Vodacom maintains outlook despite pressure

14 NOV 2016

South Africa’s Vodacom Group CEO Shameel Joosub hailed a 5.3 per cent rise in service revenue, while noting some headwinds in its international operations.

The group’s domestic business contributed to total service revenue growth by adding 2.3 million active customers in the six months to end-September. The international business also chipped in, although it was hit by customer registration requirements, as well as economic concerns in two markets.

Group-wide service revenue rose by 5.3 per cent to ZAR34 billion ($2.37 billion). Total group revenue rose by 4 per cent to ZAR40 billion.

However, the company admitted it was “navigating through some short-term pressure” in its international operations due to competition and changes to processes relating to customer registration.

Active customers in its international operations decreased 11 per cent to 28 million due to disconnections in the second half of the prior year. And new customer acquisitions were impacted by changes in customer registration.

The company also noted deteriorating macroeconomic conditions in DRC and Mozambique.

With these factors in mind, the group is maintaining a target of low to mid single-digit group service revenue growth, as well as mid to high single-digit group Ebitda growth, in the medium term.

Cause for optimism flowed from user hunger for data, encouraged by the company’s Just 4 You platform. In South Africa, the operator is reducing the cost of data by encouraging users to take up bundles, and then assisting them to remain in-bundle and saving money through notifications. It now has 9.3 million users buying more than 223 million data bundles.

Group net profit fell by 2.7 per cent to ZAR6.3 billion in the six months to end September.

The group said earnings were impacted by a one-off tax increase in Tanzania, as well as weaker local market currencies. The latter effect was particularly noted in the remeasurement of an intergroup loan to its Mozambique unit.


Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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