Vodacom South Africa Achieves Impressive Half-Year Performance

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Vodacom South Africa Achieves Impressive Half-Year Performance
Credit: © Reuters.

Vodacom South Africa has reported commendable half-year results, revealing a 4% increase in service revenue to R30.7 billion for the six months ending on September 30. Despite persistent macroeconomic challenges, the company, a subsidiary of Vodafone, considers this growth a credible achievement.

This positive outcome is attributed to the introduction of new services and the surge in mobile data usage.

Financial and digital services, fixed solutions, and IoT experienced an impressive 18.1% rise, contributing R5.1 billion, equivalent to 16.6% of South Africa’s service revenue.

Within its core connectivity business, Vodacom emphasized that the expansion of mobile data was supported by a resilient network, enhanced capacity, and enticing personalised offers driven by big data.

South Africa’s overall revenue reached R43.3 billion, marking a 5.1% increase, with robust equipment sales fueled by customer-friendly 36-month contracts.

In the second quarter, the momentum continued with a 4.1% acceleration in service revenue, propelled by increased prepaid revenue.

Mobile contract customer revenue experienced a 4.1% surge, reaching R11.7 billion, thanks to substantial growth in the consumer segment. The positive performance in this segment was buoyed by a contract price hike, coupled with a 20% additional data allocation, reflecting Vodacom’s commitment to providing value to its customers.

Although the Mobile contract ARPU of R302 increased by 1.7%, the 6.7% price hike was partially offset by temporary challenges within Vodacom Business, as corporate customers adjusted spending for employees returning to offices.

The company added an impressive 105,000 contract customers in the six months, reaching a base of 6.8 million, representing a 2.8% increase.

Turning to prepaid mobile services, Vodacom South Africa saw a 3.1% revenue increase to R13.1 billion, accelerating to 3.5% in the second quarter. This resilience occurred amid a challenging macroeconomic environment and inflationary pressures on consumers.

Leveraging their world-class customer value management capabilities, Vodacom drove higher customer engagement, resulting in a 3.6% growth in prepaid ARPU to R58. A substantial 2.9 million prepaid customers joined in the six months, reaching a significant milestone of 40.5 million customers.

Data took centre stage in Vodacom’s narrative, with a 45.2% surge in data traffic, driven by smartphone penetration and network availability. Data customers reached 25.8 million, an 8.5% increase, while smart devices rose by 10.3% to 30.5 million. The 4G and 5G device count increased by an impressive 17.6% to 22.8 million, and the average usage per smart device surged by 33.6% to 3.7GB per month.

Notably, prepaid data revenue witnessed a remarkable 15.3% increase to R6.2 billion for the six months, underscoring Vodacom’s commitment to offering affordable data propositions to the most price-sensitive, lower-income customers. In this tale of sustained growth and resilience, Vodacom South Africa reaffirms its position as a leader in the telecommunications landscape.

Summary of other important figures

  • Fixed service revenue increased by 25.0%, excluding wholesale transit, driven by strong customer adoption of fiber and project-based revenue. Homes and businesses connected reached 178,000, with Vodacom’s own fiber passing 165,879 locations.
  • Service revenue from financial services rose by 10.8% to R1.6 billion. The growth was fueled by the insurance business, with a 17.2% increase in revenue supported by a 3.9% rise in policies, totaling 2.7 million. VodaPay, the super-app, concluded the period with 7.6 million downloads and 4.1 million registered users.
  • Vodacom Business service revenue increased by 0.3% to R8.7 billion, facing pressure on wholesale revenue. Excluding wholesale figures, Vodacom Business service revenue saw a 3.8% growth. Cloud, hosting, and security played a crucial role, with revenue for this segment soaring by 41.7%. IoT connections increased by 12.3% to 8.0 million.
  • EBITDA grew by 1.6%, with reinvested cost savings into network resilience and maintenance. The EBITDA margin moderated to 37.0%, influenced by lower-margin equipment revenue, Cloud reseller margins, and increased network and payroll costs. Payroll costs reported a 11.7% increase, offset by capital expenditure savings. Cost savings are expected to accelerate in the second half, supporting EBITDA growth. Operating profit declined by 3.3% due to higher depreciation and amortization.
  • An investment of R4.8 billion was made in the network to enhance resilience, leverage new spectrum assets, and improve IT platforms, maintaining Vodacom as South Africa’s most reliable network and network NPS leader. The year-on-year decline in capital expenditure reflected accelerated energy resilience spending in the first half of the previous year. Anticipated capital expenditure for the current financial year is approximately R11.0 billion, with increased spending in the second half.
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