Vodacom has published its financial results for the year ended 31 March 2019, which showed subdued mobile data revenue growth in South Africa.
Speaking at the company’s results presentation at Vodacom World in Midrand, Gauteng, Vodacom CEO Shameel Joosub said this lower data revenue growth could be attributed to its data pricing transformation strategy and the implementation of ICASA’s End-User and Subscriber Service Charter (EUSSC) regulations.
Joosub said that Vodacom had been steadily lowering the effective data rate for customers, bringing the network’s data bundle pricing in line with the competition and phasing out out-of-bundle (OOB) revenue.
“We remain focused on data pricing in South Africa, where we will continue to manage the process of data pricing transformation,” Joosub said.
Data price strategy
Joosub said Vodacom had decreased the price of its hourly, daily, and weekly data bundles, which have seen increased adoption and now comprise the majority of data bundle volumes on the network.
“From a price transformation perspective, we focused on hourly, daily, and weekly price points to give customers more flexibility,” Joosub said.
This had the effect of bringing effective data rates in South Africa down by 37.5% over the last financial year, and 80% of Vodacom’s bundle sales are now these discounted hourly, daily, and weekly data bundles.
Responding to questions regarding data bundle pricing in South Africa, Joosub acknowledged that Vodacom previously commanded a premium over competitors – especially Telkom, which offers some of the cheapest data bundles in South Africa.
“We were letting Telkom run away a little bit with the market in terms of prepaid data bundle pricing, but then we dropped our rates,” Joosub said.
“I think we compare very favourably to Telkom and MTN,” he added. “We still believe we can still command a price premium, but we took steps where this premium was becoming too big.”
Vodacom’s financial results showed that data traffic was up 35.6% in the period – and active smart devices on the network were up 7.6% to 19.9 million, of which 10 million were 4G devices.
Data revenue and roaming
These pricing changes paired with the implementation of the EUSSC resulted in lower mobile data revenue growth.
Joosub said that Vodacom would also evaluate its monthly data pricing in the coming year to ensure the company remains competitive and completes its pricing transformation.
75% of Vodacom contract customers have been migrated to packages which offer better data value, added Joosub.
Furthermore, Vodacom and Telkom recently signed a roaming agreement which sees Telkom customers roaming on Vodacom’s 2G, 3G, and 4G networks.
This arrangement is on track to take effect from 1 July 2019, allowing Telkom customers to enjoy better coverage thanks to Vodacom’s expansive network.