Subscriber Surge Lifts Vodacom's Revenue in South Africa

Mergers, Acquisitions and Financial Results

Mobile operator Vodacom has pumped up its revenue 13.7% for the nine months to December 31, generating R40.5bn for the period. The growth was spurred by an even more robust 14.3% surge in subscribers to see it serve 37.8-million users through operations in five countries.

For the first time it can now claim that 30% of its customers are beyond SA's borders, with 11.3-million users in Tanzania, the Democratic Republic of Congo, Lesotho and Mozambique. Vodacom has not disclosed how much of its revenue or profits come from those countries, but it will be proportionally far less. One major difference is the average revenue per user , which measures how much a customer typically spends.

In South Africa, the average user spends R135 a month, compared to just R55 in Tanzania and R42 in Mozambique. Vodacom has managed to drive up that average monthly spending in each country, despite a general trend for it to fall as cellular networks expand and more low-income customers sign up.

One figure of concern will be its relatively high churn of 41.3%, which records the number of customers who leave its network and defect to rivals. That has declined a fraction from 42.3% in the previous quarter.

In South Africa its customer base rose another 1.3-million to a total of 26.5-million, up 4.8% from the end of September to give Vodacom 52% of the market share.

That growth still outstrips the number of new customers joining its foreign networks, where the total rose by just under 1-million

CEO Pieter Uys said one of the pillars of Vodacom's growth strategy was expanding its African footprint beyond SA. "I'm pleased to say that this quarter we reached an important milestone with 30% of our total customer base now coming from our operations in Tanzania, the Congo, Lesotho and Mozambique," he said.

It has been a long time since Vodacom entered any new territories in its own right, in stark contrast with the relentless foreign expansion of its larger rival, MTN. Uys hopes Vodacom will finally be able to expand later this year, once Telkom sheds its 50% stake in the business. Simultaneously, the UK operator Vodafone will increase its stake to 65% and begin to use Vodacom as its vehicle for expansion in sub-Saharan Africa.

Business Day