Vodacom, South Africa’s biggest mobile phone operator, provided hope in a cellular sector being hard hit by a scandal rocking MTN – Africa’s largest mobile phone operator. Vodacom on Monday published a stellar sets of financial figures indicating that the company is benefiting from its diversification strategy. By Gugu Lourie
Vodacom, which is majority owned by British giant Vodafone, said active customers jumped 6.8% to 65.1 million in the six months to end-September 30.
The company’s EBITDA (earnings before interest tax depreciation and amortisation) rose 13% to R14.7 billion and total revenue was up 6.4% to R40 billion.
Furthermore, Vodacom customers continued to spend more data across its operations in South Africa, Tanzania, Mozambique and Lesotho, resulting in group data revenue rising 33.5%. The company, which is in a process to buy Neotel, said hheadline earnings per share was up 6% to 440 cents per share. Headline EPS is South Africa’s main profit gauge.
“It has been a strong start to the year with sustained growth underpinned by network superiority, customer value management excellence and distribution leadership. We lifted Group capital expenditure 5.8% to R6.2 billion, expanding 3G coverage in all our markets. In South Africa, LTE/4G coverage increased from 32.2% to 46.8%,” said Shameel Joosub, Vodacom Group CEO.
“We have already seen the customer experience improve significantly, creating a 17 point lead in Net Promoter Score (‘NPS’) between us and our nearest competitor.”
Vodacom also rewarded shareholders with an interim dividend. The company declared a 395 cents interim dividend, reflecting a 5.3% rise compared to the same period in the previous year.
23 million data users
Vodacom delivered this goo sets of interim figures despite competition in the mobile phone space heating up as more new players enter the saturated market, since they see potential for more growth especially in the provision of mobile data.
Joosub said on Monday that he was encouraged by the increasing demand for data services as the company make devices and data bundles more affordable.
“We now have 28.3 million data users across the Group, driving a 33.5% increase in data revenue. Our LTE/4G customers in South Africa, now approaching two million, consume almost three times more data as compared with 3G customers,” said Joosub.
The company is also banking on increasing its data users through Neotel, once the deal to buy the company owned by India’s Tata Communications is finalised. Joosub explains: “Neotel, which is pending Competition Tribunal approval, will further enhance our ability to contribute meaningfully to the development of fixed-line services, broadband and fibre to homes and businesses in South Africa.”
“There are good opportunities ahead of us as only 66% of our monthly active customers in South Africa are using data and our share in fixed services is only a fraction of what it is in mobile. The performance of Vodacom Business in South Africa was particularly strong with underlying service revenue growth of 12.8%, underpinned by new customer wins as well as our mobile customers choosing to purchase fixed services from us as they trust our brand and value network reliability.”