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Vodacom grows subscribers but takes a hit thanks to data pricing cuts

Jul 25 2019 12:16
Loni Prinsloo

Vodacom sales growth slowed as Africa’s largest wireless carrier by market value battled tougher data-price regulations and a sluggish economy SA.

Service revenue gained 3.9% in the three months through June, compared with 5.2% a year earlier. Subscriber numbers across the group’s markets rose by 1.2 million to 79 million.

Key Insights

Vodacom’s international business growth offset a decline in South Africa as use of data and mobile-money services across the continent continue to gather momentum.

Management is looking to expand its international footprint by entering Ethiopia, which recently unveiled plans to award two new licenses to operators. One problematic area is the Democratic Republic of Congo, which threatened to withdraw the carrier’s 2G license over a dispute over how it was awarded.

In South Africa, President Cyril Ramaphosa said in June that operators would soon have more clarity on spectrum allocation, and expectations are that it will be awarded in 2019.

That will deliver a boost to Vodacom and crosstown rival MTN, which are both having to comply with new restrictions on data pricing.

Market Reaction

Vodacom shares rose 2.1% as of 09.14 in Johannesburg, paring the year’s decline to 11%. MTN, which is more exposed to other markets and thus more insulated against South Africa, has gained 23%, narrowing the gap in market value to just R10bn.

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