Promotions help boost Vodacom subscribers
Vodacom has maintained its market share in SA with promotional packages and continued investment in its network with growth expected to remain steady in the medium term.
Vodacom grew its local subscriber base by 690,000 during the quarter to December 2016, taking its total base in SA to 36.4-million. This is attributable to promotional data and voice packages and its strong network coverage and quality.
Strong growth in data demand outstripped declining voice revenues, resulting in service revenue increase of 5.5% to R13.4bn. Overall revenue from SA rose 4.9% to R17.1bn.
Vodacom group revenue was up 1.2% to R21.2bn.
Mergence Investment Managers portfolio manager Peter Takaendesa said revenue growth had consistently slowed at Vodacom over the past four quarters — from 9% reported in the December 2015 quarter to 1.2% for the three months to December 2016.
Takaendesa said the South African operations had remained steady, growing service revenue in mid-single digits over the same period, but the rest-of-Africa operations were disappointing due to regulation and tougher competition.
Vodacom operates in Lesotho, Mozambique, the Democratic Republic of Congo, as well as Tanzania.
Shameel Joosub, Vodacom Group CEO, said strong growth in SA was delivered through the group’s strategy of "sustained investment in network infrastructure, growing data demand and successful execution of our pricing strategy".
Through the group’s bundle pricing strategy, voice and data prices had fallen 17.6% and 15.4% respectively, Joosub said.
Takaendesa said the South African operations were likely to remain steady, helped by data revenue growth and voice price stabilisation in the medium term but the longer-term picture "remains clouded" by the introduction of new players such as Multisource, which owns Wireless Business Solutions, as well as by MTN SA fighting to regain market share.
"The stronger rand trend will be a stronger headwind to their rest-of-Africa operations for a while as some of their operating countries like Mozambique have serious national debt problems," he said.
MTN has overhauled its top executives, with the market anticipating new strategies to help the group claw back its market share in key markets. In the three months to September 2016, MTN SA reported a marginal decline of 0.5% in subscribers to 29.7-million.
Vodacom group data revenue increased 18.4% to R6.5bn, representing 37.5% of service revenue. Service revenue from the rest of Africa declined 8.2% to R4.2bn, affected by the improvement of the rand against mainly the US dollar and continued weakness in the Mozambican metical.
Active customers from the rest of the operations are down 7.5% to 28.8-million compared to the three months to December 2015 as a result of disconnections of nonregistered subscribers as required by law. In the three months to December 2016 Vodacom managed to regain 876,000 subscribers.