Vodacom first-quarter revenue rises on strong data demand during lockdown

JOHANNESBURG (Reuters) - South African mobile operator Vodacom Group Ltd VODJ.J on Thursday reported a 7.6% rise in first-quarter group service revenue, buoyed by strong demand for voice, data and financial services in its domestic market during the coronavirus lockdown.

Vodacom, which is majority owned by Vodafone VOD.L, said group service revenue grew to 18.7 billion rand (891.85 million pounds) in the three months ended June 30, up from 17.4 billion rand from the year-earlier period.

Overall group revenue grew by 5.6%.

The telecoms sector has experienced a spike in network data traffic as millions of South Africans were forced to work, school and entertain themselves from home after the government imposed a lockdown from the end of March to curb the spread of the coronavirus.

This resulted in Vodacom’s business in South Africa, its largest market, growing service revenue by 6.4%. Data traffic surged by 97.7%, also boosted by data price cuts implemented from April.

The significant growth in demand for data assisted in offsetting the effects of the price cuts, Vodacom said.

However, the number of South Africa customers fell 9.9% largely due to fewer prepaid connections in “the period of restricted movement,” it added.

Vodacom group Chief Executive Officer Shameel Joosub said while he was pleased with the performance of the local business, he remained cautious about the impact of COVID-19 on the firm’s operations and uncertainty about the pace of economic recovery.

This is because disposable income will increasingly come under pressure as a result of rising unemployment and reduced economic activity, he added.

Excluding currency gains, underlying growth in its international portfolio declined by 5.3%, impacted by a combination of subdued economic activity, and reduced pricing for M-Pesa mobile money service transactions in some of its operations. In rand terms, revenue rose 10.7%.

Reporting by Nqobile Dludla; Editing by and Rashmi Aich and Christopher Cushing