South Africa's Vodacom service revenue jumps as domestic market improves

JOHANNESBURG (Reuters) - South African mobile operator Vodacom Group Ltd said on Tuesday its third-quarter group service revenue grew nearly 4%, boosted by growth in the domestic market, while it invested 3.4 billion rand ($226.22 million) in its network across the group.

A branch of South African mobile communications provider Vodacom in Cape Town is shown in this picture taken November 10, 2015. REUTERS/Mike Hutchings/File Photo

The company, majority owned by Britain’s Vodafone, said group service revenue for the three months ended Dec. 31, rose to 19.6 billion rand, pushing group revenue up by 6.4%.

On a normalised basis, service revenue grew by 4.2%, buoyed by strong growth at its South African business, which grew service revenue by 5.4%, supported by a summer rewards campaign, which was opted by 23 million customers.

Data traffic in the domestic business rose 43.2%, as the growth trend normalised with eased lockdown restrictions for most of the quarter.

Traffic had peaked in the first quarter to 98% as millions of South Africans were forced to stay at home due to COVID-19 lockdowns.

Normalised service revenue growth trend at its international business, which includes a partly-owned stake in Kenya’s Safaricom, declined 0.3% in the quarter from a 5.2% decline in the previous quarter.

“The improvement reflects some progress on economic and commercial activity levels and improved M-Pesa platform monetisation,” it said. M-Pesa is used to send money, save, borrow and make payments for goods and services.

Vodacom added that consistent with the outlook provided at its interim results, it sees scope for consumer spend to recover over the medium-term as trading and economies re-open from lockdowns in the rest of Africa.

The 3.4 billion rand investment includes 2.7 billion rand of capital investment in South Africa “to support data demand and shifts in customer behaviour patterns with a need to work, entertain and educate from home.”

The investment in its international business was focused mainly on expanding the 4G network.

($1 = 15.0298 rand)

Reporting by Nqobile Dludla; Editing by Kim Coghill and Rashmi Aich