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Vodacom adds almost 1m customers in SA

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 21 Jul 2016
A major highlight of the quarter was the "stellar" number of customer additions in SA in both postpaid and prepaid, says Vodacom CEO Shameel Joosub.
A major highlight of the quarter was the "stellar" number of customer additions in SA in both postpaid and prepaid, says Vodacom CEO Shameel Joosub.

Vodacom added just under one million customers in SA in the last quarter. This is according to the group's quarterly update for the three months ended 30 June, which show South African active customers grew 5.4% to 35.1 million.

"One of the major highlights this quarter is the stellar number of customer additions in SA in both postpaid and prepaid," says Vodacom group CEO Shameel Joosub.

Overall, the South African operation added 934 000 new customers in the quarter, with 883 000 of those being prepaid customers.

"This can largely be attributed to the significant investments that we continue to make in infrastructure to sustain our competitive advantage to deliver the best network, superior customer service and great value to our customers through innovation such as our personalised Just 4 You offers," says Joosub.

However, the group's international operations did not fare as well, with group active customers down 2.6% to 61.8 million for the quarter. This was due to new customer registration processes in Vodacom's four international operations which lost 405 000 customers combined.

"Despite the tougher economic environment in most of the countries in which we operate, the group delivered robust service revenue growth of 7.3% [to R16.8 billion]," says Joosub.

Group revenue also grew 5.8% to R19.9 billion year-on-year and group data revenue increased 19.4% to R5.8 billion, representing 34.4% of service revenue. Group capital expenditure for the three-month period was R2.7 billion, equivalent to 13.6% of group revenue.

Home market booms

South Africa saw service revenue grow 5.6% to R12.4 billion, despite increasing pressure on consumer spending. Growth was supported by strong customer additions, high demand for data services and improved voice revenue growth trends, Vodacom says.

Overall year-on-year revenue in SA was up 4% to R15.4 billion, impacted by a 3.9% decline in equipment revenue. This was driven by lower sales volumes, although improved from the previous quarter. In the prior year, the tablet and entry smartphone segment was boosted by strong sales volumes of the Vodacom-branded 3G tablet and Smart Kicka smartphone.

In SA, prepaid average revenue per user (ARPU) dropped 3.2% to R60, affected by an increase in lower ARPU customers. Active contract customers increased by 51 000 in the quarter and churn improved to 5.3%, "as customer satisfaction remains well ahead of our competitors". Contract ARPU increased 5.2% to R401 as data demand continues to grow.

Customer demand for data remained strong, with quarterly data revenue growth of 18% locally year-on-year to R4.7 billion. Vodacom says it has 18.8 million data customers and data bundle sales increased 52% ? largely due to the take-up of more affordable daily bundles, resulting in a 15.6% decline in the price per megabyte.

"We now have 14.9 million customers using bundles and we sold 329 million bundles in the first three months. We continue to improve our lead on net promoter score and we now lead by 16 points to our nearest competitor," the group says.

Average monthly data usage by customers on smart devices grew by 19.6% to 632MB in the quarter. Vodacom now has 14.1 million active smart devices on its network, up 18%, with over three million of those using LTE/4G.

Joosub welcomed the recent announcement from the Independent Communications Authority of SA inviting operators to participate in an auction of much-needed spectrum.

"This is a major progressive step for the economy, South Africa's telecommunications industry and the country as a whole. The allocation of spectrum will be transformative from a broadband access perspective and is expected to make reaching the goals set out by government's SA Connect policy more achievable," he says.

African customers fade

Total active customers in Vodacom's international operations decreased 11.5% to 26.7 million in the quarter, impacted by new customer registration processes, which were offset by currency gains.

Vodacom lost 315 000 active customers in Tanzania in the quarter, 41 000 customers in the Democratic Republic of the Congo (DRC), 40 000 in Lesotho and 9 000 in Mozambique.

"We remain committed to actively bedding down new customer registration processes in the various markets in which we operate," the telco says.

Vodacom was forced to deregister almost 3.3 million customers in the DRC in the previous quarter, which Joosub told ITWeb was costing it about $300 000 (R4.3 million) per month in lost revenue. However, Vodacom says net customer additions turned positive towards the latter part of the most recent quarter in most operations.

International data revenue increased 25.7% to R1.1 billion. Almost 41% of active international customers are using data, and it now comprises 24.4% of international service revenue supported by increased sales of smart devices and improved network quality and coverage. International service revenue grew by 13.5%, contributing 26.7% of group service revenue.

"We continue to invest significantly in our international operations with capital expenditure of R809 million in the quarter. This enables us to strengthen network and service differentiation."

Despite pulling the plug on M-Pesa in SA, the mobile money platform continues to perform well in its international operations, with an increase in active customers of 34.7% to 10.6 million. M-Pesa revenue has grown 47.5% to R500 million, and both Mozambique and the DRC have reached a critical mass of 1.4 million customers each.

In Tanzania, M-Pawa (savings and loan product) customers represent 13.2% of active M-Pesa customers. Tanzania also launched LTE/4G in May, currently operating in the capital.

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