As Vodacom pushes into new African markets, most of its growth will come from regions such as the Democratic Republic of Congo (DRC) where penetration levels are still low. However, as the operator focuses more on these countries, Frost & Sullivan believes that the growth it has seen in average revenue per user (ARPU) levels will be reduced.
Vodacom released its interim results today, showing an 8,2% increase in ARPU across the group for the six months to the end of September. The company noted that this was primarily due to growth in data revenue.
“This is a sign the data strategy is paying off in South Africa,” says Frost & Sullivan ICT analyst Spiwe Chireka. “However, whether growth in ARPU is sustainable remains to be seen, as competition in the region is intense and products and services are increasingly being replicated. As competition intensifies, operators often have to reduce tariffs in order to gain market share, and there are no indicators to say that this will not happen in the data segment.”
Vodacom’s results revealed customer growth of 35,5% in Lesotho, 34,1% in Tanzania, 19,3% in Mozambique and 18,8% in the DRC. The group recorded a 14.0% increase in profit over the same period last year.
“The operator’s presence in markets such as DRC and Mozambique, where penetration rates are less than 15%, is expected to sustain growth,” Chireka says. “This will balance out the slower growth in South Africa, where only 8,4% growth was realised.”
Chireka notes that single digit subscriber growth in South Africa was expected as the market is nearing saturation point. She said that when this has happened in advanced markets, operators have employed more aggressive strategies to expand their operations to include a wider range of telecoms services. Vodacom is following the same trend with its purchase of Gateway Communications and moves to offer corporate hosting and data services.
“Vodacom’s purchase of Gateway Communications and the development of a data centre are expected to increase its revenue streams and increasingly see it operate as a telecoms services provider in line with its parent company Vodafone,” Chireka says.