Strong data revenue growth helped Vodacom report healthy third quarter numbers as more customers joined the network.
Vodacom's group data revenue increased 27.5% to R5.5 billion for the quarter ended 31 December 2015, and now represents 32% of service revenue. The telecoms giant now has 65.2 million active customers, which is an almost 7% increase.
"Our performance in the quarter reflects the positive impact from our substantial network investment of R9.5 billion across all our operations in the nine months. We have expanded our network coverage and increased data speeds to secure network leadership," according to Vodacom Group CEO Shameel Joosub.
He says customer demand for high-speed mobile data is growing across Vodacom's footprint, supporting the strong increase in group data revenue.
Data customers grew 14.5% to 30.3 million in the quarter, while group revenue was up 8.7% to R21.7 billion.
SA continues to shine
Joosub says one of the quarter's biggest highlights was the accelerated service revenue growth of 7.2% in South Africa, now up to R12.7 billion.
South Africa remains Vodacom's largest market, with 34.1 million active users signed up to the network locally.
"In South Africa, the take-up of our personalised offer 'Just for You' was excellent and contributed to the 15.9% reduction in effective voice rates," he adds.
Vodacom says active prepaid customers increased 10% to 29.2 million in South Africa, while prepaid voice bundle purchases increased 36.8% to over 207 million in the quarter. However, contract customer additions in the quarter were negatively impacted by 75 000 disconnections by Altech Autopage, resulting in overall flat year-on-year growth in the contract customer base.
Capital expenditure in South Africa in the quarter totalled R2.2 billion as Vodacom expanded its LTE/4G population coverage to 54% (up from 47% at the end of Q2). 3G population coverage now stands at 98.3%.
Joosub says Vodacom expects revenue growth "to taper slightly into our last quarter of the financial year due to a stronger prior year comparative and a weaker outlook for the consumer in South Africa due to the drought and weaker exchange rate".
Vodacom has given no update on its proposed purchase of Neotel, which remains up in the air after a December announcement that the transaction had been modified. The new deal would see Vodacom acquire Neotel's assets related to its fixed-line business but would exclude Neotel's spectrum and licences.
International business booms
Vodacom's active customers outside of South Africa grew by almost 5% to 31.1 million, while its international segment delivered robust service revenue growth of 15.2%.
Service revenue growth in DRC and Mozambique accelerated, while Tanzania showed weakened growth "reflecting a significantly more competitive marketplace".
In the DRC and Mozambique, new government legislation meant Vodacom had to disconnect or suspend unregistered customers. Vodacom says it is expecting gross connections to be negatively impacted "while customers and the distribution channels familiarise themselves with the new processes".
Other highlights from the international business include data revenue growth of 28.4% driven by data customers growing to 11.2 million. Data now contributes 22.5% of service revenue, up from 20.2% a year ago.
M-Pesa continues to grow strongly in all of Vodacom's markets, and Q3 saw M-Pesa revenue increase by 16.9%. Vodacom added 567 000 M-Pesa customers in the quarter, with the total now sitting at 9.7 million.
Vodacom spent R1 billion on capital expenditure in its international operations during the quarter as it expanded its network coverage and increased capacity. During the quarter, it successfully renewed its 2G mobile licence in the DRC until January 2028 and obtained additional spectrum in the country for the same duration.
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