Vodacom CEO admits to tough year, happier about medium term - Mobile World Live

Vodacom CEO admits to tough year, happier about medium term

18 MAY 2015

Shameel Joosub, Vodacom CEO, said that the company “pulled through a transformative period” in its financial year to end-March 2015, but was more upbeat about the medium term.

While total revenue at the company – one of Africa’s leading operators – rose by 2.1 per cent to ZAR77.3 billion ($6.5 billion) for the twelve months, service revenue only grew by 0.2 per cent to ZAR62.2 billion.

Group net profit fell by 8.5 per cent to ZAR12.5 billion.

Joosub (pictured) described the highlights of the year as being “network investment, data growth and pricing transformation”, but admitted that “this has played out against a tough backdrop”.

“In South Africa we faced major cuts in mobile termination rates, a weak economic environment, exchange rate volatility and increased price competition,” he lamented about the group’s most important market.

And in Tanzania and the DRC (Democratic Republic of Congo), pricing pressure impacted the performance of Vodacom, which is 65 per cent owned by Vodafone.

However, on a brighter note, the group’s total customer base grew by 7.2 per cent to 61.6 million.

South Africa
In South Africa, Vodacom attracted the majority of contract subscribers to integrated packages and established its value-bundle strategy in the prepaid segment.

This meant the strong performance came at a price. There was an 18 per cent reduction in the blended average effective price per minute for voice calls, and a 24 per cent cut in the average effective price per MB of data.

The operator also felt the force of a 50 per cent reduction in mobile termination rates in South Africa. The combination of pricing pressure and MTR cuts meant a 2.7 per cent fall in group service revenue in this market.

Joosub argued that with those adverse events behind it, Vodacom can now realise the benefit of its network investment programme, and saw a more positive performance in the last three months.

And quadplay services could be on the agenda too, if the South African authorities can get around to approving Vodacom’s acquisition of Neotel, the country’s second-largest fixed operator. The delay in approval is “disappointing”, said the CEO.

“This transaction has been with the authorities for approval for almost a year now,” he complained.

More optimistic was the news from its other African operations, where service revenue rose by 10 per cent to ZAR15.3 billion.

Joosub also said a draft proposal for a universal service fee is preferable to an earlier demand by Tanzania’s government for a mandatory listing on the country’s stock exchange, according to Reuters.

“That is the latest version that has come out, which we think is a lot more reasonable and gives companies the choice, instead of forcing them to this,” said Joosub. Vodacom is Tanzania’s largest operator.

The government had previously insisted that a number of the country’s operators be listed on the Dar es Salaam Stock Exchange (DSE), so the country’s citizens could share in the success of the mobile industry.

The proposal was similar to one in Iraq where the operators’ licences included a stipulation that they must list on the local stock exchange within four years of winning their licence.

However, it now appears that Tanzania has backed away from mandatory listings, in favour of a 1 per cent universal service fee that could be used to subsidise network rollout in less accessible parts of the country.

In addition to Vodacom, other operators in the country include Bharti Airtel and Tigo.


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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