Lockdown data demand boosts Vodacom’s Q1 revenue
SA’s biggest mobile operator accelerated network infrastructure spend by R500 million to R2.7 billion in Q1 2020.
This emerged from Vodacom’s trading update for the quarter ended 30 June, published this morning.
The telco is boosting its network infrastructure as a result of increased demand for data services as more South Africans have taken to remote working and learning as a result of the COVID-19 pandemic.
In its update, Vodacom says group service revenue was up 7.6% and group revenue grew by 5.6%, benefitting from strong growth in SA, with customer demand increasing during the lockdown period, while the international operations were negatively impacted by lower economic activity from the effects of COVID-19.
SA’s service revenue growth was solid at 6.4% for the quarter, supported by strong demand for data and connectivity services in the period.
International service revenue grew by 10.7%, benefiting from the rand devaluation.
However, it says underlying performance was subdued with a 5.3% decline, as a result of lower economic trading activity, free M-Pesa services and customer registration requirements in these businesses.
CEO Shameel Joosub says in the face of an unprecedented global pandemic, Vodacom Group has responded rapidly to assist governments of the areas it operates, to curb the spread of COVID-19 while also adapting to significant changes in customer demands and behaviour patterns.
He points out that in SA, the combination of increased demand for data following significant tariff reductions of up to 40% that went into effect on 1 April and more people working and being educated remotely, resulted in a significant increase in mobile and fixed traffic in the first quarter.
“As a result, we accelerated network infrastructure spend by R500 million to R2.7 billion in Q1 and used the temporary assignment of spectrum by ICASA [Independent Communications Authority of SA] to rapidly increase network capacity to ensure we continue to deliver a high-quality experience to customers.
“The temporary spectrum assignment also allowed us to fast-track the launch of South Africa’s first mobile 5G network and our fixed 5G commercial service.”
In May, Vodacom switched on its 5G mobile network in three cities – Johannesburg, Pretoria and Cape Town – with further rollouts planned to other parts of the country.
“Collaboration is instrumental in defeating COVID-19 and it is for this reason we have concluded a number of innovative partnerships in recent months, with particular emphasis on health, education, free public benefit services, big data analytics and financial services to support citizens and governments,” Joosub says.
He notes that in addition to zero-rating numerous essential service and education Web sites, the company donated 20 000 smartphones plus 100 terabytes of data and 10 million voice call minutes to the National Department of Health to collect and transmit data in real-time for resource planning purposes as part of government’s accelerated COVID-19 testing campaign.
“We partnered with Discovery Health, the country’s largest administrator of medical schemes, to offer free virtual consultations with doctors to the general public to help alleviate pressure on the country’s healthcare system by assisting in diagnosing COVID-19 as well as treating it.”
More recently, he says, Vodacom South Africa partnered with Microsoft to launch the Connected Digital Education Platform, which provides participating educational institutions, from schools through to universities, with significantly discounted data bundles, and educators with the ability to deliver classes to learners where access to Microsoft Teams is provided free of charge.
“Earlier this week, we announced a ground-breaking technology partnership with Alipay, the world’s leading digital daily lifestyle services platform, to bring inclusive mobile solutions to South African consumers and merchants, especially small businesses, through innovative digital technologies.”
In terms of the partnership, he adds, Vodacom Financial Services will work closely with Alipay to develop a single, affordable payments app for both customers and merchants that promotes greater financial inclusion within the communities in which it operates.