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#DataMustFall implementation boosts Vodacom’s finances

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Vodacom Group CEO Shameel Joosub.
Vodacom Group CEO Shameel Joosub.

Vodacom says it saw a steady increase in SA’s data traffic as the year ended March 2020 progressed, with 1.9 million more data customers connecting to its network − a 9.7% jump to 21.9 million.

The company presented its year-end results today, saying despite the sharp data price reductions, specifically out-of-bundle data rates, announced in the first quarter, its data segment continues to grow.

In December, the Competition Commission recommended data cost reduction, with Vodacom and MTN being ordered to cut data prices by up to 50%.

“While it is still early days, the trend of increased data usage has continued into the current financial year following reductions in 30-day data bundle tariffs of up to 40% from 1 April 2020 and the launch of our ConnectU platform, which provides easy access to numerous zero-rated essential service Web sites,” says Shameel Joosub, Vodacom Group CEO.

“Despite deteriorating economic pressures and the proactive price cuts to our out-of-bundle rates, service revenue rose 2.3% in our biggest market, where initiatives to deliver greater value to customers through pricing transformation and sustained investment in network infrastructure and IT systems are being rewarded.”

Joosub says Vodacom had an improved second half performance in SA and the sustained growth of its international businesses contributed to the group’s 8.9% increase in headline earnings per share to 945c per share and a dividend return of 845c per share to shareholders.

Vodacom says this follows last year’s substantial investment in SA’s largest, to date, broad-based black economic empowerment transaction in the telecommunication sector.

The YeboYethu transaction benefitted a significant number of black investors and close to 8 500 current and past employees.

The deal structure involved the coming together of the combined interests of Vodacom’s existing BEE partners (Royal Bafokeng Holdings, Thebe Investment Corporation and YeboYethu) with a newly formed employee stock ownership plan.

In the year under review, Vodacom’s group revenue was up 4.8% (3.5%), which it said was supported by service revenue growth of 5% (3.5%).

The telco added 5.9 million new customers, to serve a combined 116 million customers across the continent.

Additionally, Vodacom says its financial services customers went up 12.8%, to 53.2 million, adding six million customers in the year.

The telco has for some time been leveraging its massive customer base to bring financial products to the market.

“As part of our strategy to build diverse and sustainable revenue streams, our efforts to introduce ‘one more service’ to customers continue to gain momentum.

“For instance, revenue from our financial services business in South Africa jumped by 21.5% to R2 billion, on the back of our popular Airtime Advance, insurance and VodaPay services.

“Our digital services business has also produced solid growth, contributing R1.5 billion in revenue on the back of increasing purchases of our video-on-demand offering and our music, sports, gaming and other video services,” notes Joosub.

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