In South Africa service revenue grew 7.1%, driven by an acceleration in customer service revenue in the second quarter. The group added 4.1 million customers, to serve a combined 120 million customers across the Group, including Safaricom.
“Having responded rapidly to help curb the spread of COVID-19 earlier in the year, Vodacom Group has turned its attention to contributing meaningfully to the economic recovery in markets where we operate following the often devastating impacts of the global pandemic on society.”Shameel Joosub, Vodacom Group CEO
Through a wide range of initiatives, including free devices and airtime for healthcare workers, cash donations and strategic partnerships, the company continues to deliver on its Social Contract with stakeholders to contribute positively to a number of pressing societal challenges. For example, the group prioritised the resilience of its networks, accelerated support to governments via donations of handsets, connectivity and medical equipment and made contactless payments more accessible through zero-rated services and an expanded M-Pesa ecosystem to address social distancing challenges. In addition, and given that collaboration is instrumental to the economic recovery, Vodacom remains committed to establishing innovative partnerships with an emphasis on health, education, free public benefit services, big data analytics and financial services to complement those already concluded in recent times with Alipay, Discovery Health and Microsoft.
To help cope with sharp increases in data traffic and shifts in customer behaviour patterns, Vodacom accelerated network infrastructure spend over the six-month period to R6.6 billion, including R5.0 billion in South Africa, keeping families connected, enabling businesses to operate, facilitating online learning and assisting governments in providing critical services.Shameel Joosub, Vodacom Group CEO
In South Africa, data usage surged +86%, as connectivity demands changed with a need to work, entertain and educate from home, and as the company made substantial reductions in monthly data bundle tariffs. Also, the launch of ConnectU, which provides zero-rated access to a wide range of websites, including jobs portals and online learning platforms and discounted offers for poor communities, supported higher usage.
Considering the magnitude of challenges arising from the pandemic in the past six months, it is particularly pleasing that we recorded a solid financial performance at Group level, where service revenue increased 7.0%. This was underpinned by strong growth from our Consumer and Enterprise businesses in South Africa, where service revenue rose 7.1% despite reductions of up to 40% in monthly data bundles which came into effect on 1 April 2020.Shameel Joosub, Vodacom Group CEO
In line with its strategy of delivering great value and an exceptional experience to our customers, Vodacom recently launched its loyalty programme “VodaBucks” to complement personalised and segmented offers to customers. These draw on the telco’s expertise in artificial intelligence and machine learning to enhance customer engagement and provide financial relief at a time when consumers are increasingly under pressure.
Investment into digital innovation is key to the Group’s growth outlook of which its Financial Services business is an important enabler. In partnership with Alipay, Vodacom Financial Services is developing a single lifestyle app for both customers and merchants that promotes greater financial inclusion. Already, the execution in the financial services space in South Africa is evidenced by the rapid growth of Airtime Advance and insurance services. Airtime advance customers increased 14.1% to 10.1 million.
“Following a sustained period of very strong growth, the performance of our International operations was impacted by disrupted economies and livelihoods on the back of COVID-19, resulting in a 5.2%* decline in service revenue in constant currency terms. Our reported results show service revenue growth of 5.8%, benefitting from rand weakness. We expect consumer spend to recover as trading and economies re-open from lockdowns.”Shameel Joosub, Vodacom Group CEO
The company’s strategic investment in Safaricom delivered a 52.2% boost in its operating profit, buoyed by currency factors and a one-off deferred tax rate adjustment of R0.8 billion. Safaricom’s local currency results reflect the impact of depressed economic activity and lower M-Pesa P2P monetisation, related to the COVID-19 pandemic. Safaricom accelerated capital expenditure by 25.5%, supporting platform growth and a notable financial improvement into the second quarter compared with the first quarter.
Looking forward, we remain cautious about the pace of economic recovery across our markets as disposable income will remain under pressure as a result of unemployment and depressed economic activity. Still, we remain steadfast in our quest to entrench Vodacom Group as a leading pan-African technology company and firmly believe that our investment into financial, digital and lifestyle services will increasingly provide opportunities to deepen our relationship with the 120 million customers who choose to use the Vodacom Group network across our footprint.Shameel Joosub, Vodacom Group CEO