Strong Data-Enabled Device Sales Boost Vodacom Revenue 

Vodacom Container Base Station Alexandre Township Sandton

Vodacom, a South African-based mobile phone operator, reported a 3.9% revenue growth to R20.7 billion in the first quarter to end-June 2017, buoyed by sales of smart data-enabled devices on its network in its home market.

Led by Vodacom South Africa, the home market of the Vodafone-owned company, to a 7.8% rise in revenue brought by a 17% jump in equipment revenue, showing the successful delivery of the telco’s strategy of driving the uptake of data-enabled devices.

The company, which is in a process of buying a 35% stake in Kenya’s Safaricom for R35 billion, said the sale of smartphones in South Africa rose by 29%, comprising 57.4% of total device sales.

Branded Smartphones Driving Sales

Vodacom recently entered the premium smartphone market by extending its range of branded devices.

Vodacom smart phone
Vodacom smart phone

After introducing low-cost own-branded smartphones, Vodacom – South Africa’s biggest mobile phone operator, started last year to introduce own-branded premium smartphones.

Last July, the telco which is in a process to transform into a digital company, introduced Vodacom Smart platinum 7 and Vodacom Smart Ultra 7.

Benefitting from this strategy, Vodacom in the first quarter of 2017 saw its active smart devices on the network swell by 18.4% to 16.6 million, with the average monthly data used on these devices increasing to 734MB per device.

“The solid performance the Group delivered in the full year 2017, continued into the first quarter of the current financial year. In South Africa, revenue growth accelerated to 7.8%, aided by increased smartphone device sales. We sustained South African service revenue growth of 5.6%, underpinned by the consistent and significant investment in our network infrastructure and IT systems, aimed at further enhancing the customer experience,” said Shameel Joosub, Vodacom Group CEO.

“Our pricing transformation strategy continues to deliver greater value for our 39 million South African customers. The 9.1% and 18.9% decline in effective voice and data prices respectively over the quarter reflects our commitment to driving down the cost to communicate in South Africa. As I have stated previously, there is more work to be done on this front, and we will be introducing additional measures this year to give greater control to customers by improving our out-of-bundle pricing”

Data is the new voice

Vodacom data sales turned in an impressive quarter, too, with South Africa – Vodacom’s biggest market – adding 463 000 new 4G customers.

Vodacom has partnered with the different platforms and websites that our customers know and love to enable them to access more of what the internet has to offer.
Vodacom has partnered with the different platforms and websites that our customers know and love to enable them to access more of what the internet has to offer. (Photo Credit: Vodacom website)

The data revenue for the South African operation grew 18.1% to R5.5 billion, contributing 42.2% (2017: 37.8%) of service revenue.

It added 463 thousand 4G customers in the quarter, reaching a total of 5.5 million customers as devices became more affordable as a result of improvements in exchange rates.

Vodacom Group data revenue increased 15.1%, normalised 18.3%, to R6.7 billion, representing 39.0% of service revenue.

Data traffic is growing fast in Mozambique, Tanzania and Lesotho

And while Vodacom’s international operations sales were down 8.2% and service revenue declined 8%, the global division – such as Mozambique, Tanzania, and Lesotho – posted a 2.2%, with normalised growth of 18.9%, supported by an increase of 810 000 active data customers, up to 13.8 million.

Vodacom International’s data traffic swelled 87%, showing strong demand for mobile data services as we drive the adoption of data bundles through Vodacom’s ‘Just 4 You’ personalised offerings.

“We continue to ensure that our customers have access to better low-cost smart devices, especially Vodacom-branded devices, as we increase data network speeds and improve data coverage,” said Joosub.

The company in the first quarter added 2.5 million customers, 2.3 million in South Africa and 280 000 in International operations, to reach almost 70 million customers.

Vodacom sitting pretty with 13.3 million mobile money customers

Vodacom, which is seeking to diversify its revenues away from relying upon its home market, also reported a 7.4% rise in revenues in mobile money service M-Pesa.

FINTECH Investment Financial Internet Technology man hand on table Business, coffee, Split tone
FINTECH Investment Financial Internet Technology man hand on table Business, coffee, Split tone (Photo Credit: www.shutterstock.com)

“The new M-Pesa platform with enhanced technology has significantly improved stability, resulting in increased trust with customers,” said Joosub.

Vodacom added 350 000 M-Pesa customers in the quarter, reaching 13.3 million.

“We continue to enhance our service and product eco-systems and

develop innovative products to improve customer experience. In Tanzania, 1.0 million customers are using our successful M-Pawa savings and loans product, developed in partnership with the Commercial Bank of Africa. There has also been a steady uptake of our International Money Transfer services,” added Joosub.

Shameel Joosub, Vodacom CEO
Shameel Joosub, Vodacom CEO

During the quarter, on average, R22 billion was processed monthly through the M-Pesa system.

The most significant negative, impacting international operations, was Vodacom Congo economic weakness and decoupling of the Congolese Franc from the US dollar that continues to impact consumer spending.

Despite this negative, and other weaker economic conditions that prevail in South Africa as well as some of our larger markets, Vodacom has put measures in place to deal with these challenges should they deteriorate.

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