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Our performance
Our business
Governance review
Administration
Overview
devices, which account for 25.7% (2015: 16.8%) of total
device sales.
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Increased data coverage – the number of active data users on
the network expanded 12.7% to 18.7 million customers.
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Our compelling data offers through ‘Just 4 You’ – this propelled
growth in data bundle sales by 85.9% with average monthly data
usage increasing 49.8% to 350MB per customer; we continue to
see good ARPU growth with customers migrating from 2G to 3G
and 3G to LTE/4G, growing by 20.5% and 19.7% respectively.
EBITDA
increased 9.5% to R25 016 million, with strong revenue
growth and EBITDA margin expanding 1.6 ppts to 40.2% due to
a strong focus on cost efficiencies. Growth was impacted by a
R531 million foreign exchange gain (2015: R114 million loss) which
has been offset by a one-off BEE charge of R128 million included in
staff expenses in the current year, and a R308 million voucher
release in the previous year. At an individual employee level, we
have instilled a cost-conscious culture across the business, driving
good progress through our ‘Fit for growth’ cost savings programme.
Total expenses grew 2.5%, well below revenue growth of 5.2%. We
have made several structural changes to deliver cost containment,
such as optimising SIM card distribution costs and buying back our
customer bases (from Nashua Mobile (Pty) Limited in the prior year,
and more recently from Altech Autopage (Pty) Limited), which has
reduced ongoing commissions paid. Other cost savings initiatives
included optimising network operational costs through
maintenance contract renegotiations, self-providing more of
our transmission services, and outsourcing our network
maintenance staff to realise scale benefits.
Capital expenditure
of R8.7 billion allowed us to substantially
widen 3G and LTE/4G data coverage, improve voice quality and
increase data speeds. We have more than doubled the number of
LTE/4G sites in the year to over 6 000 sites, and extended our
high-speed transmission to 89% of our sites. Vodacom claimed top
spot in MyBroadband’s 2016 War Drive, which tested the download
speeds of South Africa’s mobile operators’ mobile data networks.
Our fibre deployment has started gaining traction as we accelerate
deployment to more estates. We have also focused more of our
capital spend on new billing systems to allow us to transition from
a predominantly mobile company to a unified communications
provider, giving us a 360 degree view of our customers. We aim
to complete the migration of our contract customers by the end
of this year.
Active customers
increased by 6.4%, with 2.1 million new
customers in the year. The ARPU trend improved largely as a result
of lower declines in voice revenue, with customers opting for the
more attractively priced ‘Just 4 You’ offers. This was accompanied by
a continued increase in data revenue as customers traded up to
either 3G or LTE/4G devices. Total ARPU declined 0.9% year-on-year
to R112. Adjusting for the prior year voucher release of R325 million,
ARPU was almost flat, down 0.1%. We have seen great success with
the next evolution in our bundle strategy, with personalised
offers through our ‘Just 4 You’ campaign optimising customer
spend while achieving ARPU uplift. Prepaid bundle purchases
increased to over 1 billion. Active prepaid customers increased
7.6% to 29.3 million. We have migrated 85% of contract
customers to new price plans with better value offerings.
As a result, contract in bundle spend increased to 71.3%
(2015: 69.3%). Active contract customers were flat at 4.9 million.
Contract churn fell from 9.2% a year ago to 8.5%, while
contract ARPU increased 4.5% to R397.
Enterprise
continues to deliver strong growth, as we leverage
network reliability and our leading mobile brand to move more
deeply into fixed-line. Enterprise service revenue (including
mobile) now contributes 22.8% of South African service revenue.
Fixed-line and business managed services increased 26.5%
year-on-year and now comprise 14.9% of total Enterprise service
revenue. Growth was supported by the increased demand for
fixed services as customers sign up for cloud solutions such as
SAP HANA software and Microsoft Office 365. We entered into a
strategic partnership with IBM in the second half of the year to
provide hosting solutions and the first global cloud in Africa.
Our collaboration with IBM, our extensive fixed and mobile
infrastructure, our pan-African and global footprint, and our
investment in data centre infrastructure, provides the ideal
platform to deliver cloud services to large and multinational
enterprises. Internet of Things (IoT), previously called machine-
to-machine, connections increased 28.2% to 2.3 million.
Our commitments
We will continue to make the investments needed to
diversify our revenue streams and achieve our ambitious
revenue growth targets for data, enterprise, fibre and new
services. A priority focus will be on securing access to
spectrum in South Africa. We increase our rollout of fibre,
drive demand for our enterprise and content services, and
maintain a strong focus on pricing transformation, data
monetisation and the customer CARE initiative, while at
the same time ensuring further progress in cost
efficiencies. We will continue our strategy of taking a
segmented consumer view, personalising consumer offers
through ‘Just 4 You’, and offering smaller-sized bundles.
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