The success of mobile operators will be heavily pinned to data revenue growth going forward, and for Vodacom it's all about getting more smart devices into customers' hands and encouraging the use of video-on-demand (VOD) and streaming services.
"We are finding that if we put a 3G device into people's hands, we see almost a trebling of data immediately, and if we put a 4G device into a customer's hands, even if they have been using 3G, it's a doubling of data almost immediately, so that is proving to be very successful," Vodacom Group CEO Shameel Joosub told ITWeb at the release of the company's interim results this week.
Joosub says smart devices are playing a big role in revenue growth for the telecoms operator, as the company saw an almost 31% increase in smart devices onto its network in the first half of the financial year to 12.6 million. The average amount of data used per month increased 18.5% to 550MB on such devices. Tablet numbers on the network also soared by over 126% to 1.4 million following the success of the Vodacom-branded 3G Smart Tab.
He says Vodacom's intensive capital investments, especially into data networks, are starting to bear fruit.
"What is underpinning it is that we have invested R15.7 billion into the network last year and this year, and effectively we have increased our coverage, we are now sitting at 98% 3G coverage and 48% 4G coverage."
He says this means a faster and better quality network, which helps customers consume more data and ultimately boosts Vodacom's bottom line.
"If you take half an hour last year versus half an hour this year, without realising it you are actually consuming more data within that same time space because of network improvements."
This reflects strongly in Vodacom's results for the six months ended 30 September, which show an overall increase of group data revenue of 33.4% to R8.2 billion. Joosub says he doesn't see this slowing down.
"The way I think about it is data is now 34% of our revenue (up from 26.4% a year ago) and it's growing at 33%. Why we think it is sustainable is if you look at the average utilisation in Europe and the US, you are sitting at over 2GB, so we still have five times more to grow before we even come close to those numbers and those numbers are still continuing to grow."
Vodacom says the improved affordability of both devices and data bundles supported a 48% increase in data traffic in the first half of the year. Data bundle sales doubled compared to last year.
"I see customers consuming more and more data going forward, as it becomes more entrenched in our lives. It is also sustainable because you haven't connected everybody with a smart device yet."
Vodacom has 17.8 million active data customers and only 12.6 million of those have a smart device.
"There are over five million people that if you just give them a better device you can get your data usage up, so data continues to grow exponentially," says Joosub.
Big plans
"We have already launched our streaming service Deezer and have 250 000 customers using Deezer. You have access to over 30 million songs on it so it's a really cool service. We expect that to continue to grow, along with more of those type of services but I think VOD services will also increase going forward."
Joosub says plans for Vodacom's own VOD service are in the pipeline but for now the operator is in discussions with existing VOD players, including recently launched ShowMax, to partner as a way to boost data usage even further.
"We plan to partner with the existing players out there to be able to provide data within the app. So you will be able to buy your movie but you will also be able to buy your movie including data, or you will be able to buy so-many hours of browsing and so on, and we will give you the ability to charge it to your Vodacom bill."
This would also mean doing a deal with Netflix, as South Africans anticipate the global VOD service's imminent arrival into the country next year.
"We are partnering with all of them; we want to enhance the amount of data and the uptake of their services by effectively allowing them to charge to bill and enabling what we call in-app data, and I think that will continue to grow as well," concludes Joosub.
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