Vodacom trading update

Vodacom have released a trading statement this morning, for the period to end 30 June 2012. Subscribers have topped 50 million across the whole group, that is an increase of nearly 30 percent over the year. In South Africa the number of subscribers jumped to 31 million and grew by the same click. Operations outside of South Africa (Lesotho, Tanzania, the DRC and Mozambique) increased to 19 million folks. There was a big jump in M-Pesa (mobile payments) numbers in Tanzania, up to 3.6 million users, a monster gain of 120 percent. Group data revenue contributed 16.6 percent of overall revenue, whilst overall revenue gained 9.3 percent.


In South Africa the group saw strong growth in active smartphone users, jumping over 40 percent to 4.9 million folks. Average usage though looks still pretty low at 120 megs per user per month, we use too much around here, we are heavy, heavy users of data, by South African standards. But here is the part that gets everyone anxious, the data revenues increased by only 10 percent because Vodacom (in this case) reduced their pricing per megabyte by 26.1 percent. So that is why Vodacom struggled and saw revenue growth of only 1.8 percent to 11.769 billion ZAR. But that was more than offset by strong revenues from their International businesses.


From the official release, Vodacom Group Limited trading statement for the quarter ended 30 June 2012, outgoing Vodacom CEO, Pieter Uys made the following very valid point: "The connectivity revolution is well underway with close to 16 million customers actively using data, up 43% from the prior year." This is of course why we think that the mobile companies are not ex growth, as management quite clearly point out, they are seeing more people using more devices to access data, the connectivity revolution.


There were two things that made me scratch my head, I wondered why the number of subscribers outside of South Africa had fallen so much, but then I read the fine print under the subscriber numbers: "During the quarter ended 30 June 2012, Tanzania, Mozambique and Lesotho changed their disconnection policy from 215 days inactivity to 90 days inactivity. Prior period numbers have not been restated." That was solved, but the other issue was the fact that ARPU's are under pressure here, which is good for the consumer, but not necessarily good for the mobile service providers. Blended ARPU's are falling, currently they are 130 ZAR per month, whilst in the December of 2010 quarter, ARPU's were 186 ZAR per month. There are of course 12 million more subscribers in South Africa now, than there was back then. The mix is shifting, the challenge is for the handsets to become cheaper over time, which I guess is not good for someone else, think Nokia in that regard, they have just discounted the Lumia heavily. We will pay closer attention when the numbers hit the screens in the coming weeks.