SA's largest cellular operator, Vodacom, will continue to offer promotional deals to stimulate voice and data use, as consumers come under pressure due to rising fuel and food prices.
The company added 4.4 million subscribers in the first half of the year as it rolled out aggressive campaigns after its colour change from blue to red. In SA, the operator gained 2.4 million more customers, most of who were from the prepaid segment.
CEO Pieter Uys says: “In SA, increased promotional activity and reduced data prices were well received, driving significant gains in both usage and customer numbers.”
Vodacom is “playing catch-up” to gain new customers after the SIM-card registration law caused it to deactivate more than 800 000 SIM cards in total, says Uys. MTN, SA's second-largest operator, added 1.7 million subscribers in SA in the three months to September.
RICA - or the Regulation of Interception of Communications and Provision of Communication-Related Information Act - was brought into effect in the middle of 2009 and required everyone to register their SIM card by the end of June this year, or be cut off from the network.
Uys says Vodacom is seeing some customers who were cut off returning as “new” subscribers, while there is also growth in dual SIM cards. He adds voice and data price promotions have aided the group to grow its base.
Vodacom says its effective average price per minute fell 24%, while the average price of data declined 22% during the first half of the year. The company this morning published its results for the first six months of the year to September.
More to come
The company yesterday announced a festive season promotion that slashes the price of a once-off 20GB bundle to R499, from R3 620.
Uys says the local economic outlook is worsening as the rand has weakened, which has hit consumers through higher food and fuel prices. Data competition has become “more intense”, he adds.
Outgoing CFO Rob Shuter, who will head up Vodafone Netherlands from March 2012, says there is scope to trim prices even further. He says the company is concerned that the state of the consumer may work its way into the numbers in the second half of the year.
Shuter says Vodacom expects to see slower service revenue growth, although its net profit should improve.
In the first half, it grew services revenue 6%, to R27.7 billion, while net profit gained 2.8% to R4.4 billion. Group customers increased 22%, to 48 million, with active data customers growing 38%.
During the half, Vodacom improved data revenue 29.4%, while customers grew 32% to 10.5 million, says Uys. There are now about 4.1 million smartphones on Vodacom's local network after the addition of almost 900 000 handsets during the half.
The growth rate of smartphone data traffic is 10 times higher than that of dongles and other modems, says the company. “We reduced our data prices in order to maintain our competitive position and drive greater adoption and usage,” it adds.
Uys says the company will increase capital expenditure in the second half of the year as it seeks to expand coverage and improve stability. In the first six months, it spent R3.5 billion, of which about R3 billion went into its SA operations.
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