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Vodacom's Q3 revenues up 8.7%; sees weaker growth

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February 3
7:59 AM 2016

South Africa's largest mobile operator Vodacom Group Ltd has posted 8.7 percent growth in third quarter revenues. The mobile phone company is able to perform in a better way on increase in subscribers and high-speed network expansion. Vodafone is expanding internet services. Vodacom is strengthening its network and offerings in the wake of increasing domestic competition. 

Vodacom Group's sales were Rand 21.7 billion for the third quarter ending December 2015. Active subscriber number rose 6.8 percent to 65.2 million. Vodafone is banking on internet services to offset the drop in revenues from voice services. 

Vodacom is witnessing slowing down of revenue growth in the next quarter through March. The drought conditions and weaker South African currency Rand are impacting the financial performance of Vodacom. The company sees weaker outlook for consumer in South Africa. 

The wireless operator in 2015 decided to acquire most of Neotel Pty Ltd's assets pertaining to fixed-line business. The regulatory scrutiny took over 18 months of time. The revenue growth from South African market was 7.1 percent during the third quarter as against the 16 growth in the global markets, according to Sunday Times.

The number of active data users was up 15 percent to 30.3 million. The revenues from data rose 28 percent to Rand 5.52 billion. The data revenues contributed 32 percent to the service revenue. 

Vodafone registered increase in sales of affordable smartphone and other data devices in South Africa, The increased capacity added to data traffic growth of 47 percent. The number of smartphones and data devices on Vodacom network rose 28 percent to 13.5 million, according to Market Watch.

Vodacom is competing with MTN, Millicom, Orange and Orascom in the African continent. Vodacom alerts investors about the next quarter as it sees some tough weather in the quarter ending March 2016. 

Shameel Joosub, Chief Executive Officer at Vodacom, said: "Our performance in the quarter reflects the positive impact from our substantial network investment of 9.5 billion rand across all our operations in the nine months. We have expanded our network coverage and increased data speeds to secure network leadership."

Despite this, Vodacom's future outlook remains encouraging as the company is focusing on network expansion to meet the growing requirements from the subscribers. Vodacom invested Rand 9.5 billion during the third quarter on infrastructure development. The company enhanced network coverage and increased data speeds to secure network leadership, as reported by Tech Financials.

England-based Vodafone Group Plc owns 65 percent in Vodacom.  Vodacom shares fell 5.5 percent this year so far to Rand 144.06 giving a valuation at Rand 214 billion. Another competitor MTN Group Ltd is fighting against a $3.9 billion fine in Nigeria over a missing deadline to disconnect customers.  MTN shares also fell five percent. The company is disconnecting unregistered customers in Congo and Mozambique countries as part of adhering to government orders.

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