SA’s second mobile boom

The success of South African operations (from which Vodacom derived 93,6% of its business, and 99% of its profits) propelled Vodacom’s revenues up by 20% to R27-bn. Out of the five countries Vodacom operates in – the others being Tanzania, Lesotho, the Democratic Republic of Congo and Mozambique – South Africa saw the biggest growth in revenue, up 17,3% to R18,1-bn. In terms of earnings, the biggest percentage increase came from the fledgling Lesotho operation which made R48-m a 77,8% increase on the previous year.

As a result, the group as a whole reported a 24% increase in profit to R6,5-bn, and maintained a profit from operations margin of 23%.

Vodacom’s shareholders – Telkom at 50%, the UK’s Vodafone with 35% and the remainder owned by JSE-listed investment company Venfin – benefited from the good performance by sharing in the R3,4-bn dividend declared by Vodacom.

Knott-Craig said the company has garnered around 14 000 3G subscribers to date, and that the average revenue per user (ARPU) of the service was three to four times that of other customers (the ARPU for both contract and pre-paid subscribers a month is R163: R624 for contract and R78 for pre-paid).

In terms of catering for this growth, Knott-Craig said Vodacom has put up 480 3G base stations thus far, and that 900 would be up by December. He says 3G could make up one tenth of Vodacom’s contract subscribers within the next three years.

Also top of mind for Vodacom is having full control of its customer base. Over the past year, it bought a controlling stake in a service provider that sells Vodacom packages – Smartcom – and also acquired the Vodacom customer base from Tiscali South Africa. This leaves only the big two in the arena – Reunert’s Nashua Mobile and Altech’s Autopage Cellular. “We are in discussions with Nashua and Autopage and want to come up with a win-win solution,” says Knott-Craig. “This could entail a continuation of the current scenario, but with Vodacom being able to get closer to its customers.” According to the commentary to its results, Vodacom directly controls 78,3% of its contract customers and 98,4% of its pre-paid customers.

The advent of mobile virtual network operators (MVNOs) in South Africa – where companies buy excess network capacity from mobile companies, package and brand it then sell it onto customers – seems imminent, with legislation being amended to make this legal. In May, there were reports that Virgin would be entering the South African market as an MVNO, piggy-backing off the Cell C network.