Before its listing yesterday, the complex nature of Vodacom's shareholding restricted its ability to make strategic decisions. With Vodafone now owning 65% of the group and Telkom relinquishing its share, the telecommunications company is set to move forward in a clear, new direction, according to analysts.
Vodacom released its first interim results as a listed company today, revealing a 14,5% growth in revenues, but a 22,2% drop in net profit. The group ascribed this drop to the charges related to the BBBEE deal and the tough economic environment.
"The results show the effects of the current hard times," says Frost & Sullivan ICT industry analyst Lindsey Mc Donald. "They have however managed to keep expenses relatively stable, while operating costs have risen at a steady rate."
She highlights the 28,8% growth in data revenues and 80% growth in Vodacom SA broadband customers as an indication of where future revenue growth can be expected.
"This growth is significant, but at the same time it's coming off a relatively small base," Mc Donald says. "We still haven't seen the ramp up in broadband services from fixed-line operators that we would like, so Vodacom's coverage is perceived to be the most comprehensive and reliable. That's why it has become a leader."
She adds that Vodacom in South Africa has also been able to offer a greater range of top-end products such as Blackberry and smart phones than its competitors. This has given it a distinct advantage in this segment.
Mc Donald expects that the next year will see Vodacom make a concerted effort to enter other African markets. However, she warns that this will require a clear strategy.
"There is already very well established competition from the likes of MTN and Zain in the rest of Africa," she cautions. "These operators also already have strong value propositions, such as MTN's one rate for roaming in Africa and Zain's One Network. Vodacom will need to offer something unique."
She adds that the operator is likely to take its services into the rest of the continent through further acquisitions.
"The acquisition of Gateway is important as it provides an instrument for them to provide services into Africa," she says. "But finding new targets will be tough. MTN and Zain are likely to have already considered good targets and there might not be much left for Vodacom."
Mc Donald believes that part of the key to Vodacom's success will be to ensure that what the group offers in Africa is not just Vodafone by another name. The group will need to provide something that is particularly suited to the needs of the continent.
For the six months ended 31 March 2009, Vodacom reported a 14,5% growth in revenue to R55,2-billion. EBIDTA increased 10,5% to R18,2-billion while data revenue was up 28,8% to R6,4-billion.
It increased the number of customers by 16,5% to 39,6-million but broadband customers increased by 80%. There are almost 5-million Vodacom mobile Internet users in South Africa.
During the period, it completed its BBBEE transaction and also acquired pan-African communications provider Gateway.