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Vodacom rakes in R24.8bn revenue in Q1

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Shameel Joosub, Vodacom Group CEO.
Shameel Joosub, Vodacom Group CEO.

Vodacom Group posted first quarter revenue of R24.8 billion, up 9%, as strong normalised growth of 14.2% was partially offset by the rand’s recovery.

SA’s biggest mobile operator this morning issued a trading update for the quarter ended 30 June.

According to the company, the rand appreciated by 20% against a basket of its international currencies, impacting reported growth.

Normalised group service revenue growth was 7.8% as international growth accelerated.

The telco says SA’s service revenue was up 5.2% to R14.1 billion, reflecting sustained demand for connectivity services and strong growth in new services.

Strong M-Pesa revenue supported normalised growth of 13.5% for the group’s international markets, while on a reported basis, service revenue of R5.3 billion declined by 6.3% as a result of currency translation.

Group financial services revenue, excluding Safaricom, contributed 9.8% of consolidated services revenue and grew 33.9% on a normalised basis.

Branching out

Shameel Joosub, Vodacom Group CEO, says the first quarter of the financial year was characterised by two significant milestones that support the group’s geographic and revenue diversification.

In May 2021, he says, a consortium led by Safaricom was awarded a mobile telecommunications licence by the Ethiopian government, following a fiercely contested international bidding process.

“Vodacom is honoured to be part of this powerful consortium that will provide world-class services to Africa’s second most populous country.”

Separately, Joosub adds that in June, the company announced that more than 70 merchants had joined the VodaPay ecosystem ahead of the launch of its South African super-app in the coming months.

“VodaPay is expected to support greater digital and financial inclusion, which is core to our purpose-led strategy.

“It is testament to the depth and strength of the group’s leadership team that we were able to achieve these milestones and a strong financial performance while remaining resolutely focused on dealing with the devastating impacts of the COVID-19 pandemic across our markets.”

According to Joosub, a combination of greater value and an enhanced customer experience supported sustained demand for connectivity as customers continued to work, entertain and educate from home, and contributed to service revenue growth of 5.2% in South Africa.

He notes Vodacom Business revenue was up 14.1%, reflecting this connectivity demand and the integration of new digital service offerings, such as the internet of things.

Financial services in South Africa remained a strong performer, delivering revenue growth of 19.1%.

“Our international portfolio delivered normalised service revenue growth of 13.5%, marking a meaningful recovery from the prior financial year.”

Helping hand

During the quarter, Joosub says Vodacom assisted governments and communities across the continent through strategic partnerships and the deployment of technological solutions to enable more Africans to be vaccinated.

“In April 2021, we partnered with the African Union Development Agency to accelerate the COVID-19 vaccine rollout through mVacciNation, our technology platform that manages vaccination appointments and stock readiness.

“In South Africa, the National Department of Health is leveraging our mVacciNation platform to manage the deployment of vaccines.”

In addition, he points out that Vodacom and Vodafone made an R87 million financial pledge during the quarter to provide logistics support and cold chain technology to deliver COVID-19 vaccines to underprivileged and rural communities in the Democratic Republic of Congo (DRC), Lesotho, Mozambique, SA, Tanzania and Ghana.

“Delivering on our purpose and social contract is not limited to alleviating the effects of the pandemic. During the quarter, Vodacom and the Vodafone Foundation launched a fund to support communities in the DRC impacted by the volcanic eruption of Mount Nyiragongo, in addition to providing free voice calls and person-to-person (P2P) M-Pesa transactions.

“In South Africa – through the Vodacom Foundation’s Disaster Relief Fund – we provided support to communities in Cape Town impacted by fires in April and to people affected by the recent unfortunate social unrest in KwaZulu-Natal.”

Banking on resilience

According to Joosub, the firm also implemented a co-ordinated response to maintain service and prioritised the safety of customers, staff, suppliers and franchise store employees in areas impacted by the unrest.

“The financial impact of damage to our infrastructure related to the unrest was not material,” he says.

“Since the beginning of the quarter, South Africans have benefitted from a further 14% price reduction in the 1GB 30-day data bundle – marking a cumulative 43% cut since April 2020 – and our significant investment in infrastructure and technology of R2.9 billion to support network capacity and resilience.”

The performance was supported by M-Pesa revenue growth, up 43.2% on a normalised basis, which benefited from the increased customer base, higher platform usage and the re-instatement of P2P M-Pesa transaction fees.

“We zero-rated P2P M-Pesa transaction fees for the majority of the FY21 to support our customers and facilitate economic activity. The reported service revenue decline of 6.3% for our international markets reflects the impact of currency translation. In the quarter, the rand posted a sharp recovery, appreciating by 20% against a basket of our international currencies, negatively impacting the reported result.

“Looking forward, while we expect disposable income to remain under pressure, our ‘System of Advantage’ will deliver diversified, differentiated offerings to our customers, further strengthening and growing our relationships with them.

“Also, we eagerly anticipate the outcome of the legal processes under way pertaining to the auction of high-demand spectrum in South Africa and hope that the impasse will be quickly resolved in the best interests of consumers.”

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