Johannesburg - The South African cellphone market still has another 18 to 24 months of good growth left, despite reaching 100% penetration with 48 million SIM cards in the market, says Vodacom CEO Pieter Uys.
Speaking on a conference call after reporting the company's financial results for the half year to end-September, Uys estimated that the penetration of people with cellphones was closer to the 70% mark.
Many people have more than one SIM card, which is why penetration can exceed 100%.
During the six months under review, Vodacom added another 8.4% to its customer base in South Africa, taking it to 25.2 million. This gives it an estimated 53% market share. Although Vodacom is still the leader, this figure represents a 3% decrease from 56% previously.
But Uys said the decline was mostly due to the stricter disconnection rule it had implemented last year, and did not necessarily mean that other operators had stolen such a great much market share from Vodacom. He says the revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) market shares of the various operators are a more accurate measure. On this score, Vodacom has lost about 0.5% of its market share.
As reported in a pre-results release last week, Vodacom grew revenue by 14% to R26bn, and profit from operations on that by 12.5% to R6,4bn. Ebitda profits were up 13.9% to R8.7bn, putting it on a stable Ebitda margin of 33.3%.
Total customers rose by 13.3% to 35.7 million. Uys said its non-South African operations had grown at a much faster pace than in South Africa.
New growth areas
Vodacom has been aggressively seeking alternate growth sources in preparation for the SA market reaching saturation. Uys said Vodacom Business and the acquisition of Gateway Communications were two key areas of growth for the group.
Once the Vodafone acquisition of another 15% - which will take its Vodacom stake to 65% - has been concluded, Vodacom will be its preferred partner for expansion in sub-Saharan Africa.
But Uys said this did not necessarily mean Vodacom could not vie for opportunities elsewhere on the continent. And besides, being Vodafone's preferred sub-Saharan Africa partner did give Vodacom a lot of opportunities, Uys said. For example, it included the Nigerian market.
While Vodacom's previous acquisition targets included only traditional cellphone opportunities, the launch of Vodacom Business and the Gateway purchase represented a departure from this, to include broader telecommunications assets. It also gave Vodacom a good footprint on the continent.
Uys says Vodacom aims to be a leading provider of total telecoms solutions on the continent. Although the market had changed significantly in the last six months, Uys said if opportunities did come up across the spectrum of fixed to mobile and converged information and communication technology (ICT) companies, it could look "cautiously" at these.
Vodacom would also concentrate on nurturing the existing business, Uys said. The firm would focus on customer retention and launching new, innovative products as well as its broadband and connectivity offerings, in an effort to increase average revenue per user (Arpu) numbers.
As part of the Vodafone transaction, the remaining 35% of Vodacom will be unbundled to shareholders and listed separately on the JSE next year.
- Fin24.com