO commented: "Growth from our International portfolio offset the anticipated slower performance in South Africa, which was impacted by new data usage regulations, significant data price cuts and a subdued economy weighing on consumer spend."
"Revenue and service revenue at a Group level grew by 4.2% and 3.9% respectively. Excluding Safaricom, we added 1.2 million customers in the three-month period, serving 79 million customers across the Group, having added 2.4 million customers in total to the Vodacom network over the past year."
Joosub added the company is encouraged by President Cyril Ramaphosa's commitment to award new spectrum, made in his address at the Fourth Industrial Revolution South Africa Digital Economy Summit.
"This is a vital part of reducing input costs and further bringing down data prices in South Africa, where lengthy delays in completing the digital migration and allocating 4G spectrum has curbed the pace at which data prices could have fallen. Clear policy direction for the country's telecommunications industry is also expected to restore investor confidence in South Africa and boost economic growth."
Vodacom expects to conclude the acquisition of the M-Pesa brand and platform "and together with the recent launch of VodaPay, to further enhance the performance of our Financial Services business. "
It is also encouraged by the growth potential from the IoT.nxt acquisition (pending Competition Commission approval) and AWS partnership agreement announced earlier this year.