Vodacom’s Service Revenue Rose on Solid Organic Growth in 3Q16



Vodacom’s service revenue in fiscal 3Q16

Earlier, we looked at the performance of Vodafone (VOD) in India during fiscal 3Q16. Now, let’s look at Vodacom’s performance in South Africa (EZA) and the company’s international component. Vodacom’s service revenue decreased ~10.3% YoY (or year-over-year) to ~0.8 billion pounds in fiscal 3Q16. According to the company, this revenue stream grew ~7.2% YoY during the quarter organically (excluding currency and merger and acquisition impacts). In fiscal 2Q16, the comparable increase was ~3.9% YoY.

As per Vodafone, Vodacom’s service revenue in South Africa increased by ~7.2% organically YoY in fiscal 3Q16 compared to ~3% YoY in fiscal 2Q16. Moreover, that strong subscriber growth positively affected this revenue stream in South Africa during the quarter.

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Vodacom’s mobile customer metrics during fiscal 3Q16

In fiscal 3Q16, the growth trend in Vodacom’s mobile customers continued. These subscribers increased ~6.8% YoY to ~73.7 million during the quarter. On a net basis, the telecom player added ~284,000 prepaid customers. However, the company’s contract customer net loss was ~23,000 during that quarter.

Now let’s look at the unit contribution of mobile customers of Vodacom. The company’s mobile ARPU (average revenue per user) increased ~1.4% YoY to ~70.8 South African rands in fiscal 3Q16. Vodacom’s prepaid ARPU increased ~1.3% YoY to ~45.2 South African rands in fiscal 3Q16. Additionally, Vodacom’s contract ARPU increased ~7.2% YoY to ~410.1 South African rands for the quarter.

For diversified exposure to Vodafone and some of its peers, you may consider the iShares Global Telecom ETF (IXP). The ETF had ~24.6% of its holdings in Vodafone, Deutsche Telekom (DTEGY), BT Group (BT), Telefonica (TEF), and Orange (ORAN) at the end of December 2015.


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