Vodacom FY - MoMo is the future


Vodacom released their full-year numbers yesterday showing growth in both subscriber numbers and revenues.


Vodacom full year numbers - still strong data growth


Vodacom reported full year numbers on Monday. The company traces its heritage back to the dawn of democracy in South Africa, I had the pleasure of being at a dinner birthday function and sat with a man who was part of the team that wrote that there would be a maximum (at the time) of 250 thousand users of the mobile service. Phones were big and clunky and took calls only, remember? It is a little difficult to believe that the touchscreen smartphones are not that old, and in terms of being mainstream, less than a decade. The iPhone is not even 10 years old. Remember the Symbian operating systems on the Nokia? Remember Nokia? Remember Windows phones, how huge that was going to be. It is Android and iOS now, to be fair there are others, not as dominant as these ones.


Vodacom and Neotel deal one step closer


Vodacom's share price was up over 3% yesterday on the news that the PIC has bought governments stake in the company but also on the news that the Neotel merger has been recommended for approval. Here is the media statement from the Competitions Commission - Commission recommends approval of Vodacom/Neotel merger with conditions.


Vodacom full year results


Yesterday Vodacom released their Annual results for the year ended 31 March 2015. The number that first catches your eye is the impact of the 50% decrease in the mobile termination rate (MTR). The MTR impact was R 2 billion in revenues and R 1.2 billion in EBITDA, it is not great to see these numbers but the impact has now been felt. Interconnect rates now account for less than 5% of revenues and even though MTR will continue to drop over the coming years, the drop will be nowhere as big as last years one.


Vodacom prices go up


Vodacom have hiked their contract prices. I think it is about time. Come one. People want a 4G/LTE network, an amazing handset (the new iPhone is fabulous) and on an inflation adjusted basis they have been paying less. Yet the Rand has weakened and the handsets and services have improved. If you stand with your handset anywhere in the urban areas and get a fantastic LTE connection, well then I am sorry, there is a price associated with that. I think that this is a very important point in the cell phone pricing wars, if your best customers demand the best services, then I am afraid that there is an associated cost with that.


Vodacom quarterly numbers


Vodacom have released quarterly numbers this morning, they look pretty average. That is to be expected I guess. Local revenues getting squeezed, CEO Shameel Joosub had this to say in the commentary: There was a significant impact from the 50% decline in mobile termination rates in South Africa, increased competition and we're seeing increased pressure on consumer spending. Data spend continues to be the only bright spot in these numbers, data traffic grew a whopping 62 percent here and an astonishing (off a low base) almost threefold in their international operations. Active smartphones and tablets across the network here in South Africa is 9.5 million devices. Forget about broadband, the people have spoken, the continued investment in 3G and LTE networks will continue to see customers view the mobile networks as their goto for data.


Quarterly numbers decent enough


We skipped it last Thursday, there was too much going on at the time, rather late than never, here are the Vodacom Group Limited quarterly update for the period ended 30 June 2014. The table snapshot from the press release sums it up:


Voice falling, but data on a tear


A company evolving right now is Vodacom, with only one more hurdle left. And quite possibly a huge one, in an announcement this morning Vodacom have agreed with Neotel to buy all of it for 7 billion Rand. But the deal remains "subject to regulatory approvals". But how would you, the consumer benefit? Well, it seems that the more lucrative business market would benefit: "Vodacom's customer base will benefit from Neotel's extensive fibre assets and enterprise capabilities which will allow Vodacom to accelerate its fixed enterprise strategy and stimulate greater competition in the South African fixed telecommunications sector."


Data explosion, who would have thought? Well....we would.


This morning we received a quarterly update from Vodacom for the period ended 31 December 2013. The numbers look really impressive. Group revenue increased 10.5% to R20bn. Service revenue increased by 6.4% while data revenue increased 40.7%. Data is now amazingly 22% of all revenues. Who would have thought a few years ago.


Vodacom results surprise Mr. Market


Vodacom results, the other day, did you see them? Here they are: For the six months ended 30 September 2013. With the payoff line Power to you. Nice. Highlights for the period include the subscriber base having expanded to 53.8 million folks with the prepaid active customer base having increased by 927 thousand.


Vodacom buying Neotel?


I think that Reuters broke the story Friday, but there was a confirmation yesterday that Vodacom were looking to buy Neotel yesterday. Or let me rephrase that, they are looking to buy. Because there are some issues with regards to the competitions authorities and those would need to be addressed, but I can see how the Vodacom hook up with Neotel would work. According to this article in MyBroadband: Vodacom-Neotel deal discussions confirmed, 15 thousand km's of fibre optic network, more than half of that in the Jozi, Cape Town and Durban areas. This would not be anti competitive, but rather could be seen as a direct challenge towards the fellows over at Telkom. Who seemingly are steering the ship in the right direction for now.


Vodacom trading update


Yesterday we received a very informative trading statement for the quarter ended 30 June from Vodacom. Group revenues are up 3% for the quarter while customers increased by 5.3% to 51.5 million. Although still small, their international operations grew revenue by 14.1% while South African revenues increased 3.9%. There was a once off sale of Gateway carrier services which had a negative impact on operating revenues.


Vodacom with good FY numbers


Decent. That is the very best way that I can describe the full year numbers from Vodacom this morning. No, very decent in fact and very respectable in an environment that is a little meh. Everyone will get excited about the dividend. In a world with low yields everywhere, this is one that you have to get excited about. For the full year the dividend declared was 785 cents. Less the 15 percent withholding tax and you come to 667.25 cents, a very favourable 5.7 percent historical yield on the Friday closing price of 115.82 ZAR per share. Headline earnings for the full year increased 23 percent to 872 cents, giving the company a fairly modest earnings multiple of just shy of 13.3 times. Not expensive, not overly cheap.


Vodacom trading update


And on that note, let us speak the English that we know and look at a Vodacom trading statement that has been released this morning. Looks excellent at face value. However, this is comparing against a period where there were negative once off charges. But that is the way that it rolls, once offs are exactly that. Results for the year to end March are expected on the 20th of May. And when they arrive, it will show that HEPS will be between 20 to 25 percent more than the 709 cents reported last year. Between 850 to 886 cents, more or less for the full year. So that is good, right? Yes. I suspect that the market will have expected something around here, if not a little less, an upside surprise is always a good thing. More importantly, the yield at current prices is around 7.5 percent. Yowsers. That is excellent.


Vodacom numbers shows slowdown


This morning we received a trading statement from Vodacom for the quarter ended 31 December 2012. Group revenue was up 1.7% but within this sales number there were lots of moving parts. Group data grew 23.3% while data customers grew by 33.8% to 18.5 million. People sure are lapping up those smartphones. The international operations grew 22% whilst group customers grew 12.2% to 51 million. Of those customers, 30.6 million are from South Africa where clients grew 11.7%.


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