Vodacom pumps R4.8 billion into South African network

Vodacom South Africa has invested R4.8 billion into its network between 1 April and 30 September 2023.

In its interim financial results released on Monday, Vodacom said this was to support network resilience, leverage its new spectrum assets, and enhance our IT platforms to maintain its competitive edge.

Vodacom’s capital expenditure is a billion rand (17.1%) lower than the same period last year.

“The year-on-year decline in capital expenditure reflects accelerated energy resilience spend in the first half of the prior year period, ahead of load-shedding,” Vodacom explained.

“Looking ahead, we expect to spend around R11.0 billion on capital expenditure in the current financial year, with increased spend in the second half of the year.”

Regarding the rest of its financial performance metrics, South African service revenue was up 4% to R30.7 billion.

Vodacom said this was a credible result given ongoing macroeconomic challenges.

“The growth was supported by new services and mobile data. New services such as financial and digital services, fixed and IoT were up 18.1% and contributed R5.1 billion, or 16.6% of South Africa’s service revenue.”

Operating profit declined 3.3% to R9.6 billion. Vodacom said this was as a result of higher depreciation and amortisation.

Earnings before interest, taxation, depreciation, and amortisation (Ebitda) increased by 1.6% to R16 billion.

“We reinvested cost savings into network resilience and maintenance,” Vodacom stated.

“The Ebitda margin moderated by 1.3 percentage points to 37.0%, impacted by lower margin equipment revenue, Cloud reseller margins and higher network and payroll costs,” said Vodacom.

“Payroll costs were up 11.7% on a reported basis as a result of lower capitalised overheads, which from a cash perspective was offset by capital expenditure savings.”

Vodacom said it expects cost savings to accelerate into the second half of the year, supporting Ebitda growth.

As for its core connectivity business, Vodacom said mobile data growth was supported by network resilience and capacity coupled with “big data-led” personalised offers.

Revenue reached R43.3 billion, up 5.1%, driven by strong equipment sales. Vodacom said its 36-month contracts allowed customers to upgrade handsets more affordably.

Mobile contract customer revenue increased by 4.1% to R11.7 billion, supported by good growth in Vodacom’s consumer segment.

“The consumer segment performance benefited from a contract price increase, which was coupled with an additional data allocation of 20% to support our value commitment to customers,” Vodacom stated.

“We added 105,000 contract customers in the six months reaching a base of 6.8 million, up 2.8%.”

Prepaid mobile customer revenue increased 3.1% to R13.1 billion and accelerated to 3.5% in the second quarter.

“We utilised our world-class customer value management capabilities to drive higher customer engagement and increase active days on the network,” Vodacom said.

“We added 2.9 million prepaid customers in the six months to reach 40.5 million customers.”

Average revenue per user (ARPU) also increased for contract and prepaid subscribers.

“Mobile contract ARPU of R302 was up 1.7% with the 6.7% price increase partly offset by transient pressure within Vodacom Business as corporate customers recalibrate spend for employees now returning to their offices,” the company said.

Prepaid ARPU grew 3.6% to R58.

Data traffic increased 45.2% during the period, supported by smartphone penetration and network availability, with data customers reaching 25.8 million, up 8.5%.

Smart devices were up by 10.3% to 30.5 million, while 4G and 5G devices increased by 17.6% to 22.8 million.

The average usage per smart device increased by 33.6% to 3.7GB per month.

Prepaid data revenue increased by 15.3% to R6.2 billion for the six months.

“This growth reflects our best-in-class network availability and the success of our data-led propositions focused on providing affordable offers to the most price-sensitive, lower-income customers,” Vodacom said.

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Vodacom pumps R4.8 billion into South African network