Vodacom: Cheaper Android, cheaper data bundles
If an iPhone, Blackberry and other smartphones have proven to be too expensive for you – Vodacom plans to launch a smartphone that will cost you less than R1 000 and offer cheaper data bundles.
With 3.6m South Africans having purchased a smartphone from Vodacom, the giant network provider is hoping to get the rest of us to do so, by providing an affordable Android smartphone in the next six months.
CEO Pieter Uys says that the population penetration of high speed mobile broadband isn’t where he wants it to be − it currently stands at 75%, and it should be closer to 100%.
”In the next couple of months, South Africans can expect to be able to purchase a smartphone for under $100 (or just under R700). We want to bring the power of internet to the consumer’s hands – for lower prices,” said Uys.
Hoping to make a good impression and keeping in line with its rebranding, I arrived at Vodaworld in Midrand with a red scarf tied around my neck, to hear the company announce its year end results on Monday. To my disappointment I was mistaken for a staff member by some analysts.
A little less disappointing though was the group announcing that it is planning on investing R7b in its network to improve both data and call connections. This brings some welcomed relief for subscribers who’ve recently experienced dropped calls due to the upgrades to their towers.
The group boasted a 35% growth in data revenue this year and sees this as a growth opportunity. Frost and Sullivan ICT analyst Protea Hirschel says it’s no surprise that Vodacom is thus pushing smartphones to promote or encourage data bundle usage.
The cellphone operator also spent R5.1bn in capex to provide better data service offerings. It spent the money on upgrading base stations and expanding its self-provisioned transmission network. Hirschel is of the opinion that: ”Not only will this increase average speeds for subscribers over the medium term, but the group will also gain additional capacity which should improve its cost structures in future.”
But although data could be the way forward for Vodacom, the cellphone operator says it hasn’t neglected its voice tariffs. Uys says cheaper call tariffs will also be another focus area for the group in the next year.
The South African telecommunications landscape, from which Vodacom derives 86.2% of its revenue, has become considerably more competitive over the last year. The entry of Telkom’s 8ta into this space and a more aggressively positioned Cell C has resulted in downward pressure on prices and margins, according to Hirschel.
Vodacom is also diversifying into other products ranging from mobile money to music downloads. “We expect Vodacom to be following the lead of its parent company in developing other markets in future, such as mobile health and machine to machine communications,” says Hirschel.
Other interesting pointers that came out of the results include:
- A 4.5% increase in revenues to R61.2bn from R58.5bn in the prior period.
- EBITDA margins remained stable at 33.7% with the group generating R20.6bn EBITDA in the current financial year.
- Operating profit improved by 21.9% to R13.7bn, from R11.2bn previously, despite a further impairment of R1.5bn of the Gateway operations.
- Contract customers grew by 14% to 5.1m, and ARPU – average revenue per user –grew to R157 from R132.
- Vodacom declared a final dividend of 280c per share, bringing the total dividend for the year to 460c per share.
It appears that the market liked Vodacom’s latest set of results as its share price closed at a 52-week high of R81.70, up 2% from Friday’s close.
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Source: Moneyweb
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