South Africa

South-africa


Map

 

   Year ended 31 March     % change    
   2017     2016     16/17    
Service revenue (Rm) 52 071     49 320     5.6    
Revenue (Rm) 64 729     62 279     3.9    
EBITDA (Rm) 26 815     25 016     7.2    
EBIT (Rm) 20 593     19 430     6.0    
Data revenue (Rm) 20 696     17 287     19.7    
Capital expenditure (Rm) 8 471     8 747     (3.2)   
Customers1 (thousand) 37 131     34 178     8.6    
Prepaid customers (thousand) 32 000     29 265     9.3    
Contract customers (thousand) 5 131     4 913     4.4    
Data customers2 (thousand) 19 549     18 056     8.3    
IoT connections3 (thousand) 2 979     2 264     31.6    
Total ARPU5 (rand per month) 111     112     (0.9)   
Prepaid  62     63     (1.6)   
Contract  408     397     2.8    
Number of employees  5 038     5 009     0.6    
NPS score (%) #1 50^     54          
Service revenue market share (%) #1  51.0^     51.1¥          

  • Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly fee that entitles them to use the service even if they do not actually use the service and those customers who are active while roaming.
  • Data customers have been restated to exclude customers with free allocated data bundles not used. Data customers are based on the number of unique users generating billable data traffic during the month. Also included are users on integrated tariff plans, or who have access to corporate APNs, and users who have been allocated a revenue generating data bundle during the month. A user is defined as being active if they are paying a contractual monthly fee for this service or have used the service during the reported month.
  • Internet of Things (IoT) connections, previously machine-to-machine, is the remote wireless interchange between two or more predefined devices or a central station without direct relationship with an end customer, in order to support a specific business process or product.
  • Minutes of use (MOU) per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly active customers during the period.
  • Total ARPU is calculated by dividing the average monthly service revenue by the average monthly customers during the period. Prepaid and contract ARPU only include service revenue generated from Vodacom mobile customers.
^ These items were the subject of the limited assurance engagement performed by KPMG.
¥ Prior year service revenue market share has been restated for updated competitor information.

Service revenue increased 5.6% to R52 071 million driven by strong customer additions, with good progress on data and enterprise services. Revenue grew by 3.9% to R64 729 million, hampered by the equipment revenue decline of 4.0%. This was mainly due to slightly lower device sales, which was impacted by the weakening of the rand against the US dollar and Euro for most of the year.

 

Customers increased by 8.6% to 37.1 million, with 3.0 million customer net additions in the year, as our segmentation and bundle strategy continued to attract new customers. Prepaid customers reached 32.0 million, up 9.3%, driven by the success of our improved value propositions through ‘Just 4 You’ offers, the successful launch of our youth (NXT LVL) proposition and a highly engaging summer promotion. We added 218 000 contract customers during the year with improved loyalty leading to reduced contract churn of 4.2%, while increasing contract ARPU by 2.8% to R408. Our bundle strategy, designed to make communication more affordable, continues to progress well and we sold a total of 1.5 billion bundles, up, 34.1% in the period. Of these, one billion were voice bundles. This enabled us to reduce our effective price per minute by 14.3% to the benefit of customers. The success of the personalised voice bundle strategy through our ‘Just 4 You’ platform has resulted in a slower voice revenue decline of 3.7%.

 

Data revenue grew 19.7% to R20 696 million; now comprises 39.7% of service revenue. As the strong demand for data continues, underlying drivers of growth remain strong with data customers up 8.3% to 19.5 million and data traffic up 43.2%. This was enabled through growing our data network coverage and capacity, as well as focusing our device strategy on increasing 3G and 4G device uptake. 4G customers on our network increased 86.7% to 5.1 million, while the average monthly data usage on smartphones increased 25.0% to 560MB. Our data bundle sales grew by 44.8% to 495 million resulting in the reduction in the effective price per MB by 16.0% thereby continuing to give more value to our customers. Our focus in the year ahead will be to transform data pricing to the benefit of customers, by reducing customer exposure to higher out-of-bundle rates.

 

Enterprise showed continued strong revenue growth of 12.7% (of which 2.8ppts relate to the impact of Autopage customer buy backs in the prior year) from customer win backs, and now contributes 24.3% (2016: 22.8%) of service revenue. Mobile enterprise customer revenue grew 14.2% (of which 4.5ppts relates to the impact of Autopage customer buy-backs in the prior year) to R7 884 million. We have secured South Africa’s national and provincial government departments’ mobile voice and data communications contract for a period of four years. This award will enable us to partner with government to support greater innovation. Customer migration for this contract is expected to commence in the first quarter. We are leveraging our network reliability and our leading mobile brand to move more deeply into fixed-line. Fixed-line and business managed services (BMS) revenue increased 8.3% with growth in cloud and hosting revenue gaining further momentum as it increased by 35.2% in the year. Internet of Things (IoT) revenue increased 19.1% to R662 million.

 

EBITDA increased 7.2% to R26 815 million with EBITDA margin expanding strongly by 1.2ppts to 41.4% due to strong focus on cost efficiencies and driven by sales margin improvement. We focused on driving efficiencies across all distribution channels. We rebalanced our subsidies towards data-enabled devices, resulting in improved take up of data services and improved returns. We benefited from improved inventory management, reduced office accommodation spend as we rationalised offices and various network cost savings. These cost-savings initiatives have offset higher network operating costs due to increased number of sites and a trading foreign exchange net loss of R250 million (2016: R531 million net gain).

 

Capital expenditure of R8 471 million allowed us to continue widening our 3G and 4G data coverage, improve voice quality and increase data speeds. 4G coverage increased to 75.8% of the population, up from 58.2% a year ago reaching over 7 900 sites. We extended our high-speed transmission to 92.1% of our sites. We completed the development of our new customer management and billing systems to future proof our operations and have migrated all our consumer contract customers to this new platform. We also entered into a commercial agreement with WBS that enables us to roam on their 4G and 4G+ network.

 

Our focus on customer experience improvements through network enhancements, better value propositions and service, through our CARE initiative, has enabled us to increase our customer satisfaction lead to 17 points over our nearest competitor as measured through the net promoter score methodology. We have underpinned our best network promise with our dropped-call compensation guarantee, giving customers free minutes for calls dropped on our network. As customers become more digital, we are positioning the MyVodacom app as customers’ primary interaction channel with Vodacom for people with smartphones. The app enables a number of self-help features, up-to-date bundle and balance information with an easy interface to buy our bundles. We continue to drive higher usage of the app through promotional offers and consistent improvement of the app, to deliver improved functionality.