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Vodacom growth spurt continues

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Vodacom growth continues unabated, with the cellular network operator increasing customers in all the regions it operates in, while showing a 17,5% growth in profit on a 17,2% increase in revenue for the six month period to 30 September. 

The group's total customers increased by 22,6% to 31,6-million. Customers now number 23,2-million in South Africa (a 15,3% increase), 3,7-million in Tanzania (up 41,8%), 3,2-million in DRC (up 56,8%), 332 000 in Lesotho (up 39,5%) and 1,1-million in Mocambique .
Revenue increased by 17,2% to 22,8-billion, and profit was up 15,1% to R5,7-billion, with net profit after tax up 17,5% to R3,7-billion.
Group CEO Alan Knott-Craig says it is exceptional for a cellular phone network to generate double-digit organic growth in a maturing market that had been going for 14 years.
“Our horizontal diversification growth initiatives are underway and promise to deliver good results. The most exciting project is the super-high speed optic fibre network that we have started building over large parts of Johannesburg in the last six months. This will provide high capacity for our own use, thereby reducing our wholesale cost, whilst increasing revenue opportunities from corporate customers by offering cost-effective voice, data and media communications at maximum speeds. This service should be commercially available by March 2008,” Knott-Craig says.
Vodacom`s leadership in the competitive South African mobile communications market decreased to an estimated 56% market share on 30 September, with the cellular industry as a whole increasing by an estimated 21,5% in the last six months. Vodacom holds approximately 42% of the market.
The market penetration, by SIM card, of the cellular industry is now an estimated 86,8% of the population.                                                                     
Vodacom`s data revenue increased, mainly due to new data initiatives. Vodacom  SA transmitted 2,2-billion SMSs over its network during the six months ended 30 September.
The total number of data users was 3,5-million on the South African network. The number of  active data users includes: MMS users 1,3-million; data card and USB modem users 266 000; 3G/HSDPA handsets 945 000; Vodafone live! users 1,2_million; Unique Mobile TV users 35 000.
Data revenue now constitutes 10,5% of service revenue, which excludes equipment sales, starter pack sales and non-recurring revenue. Data revenue in all countries increased substantially, confirming the trend of increased data spend by customers.
“Including our interests in broadband suppliers like iBurst, Vodacom is arguably the biggest supplier of broadband in the country. By building our own infrastructure we will be able to significantly reduce data cost and hence prices to our customers in the medium to long term,” Knott-Craig says
Vodacom`s interconnection revenue increased by 15.6% to R4,3-billion for the six months ended 30 September, due to the growth in incoming mobile traffic from other networks.
Knott-Craig adds that the Vodacom Earth Station at Midrand had been completed and will be commercially operational by December 2007. “This gives us direct satellite communications with our African operations. It also gives us alternate feeds for our South African infrastructure ensuring a more robust network.
"Our foray into Pay-TV looks promising, and the recent introduction of our own radio station for internal communication to our distribution channel and staff, and eventually to our customers by streaming, should also attract new advertising revenues. Media advertising using text and MMS has also been launched and we are hopeful that this too will produce an additional revenue stream. The soon-to-be-introduced Vodacom instant messaging (IM) service will not only provide competition to players in this field, but will enhance our own product offering to the market.
“Our recent decision to diversify into managed services for corporate customers will include corporate hosting, enterprise application solutions, hosted PABX services, virtual private networks and managed storage, and should be available by the end of this financial year.
We also are expanding our presence in the Internet space by becoming a Tier 1 ISP. This too should become a reality by the end of the current financial year,” Knott-Craig says.
“Our acquisitions into WBS Holdings and Wireless-G have strengthened our presence in the data communication space and given Vodacom access to not only WiMax services but also a significant number of WiFi Hotspots internationally. Commercial access to the WiMax network should be a reality by the end of the current financial year, as will integrated access to the WiFi Hotspots," he says.
Meanwhile, Vodacom’s BEE transaction, valued at R7,5-billion, at the South Africa opco level, received the green light from shareholders last week, after being delayed over the last five months by shareholder activity.