Vodacom’s service revenue growth hurt by decline in SA

Vodacom Group’s international operations made up for a decline in service revenues in the mobile operator’s home market in the three months to end-June amid pressure from regulators and consumers to cut data prices.

In April, the Competition Commission said mobile operators overcharged consumers, particularly low-income earners. This followed an order from the Independent Communications Authority of SA (SA) that operators must let customers roll over their unused data, among other measures.

Mobile operators have argued that they would have been able to reduce data prices faster had the government released much-needed spectrum, or radio waves.

Vodacom said on Thursday group revenue in the quarter to end-June rose 4.2% to R21.5bn, with service revenue up 3.9% at R17.4bn.

Service revenue from outside SA jumped 19.6% to R5.1bn, thanks to higher M-Pesa revenue and data revenues, as well as currency movements. But in SA, service revenue edged 1.2% lower to R12.6bn.

“Growth from our international portfolio offset the anticipated slower performance in SA, which was impacted by new data usage regulations, significant data price cuts and a subdued economy weighing on consumer spend,” said Vodacom CEO Shameel Joosub.

Excluding the company’s Safaricom associate in Kenya, Vodacom added 1.2-million customers in the three-month period.

Joosub said Vodacom was “encouraged” by President Cyril Ramaphosa’s commitment to award new spectrum.

“This is a vital part of reducing input costs and further bringing down data prices in SA, where lengthy delays in completing the digital migration and allocating 4G spectrum have curbed the pace at which data prices could have fallen,” he said.

“Clear policy direction for the country’s telecommunications industry is also expected to restore investor confidence in SA and boost economic growth,” Joosub said.

He said growth in the second half of the financial year is likely to improve in SA. The domestic business would benefit from “the completion of the national roaming partner switch-over and improved commercial momentum in financial services”.

Meanwhile, Joosub said Vodacom expects to conclude the acquisition of the M-Pesa brand and platform. Together with the recent launch of VodaPay, this would boost the group’s financial services business.

hedleyn@businesslive.co.za