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Vodacom Group Limited
Integrated report for the year ended 31 March 2017
Our segment performance
continued
Tanzania
Year ended 31 March
2017
2016
Revenue (TZSm)
933 292
923 347
EBIT (TZSm)
97 260
107 200
Customers
1
(thousand)
12 653
12 375
Data customers
2
(thousand)
6 463
5 415
MOU per month
4
157
124
Total ARPU
5
(TZS per month)
6 003
5 972
Number of employees
525
546
NPS (position relative to competitors)
3rd
2nd
Customer market share #1
30.9%
31.9%
¥
Solid progress in most of our strategic priority areas enabled us to
deliver a stronger second half performance, despite a highly
competitive environment. In particular, our continued investments in
data, M-Pesa and enterprise paid dividends by lifting customer and
revenue growth in the second half of the year. Our investments to
date have resulted in expanded coverage and a superior data
network experience, placing Vodacom at the forefront of securing
growth in mobile data. During the year, we launched high-speed
4G coverage across Dar es Salaam and produced impressive average
download speeds which are over 60% faster than our next-best
competitor. We continue to explore opportunities for spectrum
acquisition which will enable us to rollout 4G into other regions.
In addition, we made data services more accessible by introducing
affordably priced smartphones and attractive data propositions.
This largely contributed to the 19.4% increase in active data
customers who now make up 51.1% of our active customer base.
M-Pesa consistently delivered strong growth throughout the year
despite the negative impact of excise duty increases imposed in
July 2016. The continued expansion of our mobile money ecosystem
helped fuel the 13.3% or 936 thousand increase in M-Pesa
customers. M-Pesa revenue grew 11.2% to TZS249.6 billion, and now
accounts for 27.3% of service revenue, up from 24.5% last year.
EBIT declined by 9.3%. The impact from slower revenue growth
and greater network operating costs was limited by our vigorous
focus on cost containment through our ‘Fit for growth’ programme,
which improved operating leverage during the period, protecting
EBIT margin from further compression.
Under Section 26 of the Electronic and Postal Communications
Act, 2010 (as amended by the Finance Act, 2016), licensed
telecommunications operators are required to issue 25% of their
share capital through an initial public offering (IPO) to Tanzanians
and thereafter list the said shares on the Dar es Salaam stock
exchange (DSE). Vodacom Tanzania opened its IPO on 9 March 2017
and the offer period closed on 11 May 2017. The listing of shares is
expected to take place in June 2017, subject to approval by the
Capital Markets and Securities Authority (CMSA) and the DSE.
Looking ahead, we aim to maintain the encouraging momentum of
the second half of the past year by continuing to focus investments
across our key strategic drivers – data, M-Pesa, and enterprise –
which are expected to yield strong growth. We will remain resolute
in our quest to further enhance customer experience through both
service levels and our network advantage while being cognisant of
containing costs through our ‘Fit for growth’ initiative.
Year ended 31 March
2017
2016
Revenue (US$’000)
407 413
429 605
EBIT (US$’000)
12 664
40 633
Customers
1
(thousand)
10 388
8 527
Data customers
2
(thousand)
3 705
1 996
MOU per month
4
49
39
Total ARPU
5
(US$ per month)
4
3
Number of employees
617
613
NPS (position relative to competitors)
1st
4th
Customer market share #1
38.9%
37.1%
¥
Vodacom DRC rebranded from blue to red and celebrated 15 years
in the DRC. We also improved our NPS position to first from fourth
place last year.
Following the loss of close to three million customers (25% of the
customer base) in the prior year due to registration requirements,
this was always going to be a tough year for us, as we worked to
recover these customers during the year. Political instability and a
deteriorating macroeconomic environment created a tough
operating environment. The Congolese franc depreciated 45%
against the US dollar and GDP growth slowed to an estimated
15-year low of 2.5%.
Despite these negative impacts we continued to deliver on our
strategic objectives. This was backed by further capital investment
in the network, billing services and IT, which resulted in us
improving to first position in our customer satisfaction measure,
NPS. Revenue declined by 5.2% due to lower gross connections
resulting from compliance with the customer registration
requirements, an economic slowdown and further regulatory
pressures.
Data customers increased 85.6% and data traffic increased 46.7%,
underpinned by better device penetration. M-Pesa revenue growth
of 66.9% was driven by an additional 1.2 million customers,
resulting from our strategic focus on distribution. The EBIT decline
was driven by various factors, including lower revenue, regulatory
fee increases and customer-related acquisition costs. This was
partially offset by the implementation of Vodacom’s ‘Fit for
growth’ cost-savings initiatives, including headcount efficiencies,
contract renegotiations and energy rationalisation.
The customer base increased by 21.8%, adding 1.9 million
customers, close to recovering the number of customers
disconnected in the prior year. This has largely been achieved
through the deployment of the customer registration app and
increased points of registration across the country.
In the year ahead, we will continue to execute on the rebranding
nationwide, driving customer value management by reinforcing
offerings such as ‘Just 4 You’, introducing a franchise model to
increase our retail footprint, and improving key service level
agreements in line with our CARE initiatives.
DRC