Vodacom holds strong locally but waivers in international market

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This morning Vodacom released its trading update for the quarter ended 30th June.

Looking at the headlines Vodacom Group’s service revenue amounted to R18.76 billion during the quarter while group revenue grew to R22.73 billion. This represents a percentage change of 7.6 per cent and 5.6 per cent respectively.

However, international revenue has declined as much as 6.2 per cent for the quarter, normalised to 5.2 per cent.

The network operator says that this decline was due to the pandemic which resulted in subdued economic activities.

But COVID-19, or rather the lockdown, has not been kind to Vodacom locally either.

The network operator reports that its customer base has fallen 9.9 per cent, driven by “reduced connections in the prepaid segment during the period of restricted movement”.

This sounds like a fancy way of saying that because folks didn’t (or rather couldn’t) move around they were using other means to connect such as fixed-line broadband.

This decline appears to have been offset by a growth in mobile customer revenue. During the quarter, revenue from mobile customers grew 5 per cent. This along with a lower customer base means that Vodacom’s average revenue per user has actually grown 20.8 per cent to R64 for prepaid customers.

Looking at contract customers however, average revenue per user fell from R290 in June 2019 to R288 in June 2020.

Despite everything that is going on though, Vodacom has managed to keep its head above water but Vodacom Group chief executive officer, Shameel Joosub is cautious.

“While I am particularly pleased with the performance of our South African business, we remain cautious about the impact of COVID-19 on our operations and uncertainty about the pace of economic recovery in each of the countries where we operate as disposable income will increasingly come under pressure as a result of rising unemployment and reduced economic activity,” Joosub told shareholders.

With this in mind we do have to wonder how a smaller network operator such as Cell C is coping with the pandemic if a firm as big as Vodacom has faltered.

Brendyn Lotz

Brendyn Lotz

Brendyn Lotz writes news, reviews, and opinion pieces for Hypertext. His interests include SMEs, innovation on the African continent, cybersecurity, blockchain, games, geek culture and YouTube.