Africa: Sector Boosts Vodacom's Turnover 6 Percent

Mergers, Acquisitions and Financial Results

Vodacom Group shrugged off steep revenue falls in its international division to post a 6% year-on-year rise in turnover for the quarter to December, as growth in its core South African operation "remained robust".

Revenue from the group's South African data services saw the biggest expansion, growing by 35.2% to R1,16bn. This was due to "increased penetration of mobile PC connectivity and mobile internet usage, with broadband customers increasing 48.8%".

The Regulation of Interception of Communications Act (Rica), introduced in July, had slowed growth in prepaid service revenues in SA. The act, which requires companies to register all new customers, had contributed to a 1.3-million drop in prepaid customers during the period. But Vodacom's mobile customer numbers grew 2.5% in the period to 27.1-million, thanks to strong growth in its contract subscriber base. Total South African revenue grew 7.5% from the same period in 2008 to reach R13.4bn.

The group's international performance was less impressive. Growth of more than a quarter in customer numbers could not prevent a decline in international mobile revenues of 33.4%. Vodacom attributed the drop largely to "promotions aimed at improving competitiveness in the key markets, coupled with continued economic pressures".

Growth in Mozambique and Lesotho remained strong, however, while service revenue declines in Tanzania and the Democratic Republic of Congo had stabilised.

CEO Pieter Uys said that while Rica had slowed down Vodacom's gross connections on a monthly basis, the company had "since seen big improvements". "We've so far registered a third of our prepaid base, and we're on track to have registered our full base by December in line with the regulations."

Uys said Vodacom would introduce cutting-edge HSPA+ broadband to high-traffic areas in time for this year's World Cup. "This is the first switched-on HSPA+ network in Africa, and we're very proud of that." The HSPA+ network -- which will offer download speeds three times faster than those available now in SA - could see Vodacom steal the thunder of rival Cell C, which plans to unveil a similar system this year.

Chief financial officer Rob Shuter said Vodacom had written down about 400m following its 700m acquisition of Gateway Communications in 2008, as "margins in the carrier business have permanently declined based on original expectations".

But Shuter said Gateway would generate "a decent return on its impaired value".

Business Day