Vodacom, SA's largest cellular operator, boosted its overall subscriber base to 51 million in the quarter to December "through compelling value offers, superior network quality and network expansion".
The group this morning published a trading update, which said group revenue gained 1.7% year-on-year, to R18.3 billion. Stripping out the sale of its Gateway Carrier Services unit and the impact of changes in foreign currency, revenue would have gained 4.8%.
Vodacom sold its investments, supplier agreements and assets in Gateway Carrier Services for $35 million in the six months to September. It gained service revenue of $155 million, but made an operating loss of $3 million from the asset, which is included for five of the six months.
Data revenue in the third quarter grew 23.3%, and active data customers gained 33.5%, to 18.5 million. Mobile data accounted for R2.26 billion of Vodacom's SA revenue, which was R15.5 billion. Voice, which lost 2.3%, accounted for R7.6 billion in turnover.
Internationally, data grew 100%, to R306 million - led by MPesa customers gaining 72.6%, to 4.7 million - of total international revenue of R2.88 billion. Voice at Vodacom's international operations gained 19.4%, to R1.7 billion.
CEO Shameel Joosub says "it's been a quarter with strong performances in data and our international operations tempered by some challenges in our South African business". He notes that its international operations grew subscribers 13%, while the SA base gained 12%.
The cellular company has operations in Tanzania, the Democratic Republic of Congo, Lesotho and Mozambique, and entered the continent in 2000. Its African operations were problematic for a while, but have been turned around, and made their first contribution to cash flow in the year to March 2012.
Softer revenue
"While customers increased, voice revenue in SA was impacted by more active competition in a softer economy, coupled with the decision taken earlier in the year to discourage calling card behaviour. This was the right thing to do to improve profitability, but has temporarily impacted revenue growth," says Joosub.
Calling card behaviour is when airtime is bundled with a starter-pack and sold at a discounted price by wholesalers, which leads to customers buying SIM cards just to use the airtime, and then dispose of the SIM.
Locally, Vodacom reported churn of 54.9%, the bulk of which was in the prepaid segment, where it cited churn of 62.9%, up from 53.3% in the three months to September and from 35.3% in the year ago period.
Vodacom says, "as expected, we have seen reduced revenue, higher churn and net disconnections in the quarter," in its local operations. It has seen a reduction in its prepaid acquisition costs and improved profitability in the prepaid customer base.
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