Vodacom weathers tough economy

Vodacom Group delivered a 4.7% increase in normalised revenue, to R30.7-billion, in the quarter ended 31 December 2022, despite being a period that saw the worst power cuts in South Africa’s history.

The figure was up 14.8% when not normalised for exchange rate fluctuations and the impact of the R43.6-billion acquisition of a 55% controlling stake in Vodafone Egypt, which was consolidated on 8 December.

Group service revenue was up 16.1% (3.5% normalised), supported by growth in data revenue and financial services. South African service revenue rose 3% on surprisingly robust prepaid performance. Non-South African service revenue jumped 18% (4.5% normalised), driven by the weaker rand and strong demand for data services.

Financial services revenue increased 30.6% (16.5% normalised) to R2.6-billion, with downloads of the VodaPay “super app” reaching 4.5 million.

“The 4.7% increase in normalised group revenue, which strips out currency fluctuations and the impact of Vodafone Egypt’s acquisition, underscores the ongoing resilience of the group’s portfolio at a time when economic uncertainty prevails in the face of the war in Ukraine and the supply-chain impacts of the Covid-19 pandemic,” said Vodacom Group CEO Shameel Joosub in a statement.

South African service revenue rose by 3%, down marginally from the 3.1% result in the second quarter, was the result of higher investment in network capacity coupled with higher customer engagement. Capital expenditure in the three-month period came to R2.7-billion, a 15.6% uplift compared to the same period a year ago.

South African mobile contract revenue increased by 3.1% to R5.7-billion, helped by price increases earlier in the year. Average revenue per contract customer was flat at R299, while the contact base grew by 4.6% to 6.7 million.

Prepaid on the rise

The prepaid segment did surprisingly well, given the tough economic conditions in South Africa, with mobile prepaid revenue growth accelerating to 3.7% from 2.7% in the second quarter. Vodacom attributed this to network availability and a successful summer marketing campaign. Prepaid average revenue per user in South Africa came in at R61, up 7%. Prepaid subscriber growth was, however, impacted by a clean-up of 1.1 million non-revenue-generating Sim cards.

Read: Vodacom completes R48-billion Vodafone Egypt acquisition

The average usage per smart device increased 27.4% to 3.2GB/month in South Africa, while the number of 4G/LTE devices on the network rose by 11.4% to 19.2 million. Prepaid data revenue of R3-billion was up 14%.

Read: Vodacom shares leap higher on talk it may be acquired

Service revenue from financial services was up 12.6% to R779-million, with the customer base reaching 14.7 million. “Revenue growth was supported by our insurance portfolio, with the number of policies up 11.1% to 2.6 million. Our Airtime Advance product remained a key contributor to financial services revenue and posted a pleasing acceleration in the third quarter. We advanced R3.4-billion in airtime, amounting to 45.1% of total prepaid recharges.”  — © 2023 NewsCentral Media

Get TechCentral’s daily newsletter