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Vodacom still on the hunt

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 10 Nov 2014
Vodacom is still looking for more African opportunities, says CEO Shameel Joosub.
Vodacom is still looking for more African opportunities, says CEO Shameel Joosub.

Vodacom is still keen to expand further into Africa and wants to act as a consolidator as smaller, independent, operators come up for sale.

Its international operations, which last March accounted for 19% of revenue, now contribute 24% of its top line, although they account for almost half of all subscribers. CEO Shameel Joosub says he wants this contribution to grow to 30%, noting there is room for the company to encourage increased average revenue per user. "The revenue has to catch up with the customers."

Joosub says the company is also still keen to expand its base beyond the Democratic Republic of Congo, Tanzania, Lesotho and Mozambique in Africa, but "there is not much to look at".

Africa is currently dominated by a handful of large players - such as MTN, Orange and Bharti Airtel - which Joosub says have entrenched positions. However, he notes, smaller, independent, entities are coming up for sale.

As a result, there is an opportunity to play a consolidator role because the smaller players will need capital behind them to keep up with massive data demand, says Joosub. The GSMA's recent report - the Mobile Economy, sub-Saharan Africa 2014 - notes operators will spend some $97 billion in the next seven years to deal with a 20-fold increase in data.

This increase in spending is in comparison to the $45 billion that was spent in the last six years, according to the report. CFO Ivan Dittrich notes Vodacom's balance sheet can be geared to handle an investment.

Solid performance

In the first six months of the year, the international business grew its customer base 19.8%, faster than the 8.2% reported at its local operations. Vodacom now has 28.4 million international subscribers.

These subscribers combined boosted voice traffic 61.2%, while data use more than doubled. As a result, service revenue gained 13% - or 5.6% when currency fluctuations are stripped out - to R7.4 million. Overall, service revenue was R30.7 billion.

Vodacom notes "growth was impacted by intense price competition and regulatory challenges".

The company continues to invest in its international markets and increased the number of 3G sites by 43.8%, while the number of 2G sites was increased by 29.5%.

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