Vodacom growth jumps, despite difficult market

2014-05-19 07:56
Vodacom has upped the ante with a 50c call rate promotion. (Duncan Alfreds, News24)

Vodacom has upped the ante with a 50c call rate promotion. (Duncan Alfreds, News24)

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Cape Town - Despite an uncertain regulatory environment and falling call rates, Vodacom has managed to increase its revenue, the mobile operator reported.

Vodacom revealed its results on Monday and the operator indicated that it had increased group revenue by 8.3% to R75.7bn, and announced a 2.8% increase of headline earnings per share to 896c.

The result is good news for the operator which is involved in a price war with rival as voice call rates decline sharply in SA.

Regulator Icasa or the Independent Communications Authority of South Africa has demanded an asymmetrical reduction of MTRs, or the rate that operators pay each other for calls that terminate on rival networks.

The implication was that Vodacom and MTN would have to pay significantly higher rates to junior operators Cell C and Telkom Mobile.

Data growth

Despite Icasa's backtrack from the proposal after court action, MTN reduced its call rates to 79c per minute for prepaid users, and Vodacom responded. Cell C recently announced a 66c call rate.

Vodacom though, reported that despite these falling costs, revenue in SA was up by 5.5%, boosted by a jump of 28.6% in equipment sales.

The operator also increased its number of customers by 8% to 31 820 000, and in particular, it seems that more of those customers are migrating to data consumers as Vodacom reported a 11.9% increase in active data customers to 16 102 000.

Data is key for mobile operators in SA, despite the department of communications failing to meet its own deadline for direct policy of mobile broadband.

"The benefits of pervasive and affordable broadband are now well understood: Research suggests that a rise in broadband penetration is linked to economic growth and job creation," said Department of Communications Minister Yunus Carrim in 2013 at the South Africa Connect: Creating Opportunities, Ensuring Inclusion workshop.

Carrim had imposed a March 2014 deadline on the government's direct policy on high speed data networks, identified as a national priority in the National Development Plan.

Vodacom mobile data revenue grew by 32.7% to R13.2bn despite there not being clear policy on Long Term Evolution spectrum from the government.

"Vodacom again performed well this year with good results from our International operations and South Africa returning to growth. Demand for mobile data continues to be a key growth driver," said Shameel Joosub, Vodacom Group CEO.

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