Vodacom Group has again demonstrated its resilience in the face of increasing pressure on consumers, increasing revenue by 5.2% to R26.1 billion in the quarter ended 30 June 2022.
Shameel Joosub, Vodacom Group CEO, said revenue growth was underpinned by a resilient financial performance in most of our markets and South Africa in particular.
“Our service revenue growth was supported by a 10.4% increase from our International portfolio and 9.3% growth from our financial services business. The growth rate in financial services was dampened by mobile money levies in Tanzania, and if adjusted for this impact would have been an estimated 19.7%.”
Vodacom also reported that service revenue in South Africa grew 3% on the back of sustained investment into technology and our network, which continues to enhance the customer experience.
“This experience was evidenced through the 5.1% growth in our customer contract base to 6.5 million and recognition by Tutela, an independent data research company, as the country’s leader in network quality,” said Joosub.
Vodacom added that mobile contract customer revenue increased 5.8% to R5.5 billion, supported by both our consumer and Vodacom Business segments.
In the quarter, Vodacom said it increased contract pricing by between 3% – 5% reflecting inflationary cost pressures.
Mobile contract ARPU of R294 was up 0.7% with the price increases partially offset by repricing pressure associated with the government contract for mobile services (RT15) within Vodacom Business.
“We added 52 000 contract customers, with the base at 6.5 million, up 5.1%. Our prepaid segment delivered a resilient performance given the challenging macro backdrop of higher food and fuel inflation and delays to social grant payments,” said Joosub.
Prepaid revenue increased 1.7% to R6.2 billion as the company leveraged advanced CVM capabilities to further drive segmentation and localisation to help offset pressure on consumer spend.
“In addition, our initiative to increase prepaid active days supported ARPU of R55, up 1.9% quarter-on-quarter.”
Vodacom said data traffic growth accelerated to 30.2% in the quarter.
Data customers of 23 million were up 8.6%, representing 63.5% penetration of our one-month customer base.
Smart devices on Vodacom network were up by 11.5% to 26.4 million.
The number of 4G devices on its network increased 11.3% to 18.2 million, while the average usage per smart device increased 25.2% to 2.7GB per month. Prepaid data revenue of R2.6 billion was up 8.3%.
South Africa TowerCo formation
“The optimisation of assets through sharing is an integral part of Vodacom Group’s strategy called the System of Advantage,” said Joosub
He added that the separation of our South African tower portfolio into a standalone tower company (TowerCo) business is expected to support this strategic priority by enhancing asset returns, lower costs to communicate and further our ambitions to connect for a better future.
“In this regard, we are making good progress with the carve-out of the portfolio and are in the process of establishing a separate legal entity that will be 100% owned by Vodacom Group.”
Regulatory approval process for CIVH deal underway
On 10 November 2021, Vodacom announced a major step forward in scaling our fibre offering in South Africa.
Through the acquisition of a 30% stake in Community Investment Ventures Holdings (Proprietary) Limited (CIVH) fibre assets, with an option to increase to a 40% stake, Vodacom will gain exposure to highly attractive and fast-growing businesses and South Africa’s largest open access fibre players including Vumatel and Dark Fibre Africa.
Vodacom’s capital injection and strategic support will further accelerate the growth trajectory of these fibre assets. Also, the contribution of Vodacom SA’s wholesale FTTH assets will add further scale and enhance CIVH’s fibre footprint.
“The deal is closely aligned with the build-out of our System of Advantage, which is aimed at delivering diversified, differentiated connectivity offerings to our customers. Further, we expect that this investment will accelerate fibre reach in South Africa, fostering economic development and helping bridge South Africa’s digital divide,” said Joosub.
“The regulatory approval process for the CIVH transaction is proceeding and ICASA commenced with public hearings in July 2022. We expect the transaction to close in the current financial year.”
