Vodacom Integrated Report 2017

Our business

Operating context

Delivering on our strategy

Our governance structure

Administration

M-Pesa

revenue increased 19.4% to R1.9 billion, fuelled by

expansion in the distribution channels and expansion of the

products and services on offer. We added 3.7 million customers,

increasing the number of customers to 12.9 million

. Tanzania

launched an M-Pesa app for smartphones that has unique

experiences such as QR code assisted payments, easier access to

contacts, predefined amounts and integrates with the merchant

payment platform. Mozambique has made significant progress in

the year; 2.5 million customers representing 48% of its customer

base are now using the M-Pesa service while Tanzania leads at

63% penetration of its customer base. The DRC has reached

over two million customers as they focused on improving

distribution. We have implemented a new M-Pesa platform in all

operations except Lesotho with enhanced technology which has

significantly improved stability, resulting in increased trust with

customers which is a key attribute for success. The system

continues to grow from its roots of person to person transfers,

now also incorporating a complete merchant payment system,

bill payments, a salary payment system, as well as savings

and loans products for customers. In Tanzania alone, we now

transact US$1 billion in value each month.

1. Number of unique customers who have generated revenue related to M-Pesa in

the past 90 days; of these 10.0 million have been active in the past 30 days.

Capital expenditure

of R2 833 million

represented 16.3% of revenue. We continue to

invest significantly in all our markets to

strengthen network and service differentiation

and to support data growth and wider voice

coverage. We added 284 4G sites, 888 3G sites

and 536 2G sites since March 2016.

EBITDA

declined 15.6%, normalised declined

8.6%* to R4 545 million and the EBITDA margin

contracted by 3.1ppts to 26.2%. A number of

actions to mitigate the impact of the slowed

revenue growth in the year helped to offset the

impact on margins. These included sales margin

improvement through the promotion of own

channels such as M-Pesa for recharge,

restructuring to drive improved efficiencies and

continued savings in network operating expenses

through our ‘Fit for growth’ savings programme.