Safaricom acquisition boosts Vodacom

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South Africa'sVodacom Group reported a 2 percent increase in first-half service revenue on Monday, lifted by rising demand for data services in its home market.

In another significant development, the South African operation topped the 40m subscriber mark for the first time, gaining 2.9m customers in the period.

"We now also have 3.3 million sim card connections in our Internet of Things offerings", said Vodacom CEO, Shameel Joosub.

Revenue growth was up 7.7% to R33.9bn. The sale of smartphones grew by 18.3%, comprising 59.5% of total device sales in the South African operation. This is an increase from just two countries in 2015 (Kenya & Tanzania). However, prepaid average revenue per user (Arpu) was down 6.5% due to a large number of low-Arpu gross connections.

Contract customers increased by 107,000 in the time period, up to 5.2 million.

Total bundles sold increased 64.8% to nearly 1.1bn.

Improved in-bundle usage has resulted in a 24.2% reduction in the effective price per MB, Vodacom said.

Group service revenue rose2 percent to 34.7 billion rand ($2.41 billion), while group revenue increased 4.6 percent to 42 billion rand. M-Pesa added 1.1 million customers in the first half of the year, reaching 14.8 million. 4G customers on its network increased 62.8% to 6.0 million, while the average monthly data usage on smart devices increased 19.5% to 776MB.

Joosub added that the group had delivered on its promises to reduce data prices and addressing out-of-bundle prices. "Over the six month period, we invested R3.9 billion to maintain our network lead and enhance our IT systems".

"We have managed to do this while continuing to invest significantly in infrastructure at a time when the lack of available spectrum is pushing our costs higher".

"Additional spectrum will allow us to invest more efficiently and accelerate our rural coverage programme". The group added 4.3 million customers during the first half, 2.9 million in South Africa and 1.4 million in its global operations, to reach just over 71 million customers, up 11.8 percent. M-Pesa, its mobile money platform, continued to perform well in these markets.

"We will be driving further development of M-Pesa across all markets, expanding our enterprise opportunity across East Africa, and driving big data initiatives across the two organisations", Joosub said. Net profit was up 7% to R6.7bn, boosted by the acquisition of a 34.94% stake in Safaricom earlier in the year.

Finnish network equipment maker Nokia will trial its 5G technology in South Africa in collaboration with Vodacom Group, the firms said on Tuesday, as they seek to provide faster data delivery. "It achieved local currency service revenue growth of 12% for the six months period to Kenyan Shilling 109.7bn (R15.23bn)".