Big surprise as Vodacom’s voice and data revenue declines in South Africa

Vodacom has released its trading update for the quarter ended 31 December 2018, which shows a decline in its mobile voice, mobile data, and mobile messaging revenue in South Africa.

Vodacom SA’s overall service revenue declined by 0.9%, which the company said was a result of its customers optimising promotional data as part of a Summer campaign and a subdued consumer spending environment.

“Revenue fell by 1.3% following lower growth in equipment revenue, with device sales negatively impacted by the weaker rand against the US dollar,” Vodacom said.

Vodacom South Africa’s mobile voice revenue declined by 0.5%, its mobile data revenue declined by 0.4%, and its mobile messaging revenue declined by 10.9%.

Despite the decline in voice revenue, Vodacom described the performance of this segment as “resilient”.

It said its voice revenues were “stimulated by strong demand supported by our Airtime Advance product, which makes it easier to buy airtime when a customer is not close to traditional channels”.

Data revenue decline

The biggest surprise in Vodacom’s latest trading update, however, was a decline in data revenue.

Vodacom explained that its data revenue was impacted by customers using data rewards from its Summer campaign to offset their usual spend.

The operator said data usage remained encouragingly strong, with data traffic on its network up 41.4%.

Active smart devices on the network increased by 13.3% to 20.2 million, with average gigabytes per smart device increasing by 31.9% to 1.1GB. 4G customers increased by 40.5% to 9.2 million.

“We sold 209 million data bundles this quarter, as we continue to migrate customers to more in-bundle usage,” Vodacom said.

“We are managing out-of-bundle spend, with more inclusive value contracts and affordable data bundles with shorter validity periods, both of which are increasing in popularity with customers.”

Vodacom said the long-term benefit from this pricing transformation is expected to offset the short-term growth impacts as customers migrate to offers with lower effective rates.

Now read: Customer and data growth for Vodacom Group

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Big surprise as Vodacom’s voice and data revenue declines in South Africa