uploads///Vodafone H Post Vodacom Service Revenue

Understanding Vodafone’s Vodacom Performance

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Dec. 26 2016, Updated 7:37 a.m. ET

Vodacom’s service revenue in fiscal 1H17

Now that we’ve looked at Vodafone Group (VOD) in Spain (EWP) in fiscal 1H17, let’s look at Vodafone-controlled Vodacom’s performance in South Africa (EZA) and the company’s international component.

Vodacom is an African mobile communications company that is 65% owned and controlled by Vodafone. According to Vodafone, Vodacom’s revenue fell ~14.4% YoY (year-over-year) to ~2.5 billion euros (about $2.61 billion) in fiscal 1H17. Meanwhile, Vodacom’s service revenue fell ~10.2% YoY to ~2.1 billion euros (about $2.19 billion) during the same period.

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Organic change and EBITDA margin

Excluding currency and merger and acquisition impacts, Vodacom’s revenue rose ~3.2% YoY in fiscal 1H17. Organically, the service revenue in this region rose ~4.2% YoY during the period.

This increase in service revenue was driven by continued strong consumer and data growth in South Africa. Vodacom’s voice traffic continues to grow due to the success of the “Just 4 You” proposition, which is targeted at individual pricing strategies.

Vodacom’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin rose to 38.6% in fiscal 1H17 from 37.1% in fiscal 1H16. This was driven by continued focus on cost savings, which offset inflationary pressures, network site growth, and the negative impact from foreign currency denominated costs.

Mobile customer metrics

Vodacom’s mobile customers were ~73.1 million at the end of fiscal 1H17. In fiscal 2Q17, on a net basis, Vodacom added around 96,000 contract customers. The company’s prepaid additions reached 2.1 million new customers in fiscal 2Q17.

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