Vodacom has released its trading update for the quarter ended 30 June 2020, showing an increase in overall revenue but a significant drop in South African mobile subscribers.
Group service revenue was up by 7.6% and group revenue grew by 5.6%, which Vodacom said was due to strong growth in South Africa with customer demand increasing during the lockdown period, while its international operations were negatively impacted by lower economic activity from the effects of COVID-19.
In South Africa, Vodacom’s service revenue grew by 6.4%, benefiting from increased demand for data and connectivity services as customers worked from home during the quarter.
“The significant growth in demand assisted in offsetting the effects from a price reduction on 30-day data bundles from 1 April 2020. Revenue grew by 4.2% impacted by lower equipment sales during the lockdown period, but showed recovery during the latter part of the quarter,” Vodacom said.
Vodacom added that its customer base in South Africa was down by 9% – a decline which was mainly driven by reduced connections in the prepaid segment due to the movement of South Africans being restricted.
Vodacom South Africa’s total customer base declined from 41.3 million to 39.4 million over the period. This was almost entirely attributable to a loss of 1.9 million prepaid subscribers.
Data customers fell by almost 700,000, while total ARPU grew from R88 to R99 per month.
“We are however encouraged that our 30-day active prepaid customer base grew by 0.9%, Vodacom said.
“The contract customer base increased, benefiting from enterprise customers extending more data lines.”
Lockdown demand and price cuts
Vodacom said it saw mobile data traffic increase by 97.7% during the quarter, as well as 11.9% growth for Airtime Advance.
Vodacom said that while it implemented price reductions of 34% on average from 1 April, the increased demand more than offset these price reductions during the period.
“We also note an increase in data customers of 6.5% during the period with 13.2 million using 4G, up 29.4%.”
The company said it focused its capital expenditure on equipping its base stations with additional backup power and additional capacity in congested areas.
Vodacom CEO Shameel Joosub said that while he was particularly pleased with the performance of the South African business, Vodacom remains cautious about the impact of COVID-19.
“That said, we are fully focussed on delivering great value and an exceptional experience to our customers and committed to a prudently sustainable investment programme that continues to yield positive results,” Joosub said.
“Looking ahead, the long-anticipated award of high-demand spectrum in South Africa remains instrumental in the data pricing dynamic in our largest market.”