Big jump in network spending by Vodacom in South Africa
Vodacom Group increased capital expenditure in its South African operation by more than 10% in the last year as it fought to regain network leadership from rival MTN.
Capex rose by 10.6% in the year ended 31 March 2022 to R11.15-billion, up from R10.08-billion in the previous financial year. This is the most Vodacom has ever spent in a single year on its network. It is also far ahead of service revenue growth of 3.8% over the same period.
The increased spending comes as regular reports from independent research organisations, including Ookla, the owner of the popular speedtest.net Internet speed testing platform, put MTN’s network performance in South Africa far ahead of rivals, including Vodacom.
Vodacom said the increased capex was used to expand network capacity to manage additional demand for data; modernise its network to prepare for the next wave of Covid-19 infections; and enhance its IT platforms to maintain its competitive edge. “Looking ahead, we will leverage our newly acquired spectrum assets in South Africa to improve 4G services and invest incrementally into 5G infrastructure…,” it said.
Group CEO Shameel Joosub said Vodacom will again spend at least R11-billion on its network in South Africa in the financial year to March 2023.
Vodacom Group published its full-year results on Monday. Highlights of the performance from the South African operation, the group’s biggest, include:
- Service revenue grew 3.8% to R58.5-billion supported by continued demand for connectivity.
- Revenue totalled R80.8-billion, up 5.3%, driven by strong equipment sales.
- New services such as financial and digital services, fixed lines and the internet of things were up 8.5% and contributed R8.4-billion, or 14.4% of South Africa’s service revenue.
- Mobile contract customer revenue increased by 5.5% to R22-billion, with both Vodacom Business and consumer contracts contributing to this growth.
- The company added 271 000 contract customers in the financial year, mainly within Vodacom Business, and increased average revenue per user (Arpu) by 1.7%. Consumer contracts posted 1.5% revenue growth in the quarter.
- Prepaid mobile customer revenue declined by 0.7% to R25.2-billion. Despite this, Vodacom added 1.1 million prepaid customers, with Arpu at R56, up from R54.
- Data traffic was up 19.2%. Vodacom added 1.8 million data customers, reaching 23.5 million customers, up 8.2%. Smart devices were up by 13.1% to 26.2 million, while 4G and 5G devices increased by 23.9% to 18.5 million. The average usage per smart device increased by 14% to 2.4GB/month.
- Revenue generated from financial services was up 12.4% to R2.7-billion, helped by the Airtime Advance product, where Vodacom advanced R13-billion in airtime during the year, representing 45.2% of total prepaid recharges.