Vodacom customer increase 51.9%
Revenue was up 24.6% to 34.0 billion rand, while profit from operations rose 36.9% to 8.9 billion rand.
Vodacom reported net profit after taxation up 32.0% to 5.1 billion rand, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose 23.1% to 11.8 billion rand.
Cash generated from operations was up 10.8% to 11.1 billion rand.
Vodacom said that its customers increased by 49.3% in South Africa to 19.2 million. For the rest of Africa, customers increased by 74.1% in Tanzania to 2.1 million, by 52.2% in the Democratic Republic of Congo to 1.6 million, by 40.1% in Lesotho to 206,000 and customers increased by 84.9% in Mozambique to 490,000.
Its South Africa market share increased by 2% points to 58%.
Vodacom said the increase in its South African customer base was driven by the exceptional growth in the prepaid market although excellent growth was also achieved in the contract market. The number of prepaid customers increased by
53.3% to 16.8 million, while the number of contract customers increased by 26.2% to 2.4 million.
"The strong growth in customers was a direct result of the remarkable number of gross connections achieved, coupled with decreased churn," Vodacom noted.
Prepaid services have been the driving force behind market penetration in South Africa and contributed 92.1% (2005: 90.1%) to all gross new connections. During the period under review, Average Revenue Per User (ARPU) decreased to 139 rand from 2005’s 163 rand per month.
"The continued dilution of ARPU is caused by a higher proportion of lower ARPU as well as lower usage customers being connected to the network. Contract customer ARPU has decreased by 8.3% to 572 rand (2005: 624 rand) per month. The
main contributing factor to this decrease has been the high growth in data customers as well as the low end hybrid, Family Top Up package," it said.
The prepaid customer ARPU has decreased by 11.5% to 69 rand from 2005’s 78 rand per month.
In 2006 Vodacom maintained a very low contract churn of 10.0% (2005: 9.1%). The decrease in prepaid churn experienced during the year to 18.8% (2005: 30.3%) is a result of a combination of the introduction of innovative products and services, loyalty initiatives and changes in business rules to ensure incentives are paid on factual connections.
Total traffic on the network, excluding the impact of national and international roaming, increased 20.0% to 17.1 billion minutes in 2006. This growth was mainly due to the 49.3% growth in the total customer base from 12.8 million to 19.2 million as at the end of March 2006, Vodacom noted.
Also evident was a marked change in customer calling patterns, with total mobile to mobile traffic increasing by 26.1% while total mobile to fixed and fixed to mobile traffic increased by only 1.7%.
Vodacom said despite strong competition, it has retained its leadership in the highly competitive South African mobile communications market with an estimated 58% from 2005’s 56% market share.
The South African cellular industry has grown by 44% in the last year and Vodacom has contributed to approximately 63% of this growth. The market penetration of the cellular industry is now an estimated 71% (2005: 49%) of the population, it noted.
All of Vodacom’s other African operations, with the exception of Mozambique, showed excellent profit growth for the year ended March.
Vodacom Tanzania achieved exceptional customer and profit growth. The customer base increased by 74.1% to 2.1 million.
"The Tanzanian market remains highly competitive, but with mobile penetration estimated at 9.2% of the population, it still promises further growth potential," Vodacom said.
Vodacom Tanzania’s market share decreased slightly to 58% from 59%.
Vodacom Congo remains the market leader with an estimated market share of 48% (2005: 47%) at March 31, 2006. The DRC has the lowest estimated mobile penetration of all Vodacom’s operations at 5.5% of the population.
Notwithstanding the uncertainties surrounding the planned elections in the coming year, Vodacom Congo increased its customer base by 52.2% to 1.6 million (2005: 1.0 million) at end March 2006.
Vodacom Lesotho is expected to remain a small operation, but has positioned itself well to minimise the impact of competitive activity and has maintained its estimated 80% market share at March 31, 2006. Vodacom Lesotho increased its customer base by 40.1% to 206,000 (2005: 147,000). Mobile penetration in Lesotho is now estimated at 12.9%, Vodacom said.
Vodacom Mozambique’s estimated market share of 30.0% (2005: 33.0%) has decreased due to strong competition from the established competitor mCel, despite offering competitive coverage through an aggressive coverage roll-out programme. Vodacom Mozambique increased its customer base by 84.9% to 490,000 (2005: 265,000) at March 31, 2006. Mobile penetration is estimated at 8.4%.
Vodacom said it has performed well in an evolving and competitive African market. The South African market continues its robust trend and management believes that the market is far from being saturated.
The strong cash generation ability of Vodacom’s South African operations ensured a healthy consolidated balance sheet, despite substantial dividend payouts. In South Africa, Vodacom intends to strategically position itself to negate the impact of the pending deregulation of the South African market and plans to seize any emerging opportunities.
"With its strong brand and strong balance sheet, the Group is well positioned to remain the leading player in the main markets in which it operates," it said.
Affordability is the key to market penetration in all markets and Vodacom will continue to re-evaluate its tariffs and introduce innovative products to stimulate demand. In an ever-changing economic and regulatory environment, Vodacom is well positioned to maintain and even improve its current market leadership, it concluded.
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