Vodacom South Africa Pours R4.8 Billion into Network Expansion

Vodacom South Africa Pours R4.8 Billion into Network Expansion

Vodacom South Africa has allocated a substantial investment of R4.8 billion to fortify its network infrastructure between April 1 and September 30, 2023. The move aims to bolster network resilience, harness new spectrum assets, and enhance IT platforms to maintain a competitive edge. Despite a year-on-year decrease of a billion rand (17.1%), the company anticipates a total capital expenditure of approximately R11.0 billion in the current fiscal year, with increased spending expected in the latter half.

In its interim financial results, Vodacom reported a 4% surge in South African service revenue, reaching R30.7 billion. This growth, attributed to new services and mobile data, was supported by a notable 18.1% increase in services such as financial and digital services, fixed, and IoT, contributing R5.1 billion or 16.6% of South Africa’s service revenue.

Operating profit experienced a 3.3% decline to R9.6 billion, primarily due to higher depreciation and amortization. Earnings before interest, taxation, depreciation, and amortization (EBITDA) increased by 1.6% to R16 billion, with a moderate EBITDA margin reduction to 37.0%, influenced by factors such as lower-margin equipment revenue, cloud reseller margins, and increased network and payroll costs.

Vodacom remains optimistic, expecting cost savings to accelerate in the second half of the year, supporting EBITDA growth. In its core connectivity business, mobile data growth thrived due to network resilience, capacity, and data-driven personalized offers. Revenue in this segment reached R43.3 billion, up 5.1%, driven by robust equipment sales and the success of 36-month contracts enabling affordable handset upgrades.

Mobile contract customer revenue increased by 4.1% to R11.7 billion, supported by steady growth in Vodacom’s consumer segment. Prepaid mobile customer revenue also saw a 3.1% increase to R13.1 billion, reaching 3.5% growth in the second quarter. Notably, Vodacom added 2.9 million prepaid customers in six months, reaching a total of 40.5 million customers.

Average revenue per user (ARPU) increased for both contract and prepaid subscribers. Mobile contract ARPU rose by 1.7% to R302, and prepaid ARPU grew by 3.6% to R58. Data traffic surged by 45.2%, with data customers reaching 25.8 million, up by 8.5%. The average usage per smart device increased by 33.6% to 3.7GB per month.

In summary, Vodacom’s strategic investments and steady growth across various segments position it as a robust player in the dynamic telecommunications landscape.

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