Vodacom released a trading update for the quarter ended 30 June 2020, which shows strong service revenue growth in South Africa.
South Africa service revenue increased by 6.4% for the quarter, supported by strong demand for data and connectivity services.
Vodacom said this increased demand was fuelled by its subscribers working, entertaining, and educating from home during the quarter.
The significant growth in demand assisted in offsetting the effects of 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 SA’s customer base was down by 9.9%, mainly driven by reduced gross connections in the prepaid segment during the period of restricted movement.
“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.”
Big increase in prepaid ARPU
One of the standout numbers in Vodacom’s trading update is the increase in the average revenue per user (ARPU) in the prepaid segment.
Mobile customer revenue grew by 5.0% in the prepaid segment, aided by a greater share of wallet for connectivity services during the lockdown period.
Coupled with a lower prepaid customer base in the period, saw ARPU increase by 20.8% to R64.
The prepaid customer base declined by 11.9%, as gross additions during this period were weak due to store closures and restricted movements.
The chart below shows the change in ARPU for Vodacom’s prepaid subscriber base in South Africa over the last year.
Increase in data traffic
During the quarter data traffic increased by 97.7% as demand for connectivity services was key in keeping the economy going and learners educated.
“We also implemented price reductions of 34% on average from 1 April 2020 for 30-day data bundles,” said Vodacom.
The company also saw an increase in data customers of 6.5% during the period with 13.2 million using 4G, up 29.4%.
Financial services grew by 10.9% during the period supported by Airtime Advance, which increased by 11.9%, as more customers were able to use the service – penetrating 28.0% of our prepaid base.
Insurance policies increased by 22.8% to 1.9 million long- and short-term policies.