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The mobile networks don’t have things as easy as they once did, particularly in emerging market countries like South Africa. As fixed line internet has become cheaper and more freely available and data costs have fallen, the operators have seen their traditional SMS and voice revenues plummeting.
While those pressures apply as much to South African cellular giant Vodacom as anyone else, it looks like it’s managed to at least keep its revenue growing positively, thanks largely to data and an increasing demand for smartphones in the country.
According to the company’s latest financial results, international revenue was up 6.6%. In South Africa, the number was slightly lower — six percent — with Vodacom largely pegging the growth on a 41.2% increase in equipment sales and data revenue growth of 20.6%.
By the looks of things though, those are the avenues it’s going to have to keep tapping if it wants to see continued growth. Revenue from mobile contract users was, after all, flat year on year at R10.64-billion. That contract customers grew 2.2% to 4.8-million in the same period suggests that people are exploring other options, especially when it comes to the more expensive devices traditionally subsidised by contracts.
One of the more popular options would be to pay off a smart device, through FNB for instance, and keep your phone on prepaid, which allows you greater control over how much money you spend. Despite those pressures, the company claims to have around 6.6-million of the country’s smartphones on its network.
“Driven by lower handset prices and reduced data costs, smartphone adoption is growing rapidly across all of our operations”, says Vodacom Group CEO Shameel Joosub. “In South Africa, average data usage per smartphone increased 79% and for the Group, data traffic is more than 80% higher than a year ago. To cater for continued growth, we plan to accelerate network investment and we are currently in the process of determining the investment allocation per country.”
All those smartphones do, however, put a lot of pressure on the network. According to Joosub, that’s why the network has invested heavily on the infrastructure that allows us to Google directions to the nearest ATM at a whim:
A cornerstone of our strategy is sustained investment in network capacity. With increased capacity, we’re able to offer better value and support higher usage without impacting quality.
In South Africa, we invested R3.1 billion in the network during the period and increased 3G coverage to 88.9% of the population. On the voice side, our prepaid average effective price per minute came down 16.9% to 59 cents. As a result, our prepaid customer base increased by 927 000 active customers and outgoing voice traffic increased 21.2%. When looking at changes to mobile termination rates, we are hopeful that the regulator will consider the crucial role that continued investment plays in facilitating further price reductions.