Vodacom: Strong Revenue Growth, Despite Slow Customer Growth
Vodacom has issued a brief trading update showing aspects of its June quarter results. The overall impression is one of slowing subscriber growth offset by an improvement in the quality of the business as although subscribers are only up 6.6% year on year (to 34.6m) revenues have grown by 14.5%, thanks to higher levels of expenditure across the base. The chart shows the growth of the base in recent quarters.
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Venture Customers, Q1 07 – Q2 08
South Africa remains much the most important part of the group and here,there were just 70k new connections in the quarter, taking the total to 24.89m. This number includes inactive accounts and if these are stripped out, the overall base has seen a small reduction, from 22.265m to 22.021m. The other side of this coin is that ARPUs are higher, at least amongst the prepaid customers who make up the majority of connections.
During the quarter, prepaid spend rose from ZAR 62 to ZAR 64 per month and although contract spend dropped from ZAR 486 to ZAR 481, the blended number edged up, from ZAR 128 to ZAR 130. A similar result occurred with respect to churn: the prepaid ratio improved from 47.9% to 46.0% while the contract number rose from 8.3% to 9.6%. This, however, is still very low by any standard and such is the weighting towards prepaid that the blended result improved from 42.3% to 40.6%.
Most of the companyÃ's other operations also saw improvements in metrics and, indeed, in customer numbers. Tanzania saw a 6.8% increase in the base, to 4.495m and although ARPU dropped from ZAR 51 to ZAR 50, this was partially offset by a move in the churn rate from 45.5% to 45.0%. In the DRC, subscriber numbers rose by 5% to 3.45m, while ARPU advanced fro ZAR 60 to ZAR 64. Churn, however, jumped from 48.0% to 55.8%.
In Mozambique, VodacomÃ's customer base grew by just 1.6% to 1.302m, this in part being due to a rise in churn from 58.7% to 64.1%. Despite this, ARPU improved sharply, rising from ZAR 31 to ZAR 36. Finally, Lesotho saw a 6.6% increase in customers, to 421k, combined with lower ARPU (down 8.1% at ZAR 18.5) and higher churn (up 0.7pp, at 18.5%).
Posted to the site on 30th July 2008