Vodacom reports subscriber decline, revenue growth in South Africa
Vodacom South Africa reported higher quarterly revenues despite lower subscriber numbers for its third-quarter results on Tuesday.
Between December 2021 and 2022, revenue increased by 5% to R21.9 billion, while subscriber numbers decreased by 2.4% to 44.7 million.
The company said the drop in subscribers was due to a clean-up of 1.1 million non-revenue-generating content customers.
Its increased revenue was supported by strong growth in income from equipment sales.
Service revenue increased 3.0% to R15.4 billion, while network investments (Capex) increased 15.6% year-on-year to R2.6 billion.
“Summer campaign customers were rewarded with Vodabucks by completing personalised goals such as recharging, buying bundles or paying their bills,” Vodacom said regarding its service revenue growth.
It said that this kept customers engaged on its network while rewarding them for their loyalty.
“New services such as financial and digital services, fixed and IoT were up 9.9% and contributed R2.3 billion, or 15.0% of South Africa’s service revenue,” stated Vodacom.
Mobile contract customer revenue increased by 3.1% to R5.7 billion, supported by increased subscriber growth in its consumer segment.
“Growth in the consumer segment benefited from strong demand for data services and the contract price increases of between 3–5% implemented in the first quarter of the financial year,” said Vodacom.
Vodacom added 132,000 contract customers in the quarter, increasing its base by 4.6% to 6.7 million.
“Mobile contract [average revenue per user] of R299 was flat with the price increases offset by repricing pressure associated with the government contract for mobile services (RT15) within Vodacom Business.”
The new RT15 government contract has been a contentious issue in the South African market.
Most recently, Vodacom sued the South African Police Service for moving its lucrative cellular contract to rival MTN.
“Our prepaid segment delivered a good result given the challenging macro backdrop associated with higher inflation and power availability challenges,” Vodacom reported.
Mobile prepaid revenue growth accelerated to 3.7% from 2.7% in the second quarter, and prepaid average revenue per user of R61 was up 7.0%.
Service revenue from financial services was up 12.6% to R779 million, with the customer base reaching 14.7 million.
“Revenue growth was supported by our insurance portfolio, with the number of policies up 11.1% to 2.6 million,” Vodacom said.
“Our Airtime Advance product remained a key contributor to financial services revenue, and posted a pleasing acceleration in the third quarter. We advanced R3.4 billion in airtime, amounting to 45.1% of total prepaid recharges.”
Vodacom also reported solid growth in its fibre products.
“Fixed service revenue was up 10.7%, excluding wholesale transit,” Vodacom reported.
“This was supported by strong customer adoption of fibre, with homes and businesses connected reaching 155,760, while our own fibre passed 163,910 homes and businesses.”
Across the group, Vodacom reported 4.7% normalised revenue growth to R30.7 billion and 3.5% service revenue growth to R24 billion.
Vodacom’s normalised growth calculations adjust for foreign currency fluctuation and exclude the impact of mergers, acquisitions, and disposal activities.
Without normalisation, the revenue and service revenue growth looks spectacular — 14.8% and 16.1%, respectively.
Group financial services revenue grew 16.5% to R2.6 billion. Without normalisation, the reported growth would be 30.6%.
“Looking ahead, the operating environment that we face requires an unwavering focus to deliver our strategy, to meet our business objectives and to serve our customers,” said Vodacom Group CEO Shameel Joosub.
“We continue to ensure that we have the right measures in place — including our commercial initiatives and cost efficiency programmes — to help mitigate the impacts from the global macroeconomic risks.”
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