5 interesting takeaways from Vodacom’s 2015/2016 annual earnings data

Vodacom has this week released (pdf) its financial numbers for 2015 (ending 31 March 2016), and based on the digits, it’s had a good one. This especially so when compared to its rival MTN.

Although the latter still rules the roost in terms of nearly five times more African subscribers, Vodacom has seen a bit of a boom with its data offerings, subscriber growth and infrastructure improvements.

“I am very pleased with our performance this year, with strong execution of our strategy delivering solid results,” remarks CEO of Vodacom, Shameel Joosub, in the document.

“The acceleration in network investment over the past two years is a true success story of effective capital investment to ensure growth in revenue and customers.”

Joosub also revealed the key driver behind the company’s numbers this year: data.

So with that said, what takeaways can we draw from the company’s mass of numbers and letters this year?

South Africans are voracious data users

Vodacom’s data revenues ballooned by 27% year-on-year, but incredibly, the company’s traffic increased by 48%. Consumers are consuming more data, according to the numbers, with usage per subscriber across the company’s network racking up 350MB/month on average.

Customers migrating from 3G to 4G also increased by 19%, which signals a slow but steady progression towards newer devices and a bigger requirement for loftier transfer speeds in SA.

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To put the cherry on top of the data cake, though, data bundle sales increased by just under 86%.

LTE is almost ubiquitous in SA, but not just yet

4G/LTE is slowly becoming a mainstay in SA.

Vodacom notes that it invested around R8.7-billion this year in network infrastructure, mainly due to the amount of data consumed in SA.

Joosob noted that the company has “doubled” the number of 4G sites in SA to 6000, which means that 58% of the population (at least those on Vodacom) is serviced with 4G/LTE. Its 3G spectrum now covers 99% of the country.

Prepaid is alive and well, contract consumers spending more

Vodacom noted that internationally, subscriber numbers are down due to “customer registration requirements” in the company’s international operations. However, locally, prepaid users are still outnumbering those in contracts.

The company saw prepaid bundle purchases increase beyond a billion (that’s the number of bundles sold, mind), while adding just over 2.1-million customers to its network. Much of these users are likely to be on prepaid plans, as the company notes that contract subscriber numbers remained flat at 4.9-million.

Although not ideal for Vodacom, contract spend was up substantially.

“Active prepaid customers increased 7.6% to 29.3 million. We have migrated 85% of contract customers to new price plans with better value offerings. As a result, contract in bundle spend increased to 71.3% (2015: 69.3%),” the company notes in its press release.

There are now 34.2-million subscribers on Vodacom’s network.

The IoT space is languidly growing, but growing nonetheless

The IoT space isn’t just a trendy, overused buzzword, but a growing, thriving space in SA. Based on the numbers, Vodacom notes that “machine-to-machine” connections increased by 28.2% to 2.3-million.

That might not sound like much, but based on previous figures from 2014 (1.63-million), it’s definitely a significant upward trend.

M-Pesa had a good year

After the rollercoaster ride of its history, M-Pesa is now a bit of an international success story. After launching in 2007, Vodacom first brought the mobile money service to SA in 2010 with little success. But now it’s doing well beyond the country’s borders.

According to the latest numbers, 90-day active consumers now total 9.2-million (with 6.8-million active within the last 60-days) — an increase of 1.2-million clients. The company notes that revenues from the product are up by 19.3%.

A new loans and saving service based on M-Pesa in Tanzania dubbed M-Pawa, currently has 1.6-million users.

TL;DR

While clearly Vodacom had a stellar financial year, there remain challenges in the South African and continental mobile ecosystems. 4G/LTE coverage is just over half of the population, while it’s clear that data demand is only going to grow in the next few years. This also suggests a bigger trend towards data, and a slow weening off of voice. Although voice revenues also grew, it’s clear that the company will spend a lot more of its time upgrading its data infrastructure.

But is South Africa ready?

“South Africa is falling behind on broadband roll out and access,” Joosob notes in the press release, so that ultimately remains to be seen.