Vodacom has this morning released its trading update for the quarter ending 30th June 2019 and it’s a rather mixed bag for the telco firm.
First up, the good news. Internationally Vodacom saw an increase in group service revenue of 19.6 percent (8.1 percent when normalised for comparative purposes). This growth was largely driven by M-Pesa and data demand.
M-Pesa alone accounts for 17.7 percent of international service earned throughout the quarter.
Now for the bad news – Vodacom is troubled in South Africa.
The quarter saw a decline in Vodacom Group’s service revenue of 1.2 percent dropping revenue in the region to R12.6 billion.
“In South Africa, service revenue was negatively impacted by the further substantial reduction in out-of-bundle tariffs announced in March as part of our sustained pricing transformation strategy to bring down the prices of our data services. The impact from three months of ICASA’s data usage regulations, the transition between national roaming partners and the tough retail operating environment, were other contributors to the 1.2% decline in service revenue in South Africa,” said Vodacom Group chief executive officer, Shameel Joosub.
One highlight for the group this quarter was accelerated data traffic in South Africa. Data traffic climbed by 52 percent.
While this is good news to a degree, the fact that data traffic went up but service revenue fell is concerning.
Despite this Joosub appears to be encouraged by growth in other areas of the business.
“We are also encouraged by the growth potential from the IoT.nxt acquisition and AWS partnership agreement announced earlier this year. We expect growth in the second half of the year to improve in South Africa, benefiting from the completion of the national roaming partner switch over and improved commercial momentum in financial services,” said Joosub.