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Data leaps again at Vodacom

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Vodacom’s preliminary results for the year to the end of March 2012, released today, shows a leap in data use and revenues ‚ and increased dividends, writes ARTHUR GOLDSTUCK.

South African data revenues at Vodacom grew 23.6% in the year to the end of March 2012, reaching R7,639 billion, according to annual results released today. More significantly, revenue from messaging increased only 6.1%, to R3,143 billion. Messaging includes SMS, MMS and premium-rated SMS and MMS. Voice in South Africa grew a mere 2.8%, but continues to be the biggest contribution to revenue, at R29,395 billion

This suggests that Voice and SMS are reaching the top of their growth curve, while data growth is on a steep climb to eventually becoming as important as voice revenue. Mobile data is now a quarter the size of voice, and rising fast.

Thanks to growth in data and international revenue ‚ the two contributed 87% to Vodacom’s growth ‚ the company was able to declare an increased dividend of 710c a share. This represents the company returning the full Headline Earnings Per Share ‚ 709c ‚ to shareholders.

For the first time, Vodacom is reporting active customers in the past three months. While the overall South African customer base has grown 29,3% to 34,306 million, the number of active customers is 28,941 million. The big discrepancy is in prepaid users, which comes to 28,677 million overall, but only 23,312 million active.

This means 18,5% of the prepaid base is not active. Add to this the fact that pre-paid churn is 43% a year ‚ compared to 9% for contract ‚ and it becomes clear that the pre-paid customer base is the least profitable and the most difficult to manage. The 5,629 million contract customers returned an average revenue per user (ARPU) of R362 per month. The prepaid base provides an ARPU of R91 a month.

According to CEO Pieter Uys, of almost 10 million handsets Vodacom sold in South Africa in the past year, 20% are ultra low-cost handsets (ULCH), while a further 20% – 1,8 million ‚ are smartphones. This represents a 55.4% increase in active smartphones on the South African network, to 5.1-million.

While 3G dongles still make up most of data use, most new use is coming through smartphone usage. The average data used by a smartphone on the network is 92MB a month, up from 38MB a year before. At the same time, the cost of data has come down by an average of 18,2% per MB.

According to Uys, there are now 12,2 million active data customers in South Africa, of whom 1,1 million use 3G dongles and 4,2 million are buying data bundles ‚ up 60,4% over the previous year. The overall number includes feature phones using data on the phone through Internet applications.

This would include the likes of Mxit, which relies on the data layer, but which World Wide Worx does not classify as Internet access due to the fact that it is a text-based environment that does not replicate an online experience. Mxit has around 10,5-million users in South Africa.

Smartphones are beginning to penetrate the low end of the market, with the lowest price smartphone offered by Vodacom costing around R850. Uys expects thus to come down by half, around $50, in the near future.

‚We’ve seen strong delivery in the areas driving growth into the future ‚ data and the International businesses,‚ Uys points out. ‚Combined, these accounted for 87% of the growth in Group service revenue.

‚The International customer base has now reached 19 million, an increase of 36%, and this segment has passed the important milestone of generating positive free cash flow.‚

Total data customers across all Vodacom markets increased by 5 million, taking the total to 15 million and supporting overall data revenue growth of 27%.

Uys pointed out that on the back of an overall customer base growth of 30% to 48 million, Vodacom has invested R8.7 billion in its networks.

* Follow Arthur on Twitter on @art2gee

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