Vodacom has reported a group revenue increase of 6,6%, a service revenue increase of 2%, strong growth in international operations and improved growth trends in South Africa for the latest six month period.

Group active customers increased 9,7% to 53,8-million; with net connections of 949 000 for South Africa and 2,3-million in international operations. Group data revenue grew 29%, driven by bundle sales and integrated offers.

South Africa revenue increased 6%, supported by a 41,2% increase in equipment sales and data revenue growth of 20,6%.

International operations (excluding Gateway Carrier Services) maintained strong growth momentum, with service revenue up 34,7% and EBITDA growth of 39,2%. Group EBITDA grew 9,6%.

Shameel Aziz Joosub, group CEO of Vodacom, comments: “A cornerstone of our strategy is sustained investment in network capacity. With increased capacity, we’re able to offer better value and support higher usage without impacting quality.

“In South Africa, we invested R3,1-billion in the network during the period and increased 3G coverage to 88,9% of the population. On the voice side, our prepaid average effective price per minute came down 16,9% to 59 cents.

“As a result, our prepaid customer base increased by 927 000 active customers and outgoing voice traffic increased 21,2%. When looking at changes to mobile termination rates, we are hopeful that the regulator will consider the crucial role that continued investment plays in facilitating further price reductions.

“In our international operations, our customer base increased 22,4% to 23,7-million,” Joosub adds. “Data revenues in these operations increased 100,6%. This was driven by a 41% increase in the number of active data customers.

“Our International operations now account for 21,6% of group service revenue, increasing from 19% a year ago,” he adds.

“Driven by lower handset prices and reduced data costs, smartphone adoption is growing rapidly across all of our operations. In South Africa, average data usage per smartphone increased 79% and for the group, data traffic is more than 80% higher than a year ago.

“To cater for continued growth, we plan to accelerate network investment and we are currently in the process of determining the investment allocation per country.”

For the South African operations, revenue increased 6% to R30,134-billion driven by a 41,2% growth in equipment revenue from smartphone and tablet sales. The growth in equipment revenue was achieved through increased device financing which underpins our strategy of putting data capable devices into our customers’ hands by making devices affordable for more of our customers. This has supported the growth in active data customers of 13,4% to 15,1-million customers.

Service revenue growth trends stabilised in the period, an improvement following declines in prior quarters. Excluding the impact of lower mobile termination rates (MTRs), service revenue increased 2,9%.

The improvement was driven by successful execution of our pricing transformation strategy which resulted in data revenue growth of 20,6% and positive growth of both contract and prepaid customer revenue. Service revenue growth was offset by a 23,6% reduction in interconnect revenue from lower MTRs.

Contract mobile customer revenue was flat year on year at R10,639-billion. Contract customers grew 2,2% to 4,8-million. Contract customer ARPU decreased 3,2% to R393 per month due to a higher prevalence of data only customers with lower ARPU and the decline in out-of-bundle spend.

The decline in ARPU was largely offset by increased data spend as Vodacom moves customers to better value integrated price plans and data enabled devices.

Contract ARPU decline has slowed from previous quarters as the company continues to transform the base from voice centric contracts to integrated price plans which incorporate voice, data and messaging at better value. 41,8% of the voice contract base (excluding top up) is now on the integrated Vodacom Smart and Vodacom Red price plans with in bundle spend of 63,8% up from 62,7% in previous year.

Including M2M connections, the contract customer base increased 6,2% to 6,1-million M2M customers increased 24,1% to 1,3-million as the company continues to leverage the Vodafone global M2M technical platform. It also continues to launch M2M applications as this market evolves.

The programme to simplify price plans and offer more value has been well received by customers, resulting in a net gain in active prepaid customers of 927 000 in the six months, up 1,2%. The pricing transformation programme has delivered price declines of 16,9% in effective price per minute to 59 cents. Vodacom has increased prepaid customer ARPU by 1,4% to R74 as a result of increased take up of prepaid data bundles and 19,3% growth in minutes of use, offsetting declines in price.

Data revenue increased 20,6% to R5,096-billion, contributing 21,5% (2012: 17,8%) to service revenue. Vodacom further reduced pricing on all our bundles during this period resulting in a 108,4% growth in the number of bundles sold.

The effective price per megabyte has reduced by 16,3%. Focus on handset financing to drive smartphone penetration has led to a 24% growth of these devices, with 6,6-million now active on the network. The average monthly usage has also increased 78,9% to 220 MB per device and active data customers increased by 13,4% to 15,1-million.

EBITDA grew 5,9% to R11 421-million with margin of 37,9%. Margins were impacted by low margin equipment sales which now contribute higher proportionate levels of EBITDA.

Vodacom’s international operations’ service revenue excluding Gateway Carrier Services (GCS) grew 34,7% to R6,516-billion. Service revenue growth was supported by a 22,4% increase in customers to 23,7-million. Our bundle offers continue to show good elasticity and resulted in a 44,2% increase in outgoing traffic, more than offsetting the effective reduction in prices. International operations increased its contribution to Group service revenue from 19% (excluding GCS) to 21,6%.

Data revenue grew 100,6% driven by 41% growth in active data customers to 6,1-million. Data bundle propositions in all our markets stimulated further demand; the company now has 25,6% of the customer base using data compared to 22,2% a year ago.

Mobile financial services continue to grow in Tanzania contributing 18,7% to service revenue. M-Pesa customers grew 29,4% to 5,5-million, more than half of the customer base in Tanzania. M-Pesa was launched in DRC, Mozambique and Lesotho in the period and is already gaining traction in these markets.

International operations EBITDA (excluding GCS) is up 39,2% to R1,806-billion and EBITDA margin increased to 26,9%, excluding the impact of movements in foreign currency. EBITDA margin improved by 1,8 percentage points as a result of our continued focus on cost containment. International operations contribution of 13,7% to group EBITDA increased from 11,8% a year ago.