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The telecoms industry’s data quandary

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Vodacom (Duncan Alfreds, News24)

Just a few years back, the growth in telecoms groups’ revenue, profits and share prices was rampant, and the pace was seemingly unstoppable. Today things don’t look as peachy, as they struggle to maintain growth momentum in a world of slowing voice revenue growth, falling data tariffs and squeezed margins.

Vodacom’s latest results, released on 16 May, sum up the problem. Demand for data continues to soar and data revenue growth is outstripping that of voice. But revenue from data is growing at a significantly slower rate than the increase in data traffic.

Vodacom’s experience mirrors that of its local and international peers. This is an industry-wide problem with no immediate solution, a challenge that could weigh heavily on telecoms earnings and share price growth for the foreseeable future.

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