Vodacom on Monday reported a 6.3% rise in group revenue to R86.4 billion for the year ended March 2018.
Group service revenue grew 3.4% to R70.6 billion, while 0perating profit climbed 11.5% to R24.3 billion.
“We added 7.0 million customers during the year – 4.5 million in South Africa, and 2.5 million in our International operations,” said CEO Shameel Joosub. “Safaricom added 1.4 million customers. In combination, we now reach over 103 million customers across the group.”
Headline earnings per share remained constant at 923 cents per share, impacted by shares issued to acquire the Safaricom stake, while the group announced a decline in total dividend per share to 815 cents, from 830 cents in 2017.
South Africa revenue grew strongly by 8.1% to R70.0 billion, as a result of equipment revenue growth of 15.2%, underpinned by smart device sales which constitute 70.0% of total devices sold.
Service revenue increased 4.9% to R54.6 billion, Vodacom said.
“We added 229,000 contract customers. Progress on our pricing transformation strategy has resulted in short-term pressure on contract ARPU, which declined 4.4% to R390.
“This was as a result of higher roll over of unused data bundles as we continue to migrate customers to ‘more value’ contracts, with 43.4% of the base now signed up for these contracts.
“ARPU was also impacted by changes in deal structures in the first half of the year, and a reduction of the out-of-bundle data rates in October 2017,” said Joosub.
Data revenue grew strongly at 12.8% to R23.4 billion, contributing 42.8% of service revenue.
Vodacom said significant investment of R11.6 billion was used to expand its coverage and improve quality in its networks, with R8.9 billion spent in South Africa alone.
“In our International operations, it was a particularly pleasing year for Mozambique and Lesotho, while our commercial actions in Tanzania and DRC continue to show good momentum,” said Joosub.
“This portfolio produced a 7.4% increase in normalised service revenue on the back of rising customer numbers, strong demand for data and the accelerated uptake of M-Pesa.”
Revenue from mobile money has become a significant contributor to the group, Vodacom said. The combined customer base, including Safaricom, grew 11.5% in the past year and now exceeds 32.3 million.
During this period, the M-Pesa platform in International operations, processed transactions worth $1.9 billion, generating a 19.6% increase in M-Pesa revenue to R2.3 billion.
In addition, Safaricom showed impressive results processing $6.5 billion worth of transactions for the year and grew M-Pesa revenue by 14.2% to KES63 billion.
“Looking ahead, we are encouraged by the renewed economic and political stability in South Africa and larger International operations, including Kenya.
“Our operations benefit from stability in foreign exchange and macro-economic environments and this is expected to bring a greater degree of predictability to the results across our markets,” Joosub said.
“We are encouraged by these developments and are reaffirming our three year targets of mid-single digit service revenue growth, mid-to-high single digit EBIT growth and capital intensity of 12% – 14% of group revenue, to build on this momentum,” he said.