Vodacom had 73.6 million active customers across its various markets at the end of December, an increase of 13% year on year, the JSE-listed telecommunications group said on Wednesday in a quarterly update for the last three months of 2017.

Group revenue climbed by 6.7% to R22.6 billion in the three-month period, while service revenue rose by 5.5% to R18.4 billion.

Vodacom added 1.6 million new customers in South Africa and 900 000 in its international operations.

Group data revenue increased by 9.7% to R6.6 billion. International data revenue was up 19.5%. South Africa service revenue grew 4.9% to R14.1 billion, supported by strong customer gains and data revenue growth. International service revenue increased 8.7% to R4.6 billion.

“Our strategy of sustained investment into our network and improving customer experience has delivered solid gains in customer numbers in South Africa, and driven growth in our international operations, resulting in stronger growth in group revenue of 6.7%,” said group CEO Shameel Joosub in a statement to shareholders.

“In South Africa, our customer base grew 14.4% to 41.6 million, contributing to the 6.2% increase in revenue, underpinned by a resilient prepaid voice market and a highly successful summer campaign.”

Vodacom said it cut the effective price of data by 24.2% year on year. “To compensate for the expected shortfall in revenue, we have undertaken a range of initiatives to stimulate usage. Monthly trends toward the end of the quarter show that this is having the desired effect,” Joosub said.

In South Africa, the group’s biggest market, it added 1.5 million prepaid customers during the quarter, with prepaid active customers up 16.3% year on year. This led to prepaid customer revenue growth of 6.8%. Contract customers increased by 81 000.

Average revenue per user

Contract average revenue per user — Arpu is a key metric used to measure the performance of telecommunications operators — declined 5.1% to R393, an improvement in the trend from the previous quarter.

“This improvement reflects the rebalancing of contract deals, by reducing discounts on subscriptions. This was partly offset by higher rollover of unused data bundles as we continue with the migration of customers to ‘more data’ contracts, as well as the revenue effects from the reduction of out-of-bundle data rates,” Vodacom said.

Data revenue in South Africa grew by 8.7% to R6 billion, contributing 42.3% of service revenue. Data customer growth was 6.4%, adding 598 000 customers in the quarter.

“Data traffic growth remains robust at 43.9%, slightly down from the previous quarter as a result of commercial steps taken to reduce free data usage following the end of promotional offers during the quarter,” it said. “Our bundle strategy continues to deliver growth with in-bundle data revenue growth trends improving, supported by growth in bundle sales of 53.8%.”

The slowdown in data revenue growth was the result of a 50% reduction in out-of-bundle data prices in the last three months of the year as well as more customers moving into lower-priced bundles.

“We note an improvement in the in-quarter growth trend, with December growth recovering to over 13%, providing evidence that elasticity is returning, supported by commercial actions such as price adjustments on data bundles.”

Enterprise service revenue grew by 9.7% and contributed 25.5% of service revenue, supported by increases in wholesale revenue and fixed-service revenue.

Vodacom South Africa’s capital expenditure in the quarter was R2.3 billion. It said it now has 77.6% 4G population coverage and 99.4% 3G population coverage.

Results for Vodacom’s associate investment in Safaricom in Kenya are disclosed on a biannual basis and are not included in the quarterly update.

Vodacom’s shares were up 5.89% to R164.19 at 11:10am.- Moneyweb