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This pleasing performance has been accompanied by Vodacom securing an outright net promoter score (NPS) lead over all our competitors in all our operations.
During the year, we completed the transformative R42 billion acquisition of a strategic stake in Safaricom, and in the same month we became the first (and currently only) telecommunications company to list on the Dar es Salaam Stock Exchange, a record-breaking listing involving the participation of more than 40 000 Tanzanian investors.
This year, we improved our BEE score and achieved a Level 3 BEE contributor status. This reflects our commitment to implementing meaningful and sustainable transformation.
Our industry-leading application of Big Data and machine learning, created to deliver personalised bundle offers based on customer behaviour, continues to differentiate us from our competitors. Through our ‘Just 4 You’ platform we have accelerated the uptake of bundle offers, driving the sale of 2.3 billion bundles in the year, up 51.3%. Customers using bundles have grown 13.9% to 18.7 million. Data bundles sold increased 54.7% to 766 million, with the average monthly data usage on smartphones increasing 18.4% to 784 MB, driven in part by a 44.8% increase in 4G customers to 7.3 million. Enterprise service revenue grew 10.8%, and our Enterprise mobile customer base increased 6.9% year-on-year to 1.3 million customers. We achieved impressive results in growing our customer base through our segmented propositions in the youth (Vodacom NXT LVL) and emerging market (Vodacom Siyakha) segments. We more than doubled the number of customers on our Youth platform to 3.3 million, and saw 7.7 million low-income customers on our Siyakha platform using Facebook flex in the first year. Our financial services strategy is also gaining momentum with our insurance direct recharge offering.
The 4.9% rise in service revenue growth is particularly pleasing given the revenue impact associated with reducing out-of-bundle data prices by as much as 50% in October last year, as well as the early phase investments in new revenue streams, including fibre, content propositions and financial services. As part of our commitment to democratising data, we have reduced our effective rate for data by 21.6% year-on-year, and by 42.5% over the last three years. Our accelerated rural coverage programme was instrumental in Vodacom becoming the continent’s first operator to reach 80% population coverage on a 4G network.
In our International operations, it was a particularly good year for Mozambique and Lesotho, while our commercial efforts in Tanzania and the DRC continue to show strong momentum. This portfolio produced a 7.4% increase in normalised service revenue on the back of rising customer numbers, strong demand for data, and the continued accelerated uptake of M-Pesa.
Revenue from mobile money continues to be a significant contributor to the Group. The combined customer base, including Safaricom, grew 11.5% in the past year and now exceeds 32.3 million. During this period, M-Pesa customers processed transactions worth R1.3 trillion, making it the biggest mobile money platform across the continent. The total transaction revenue from M-Pesa across the portfolio is R10.2 billion, which is significant. M-Pesa revenue is flying with a growth rate of 30.4%* and 11.7 million customers in the International portfolio, and 14.2% M-Pesa revenue growth and 20.5 million customers in Safaricom.
Despite a turbulent political context, Safaricom delivered net profit growth of 14.1% for the year, supported by strong growth in data and M-Pesa revenues, and a 5.1% increase in customers to 29.6 million. Vodacom’s portion of the eight-month profit contribution from Kenya’s leading telco was R1.5 billion.
We are seeing the benefits of our significant strategic investment in Safaricom. As part of our commitment to growing our financial services, we are building on Safaricom’s extensive M-Pesa experience to expand our merchant payment system in Tanzania, and to get each of our other mobile money markets to the same level of sophistication. We are working closely with Safaricom to enable them to enhance their platforms through our skills and IT systems in Big Data and machine learning.
We believe that digitisation offers exciting opportunities for us to extend revenue streams beyond connectivity, as well as unparalleled potential to accelerate social transformation. Our Vision 2020 strategy has five key strategic elements, aimed at delivering on our core vision of being a leading digital company that empowers a connected society.
Using machine learning, Big Data and analytics, we will be deepening our understanding of consumer behaviour, and developing highly-personalised offerings, with the ultimate goal of achieving relevant offers for the segment of one. In the Consumer space, we are targeting opportunities to monetise and grow data usage by developing Consumer digital services in digital content, financial services, Consumer IoT, and specific partnerships in areas such as e-Commerce, e-Education and e-Health. To drive Enterprise growth, we are focusing on building our core sales channel, expanding our Cloud and security business, and becoming the IoT solutions partner of choice. The key objective is to protect and grow traditional revenue streams, while expanding to complementary adjacent services.
Our goal is to provide the most engaging customer experience, blending the best of technology and human interaction in a personal, instant and easy way, substantially enhancing the quality of service. We are investing in Big Data and analytics, chat bots, online self-service and IT-based customer engagement and management tools, and will be further modernising and digitising our retail channel. We will be building on the early successes of our segment-based county, cluster and micro-cluster model, to drive our targets to secure and consolidate our leadership in market share per segment and county. Our goal is to be the NPS leader in all markets, with distinct leadership in digital interactions.
In modernising our network, and as part of our smart capex drive, we will be growing our connectivity footprint expanding 4G coverage, providing 5G readiness and utilising Big Data intelligence and an Agile culture to deliver smart network planning and smart network operations. We are deepening our IT capabilities and implementing an IT acceleration programme. Our key measure of success will be our Network NPS score, measuring customer experience on our networks.
We have begun the process of digitising our own organisation, built on a culture that fosters organisational agility and collaborative working, that attracts and develops the rights skills, talent and diversity, and that uses Big Data and analytics to leverage data for improved decision-making. This year we have enhanced our core team of data engineers, data scientists and modellers, and will be looking to double our capacity in the next year. We measure our success in applying digital in our new ways of working, through our employee engagement score and particularly how we adopt digital in our mindset as a business.
Our strategic objective is to ensure that Vodacom is the customer brand of choice, with a strong purpose-driven brand and a deserved reputation for accelerating socioeconomic transformation through digital solutions, and for showing leadership in promoting BEE in South Africa. We have prioritised seven of the global UN Sustainable Development Goals (SDGs), where we believe we can have the most meaningful impact, by democratising data, extending the coverage and quality of our network, and providing digital products and services aimed at promoting financial inclusion, education, agriculture, and healthcare. We are targeting to remain the industry leader as measured by our Reputation Index survey.
Regulatory and policy developments remain an important challenge across all our markets. In South Africa, we have had constructive engagements with government and the regulator, where we have highlighted our concerns regarding the draft Electronic Communications Amendment Bill. While we fully support government’s ambitious objectives for the sector – in terms of increasing the affordability and reach of broadband, and accelerating economic transformation – we are concerned that the nature of the proposed new WOAN would have significant negative consequences. We have proposed an alternative ‘hybrid model’ – comprising a competitive WOAN with the opportunity to access spectrum for current operators – which we believe would have a greater positive impact in broadening connectivity, driving down costs and accelerating transformation.
Access to spectrum remains a critical need in making our communication services more affordable and in delivering new technological advances to customers across our markets. We will continue to engage constructively in these processes with regulators and government to ensure a speedy and fair resolution for the industry at large.
Looking ahead, we are encouraged by renewed economic and political stability in most of our markets. I believe that our investment and efforts to drive revenue diversification and digital transformation across the Group are having the desired effect, and that Vodacom is well placed to realise and share the significant opportunities associated with the increasingly rapid uptake of digital technologies. I remain confident that we have both the right strategy and the right team to drive exciting growth opportunities as we seek to change people’s lives through building a connected society.
In closing, I wish to thank my colleagues on the Board and the executive team for their guidance and assistance over the year, and Vodacom’s employees across our markets for their commitment in delivering on our strategy. The future is exciting. We’re ready.
Chief Executive Officer
1 June 2018