Vodacom spends R8.7bn on network PDF Print E-mail

SA's largest mobile operator has spent R8.7 billion on its network in the year to March in a bid to boost capacity and support revenue growth, and aims to spend at similar levels in the year ahead.

Vodacom's spending amounts to 13% of its revenue and it anticipates spending between 11% and 13% this year as it seeks to boost capacity to support growing subscriber numbers and increased demand for data.

“Our capital expenditure programme will support our continued customer demand for data services,” says Vodacom. In the coming year, Vodacom expects competition to intensify, particularly in the data business, and consumers to remain under pressure from rising food and fuel prices.

The group this morning reported service revenue up 7.8%, to R58.2 billion. It spent the bulk of its capital on its local operations, at R7 billion – a 36.8% increase on the previous year. Internationally, it invested R1.7 billion, a 39% year-on-year increase.

Vodacom said earnings before interest, tax, depreciation and amortisation gained 10.5%, to R22.8 billion, and headline earnings per share improved 8.1%, to 709c. It increased its total dividend year-on-year by 54.3%, to 710c.

International gains
In the year to March, total subscribers increased 30%, to R47.8 million, a gain of 11 million customers. The bulk of the additions came from SA, where the company added six million users, says CEO Pieter Uys.
Uys says the company has continued with its “substantial” investment in its network. “We've seen strong delivery in the areas driving growth into the future – data and the international businesses.”
Vodacom's international operations reported a 27.5% increase in service revenue, to R10.1 billion, as subscribers gained 35.5%, to 19 million. Uys says, for the first time in the group's history, its international operations became free cash flow positive.
The operator battled with its African entities for a year-and-a-half before starting to see an improvement in the first half of last year. The economic recession slowed growth, while a competitive market resulted in tariffs falling dramatically.
Vodacom also reported a 48.6% increase in active data customers, to 15.1 million. Uys says data revenue in SA now accounts for 16% of total service turnover.
In SA, the company self-provisioned more than 1 700 base stations with fibre and microwave during the year, taking the total self-provisioned sites to just over 4 300. Vodacom also added 973 3G base stations to its network, taking the total to 5 263.
Vodacom anticipates growing service revenue by low single digits in the medium term. Its results for the 2012 year exceeded expectations, Uys says.
Data demand
SA grew subscribers 27%, to 29 million, which was mostly due to a 31.3% gain in prepaid customers driven by low-cost handset deals in the retail channels and a refocus in its distribution channel to better reach under-serviced areas.
Data revenue increased 23.6%, to R7.6 million, which was driven by a 35.4% increase in active data customers to 12.2 million. Uys says smartphone users remain the driving force behind data and now account for a fifth of all handsets on the local network at 5.1 million.
Smartphone users' average monthly data use more than doubled, to 92MB a month, from 38MB a year ago, Uys says. He says Vodacom will continue to seek more affordable smartphones, which should come in at around $50 within the next 12 to 18 months.
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