South Africa pressure blunts Vodacom growth - Mobile World Live

South Africa pressure blunts Vodacom growth

12 NOV 2018

Vodacom Group booked increased revenue and customer numbers in its fiscal H1, though profit remained broadly flat as the operator continued to slash data prices in South Africa and make heavy network investments.

CEO Shameel Joosub said underlying growth in its home market of South Africa had been blunted by weak economic conditions and lower consumer spending.

In the six months to end-September, Vodacom invested ZAR4 billion ($278 million) in infrastructure in the country, while reducing voice prices by 8.5 per cent and consumer data tariffs by 16.5 per cent (a strategy in line with the country’s aims to reduce consumer fees).

Joosub warned cutting consumer prices further relied on “having access to the right spectrum at reasonable market-related prices,” adding: “while we are encouraged by the significant progress in recent times regarding the licensing of 4G spectrum in South Africa, there are still a number of areas of concern”.

The executive pointed specifically to issues with the policies outlined in the country’s proposed Electronic Communications Act, alongside the Independent Communications Authority of South Africa’s position on licensing unassigned “high-demand” spectrum.

South Africa is Vodacom’s largest market, contributing almost 80 per cent of the company’s operating profit and 74 per cent of its service revenue during the period.

At group level Vodacom made a net profit of ZAR6.8 billion, broadly flat year-on-year. Revenue increased 5.6 per cent to ZAR44.4 billion.

International operations
Across the rest of its operation, Joosub said it would continue its strategy of “heavy” network investment, in addition to incorporating artificial intelligence and big data analytics to improve its mobile money operation.

In H1 increased customer usage of data and mobile money boosted takings in its International business unit, which comprises all of its Vodacom brands outside of South Africa including subsidiary Safaricom.

At the end of September it had 34.2 million customers across its footprint using its mobile money platforms, with 21 million of these in Kenya.

It processed ZAR201 billion worth of transactions during the six month period, which Vodacom said supported a 25 per cent year-on-year increase in revenue from financial services to ZAR1.4 billion.

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Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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