Vodacom‘s revenue growth fuelled by new subscribers and data services

Mergers, Acquisitions and Financial Results

Vodacom signed up new 1,2m customers in SA in the first quarter of its 2012 financial year, taking its total subscriber base in the country as measured by active Sim cards to 27,7m. The group grew its total customer base, including its operations elsewhere in Africa, by 20,4% year on year to 45,4m.

Group service revenue increased 5,9% due mainly to strong growth in the subscriber base and increased demand for data services, helping offset reduced revenues from reduced interconnection fees and lower effective prices. The number of active data customers, including BlackBerry users, leapt 43,3% to 10,9m.

However, the company has cautioned that competition “remains intense in all our markets and we expect further pressure on pricing in the future”.

In SA, Vodacom disconnected 953 000 customers who failed to register their Sim cards by the end of June in line with new legislation. By 11 July, 205 000 of those subscribers had gone through the process. Vodacom says locked Sim cards will be removed from its customer base in line with its disconnection rule.

Total average revenue per user (Arpu) in SA fell by 4,7% to R142, largely due to a 24,8% reduction in the effective price per minute. This was offset by a 16,3% increase in average minutes of use stimulated by off-peak promotional offers.

Contract Arpu declined 10,2% to R369 due to strong growth of lower-end contract packages and reduced out-of-bundle spend by subscribers. Prepaid Arpu was flat at R79.

Data remains the growth story for Vodacom. In SA, revenue from data soared by 35,4% to almost R1,9bn on total revenues of R13,5bn. The number of mobile Internet bundle users climbed by 86% year on year to 3m, adding 425 000 in the quarter. Active smartphones on the network increased to 3,7m.

International operations grew revenue by 10,2% to R2,1bn on the back of strong subscriber growth. Though still only 4,4% of service revenue, international data sales increased by 109,3% mainly due to strong growth in M-Pesa customers to 1,6m in Tanzania. M-Pesa is a mobile payments system owned by Vodacom parent Vodafone.

Vodacom Group CEO Pieter Uys says the results are a good performance by both the SA and the international operations. But, he says: “Not everything went out way this quarter. We unfortunately experienced some outages in our SA network. While the financial impact was minimal, the negative impact on the customer experience was not acceptable.”

Uys says Vodacom has installed more fibre capacity and upgraded “certain software” to avoid similar disruptions in future.