Vodacom. Picture: Vodacom
Vodacom. Picture: Vodacom

Cutting prices helped Vodacom grow its South African prepaid subscriber numbers by 10%, the cellphone network said in its June quarter report released on Tuesday morning.

"Contract customer revenue growth has recovered from declines in previous quarters," Vodacom CEO Shameel Joosub said in the operating update.

Vodacom grew its prepaid subscribers to 37.7-million at June 30 from 34.2-million the previous year.

Its monthly average revenue per user (arpu) declined by 5.2% to R55 from R58. But the drop in arpu was offset by the addition of 1.4-million more customers, helping it grow its overall South African prepaid revenue by 5.5% to R5.8bn during the June quarter from the matching quarter in 2017.

Prepaid revenue nearly caught up with contract revenue, which grew 0.8% to R5.9bn.

Vodacom grew its contract subscribers by 5.9% to 5.4-million while arpu declined 2.3% to R384 from R393/month in the previous year’s June quarter.

Its overall South African subscriber numbers grew 9.5% to 43-million while its subscribers in Tanzania, the Democratic Republic of Congo (DRC), Mozambique and Lesotho grew 11.4% to 33-million.

Under current rules, the networks force customers to prepay for internet access, setting time limits after which customers lose their money. The Independent Communications Authority of SA (Icasa) is attempting to halt this practice.

"Looking ahead, we expect the implementation of the Icasa end-user subscriber charter regulations, in relation to out-of-bundle usage, to have a modest impact on data revenue growth," Joosub said.

"We expect this to be mitigated in the short term by continued uptake of data bundles and strong elasticity in demand for these services."

The South African subsidiary of UK mobile network Vodafone has switched accounting standards to International Financial Reporting Standards (IFRS) from International Accounting Standards (IAS).

Tuesday’s update provided the June quarter figures using both accounting standards.

Switching to IFRS cut the group’s June quarter revenue to R20.7bn from the R21.6bn it would have been under IAS.

Vodacom did not provide IFRS revenue figures for the matching period in 2017. The IAS figures indicated annual revenue growth of 4.2%.