| Thu 19 Jul 2012, 7:05 | | VODACOM GROUP LIMITED - Vodacom Group Limited trading statement for the quarter ended 30 June 2012 |
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VOD
Vodacom Group Limited trading statement for the quarter ended 30 June 2012
Vodacom Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/005461/06)
Share code VOD ISIN ZAE000132577
JSE code VOD004 ISIN ZAG000095449
News release
19 July 2012
Vodacom Group Limited trading statement for the quarter ended 30 June 2012
Highlights
- Group service revenue growth boosted by performance in key growth areas
- Group service revenue growth up 8.7% (5.7%*)
- Group revenue up 9.3% (6.5%*)
- Customers1 up 29.2%, to 50.0 million
- Robust data demand
- Group data revenue up 16.6%
- Data revenue contributing 15.4% to service revenue
- Group active data customers grew 43.3% to 15.7 million
- Continued growth in South Africa
- Service revenue up 1.8% (4.6% excluding the impact of mobile termination rates)
- Customers1 increased by 29.1% to 31.0 million
- Active smartphones up 40.9%
- Continued investment in network leadership
- International driving growth
- Contribution to Group service revenue increased to 20.5%
- Service revenue up 46.7% (23.4%*)
- Customers1 up 29.4% to 19.0 million
- Active M-Pesa customers in Tanzania increased to 3.6 million, up 120.7%
Pieter Uys, Vodacom Group CEO commented:
"Overall this was a good quarter with a particularly strong performance from our International operations supporting Group service
revenue growth of 8.7%. The connectivity revolution is well underway with close to 16 million customers actively using data, up 43%
from the prior year.
In South Africa, one of our key advantages is the size and reach of our network. Given the increasingly competitive environment,
quality and capacity both set Vodacom apart and give us the means to compete with targeted value promotions. As an example
Vodacom4Less, NightShift and more recently Power Hour tap into excess capacity on our network during slack periods and translates
this into very competitive prices for our customers. Other customer groups are driven by entirely different things such as compelling
data promotions and have benefitted from the reduction in the average effective price per megabyte of 26%.
I'm particularly pleased with the sustained high growth delivered by the International operations. The primary driver has been solid
commercial execution, supported by a healthy macroeconomic environment. Service revenue from these businesses now accounts
for 21% of Group service revenue, compared to 14.5% two years ago. Data demand in this segment is accelerating, with active data
customers increasing 152% and data revenue up 150%."
* Represents normalised growth at a constant currency.
All growth rates refer to the quarter compared to prior year unless stated otherwise.
1. Refer to page 3 for the change in the basis of reporting customers.
Vodacom Group Limited
Trading statement for the quarter ended 30 June 2012
Operating review
Group
The increasing contribution from our key growth areas helped deliver an overall resilient performance. Group service revenue
increased 8.7% (5.7%*) year on year driven by strong growth in the International mobile operations1 and data, up 64.5% (39.3%*) and
16.6% (15.8%*) respectively. This was partially offset by the further reduction in mobile termination rates ('MTRs') in South Africa on
1 March 2012. The International operations now account for 20.5% of Group service revenue, with 81% of the growth in Group service
revenue this quarter attributable to these operations. Customers increased 29.2% to 50.0 million, adding 2.1 million in the quarter.
South Africa
South Africa's service revenue grew 1.8% to R11 769 million. Excluding the impact of the cuts in MTRs service revenue growth was
4.6%, a 0.6 percentage point deterioration compared to the growth rate experienced in the previous quarter. This reflects the
slowdown in data revenue growth. Voice revenue growth remained stable compared to the previous quarter at 1.5%.
Customers increased 29.1% year on year to 31.0 million, adding 2.0 million customers during the quarter. Our highly competitive
value offers in the prepaid market saw customers increase 35.4% and stronger growth in voice traffic. Despite the 6.9% growth in
contract customers we saw a reduction in contract voice traffic largely as a result of the continued reduction of out-of bundle usage.
Blended ARPU of R130 came down 20.7% as a result of a larger portion of lower activity customers in the mix coupled with a reduction
in MTRs.
We are delivering on our strategy of putting the internet in more people's hands, with active data customers increasing 28.6% year on
year to 12.4 million. Data bundle users increased 48.5% to 4.5 million. Customer growth and higher usage were somewhat offset by
heightened mobile broadband competition, reducing our effective price per megabyte by 26.1%. The net effect was an increase in
data revenue of 10.1%. Smartphones remain a key growth driver with active smartphones increasing 40.9% year on year to 4.9 million2
devices and usage almost doubling to approximately 120 megabytes per smartphone customer per month compared to a year ago.
Continued network investment is an important differentiator for Vodacom. We made further significant investments to improve the
speed and coverage of our data networks, adding 109 3G base stations in the quarter. We also continue to invest in increasing the
capacity of our voice networks to support higher customer usage. Vodacom was named South Africa's most respected broadband
provider in a recent survey3 and based on several third party tests, we rank first for overall data network performance.
International
Positive macroeconomic environments coupled with successful commercial execution led to another consecutive quarter of high
growth in the International operations. Service revenue grew 46.7% (23.4%*), driven by an increase in the customer base of 29.4% and
higher usage in most markets.
The International mobile operations sustained strong service revenue growth of 64.5% (39.3%*) with good performance across our
markets. Tanzania maintained service revenue growth momentum, benefiting from our commercial actions and an improved pricing
environment. Mozambique also experienced significant growth with more sites on air, smarter pricing and better distribution resulting
in an overall increase in minutes of use. Strong growth in customer numbers from wider distribution in the DRC has driven the solid
growth in service revenue.
Encouragingly, data revenue is showing significant growth in the International operations, up 150.0% in comparison to the prior year.
Year on year data customer growth accelerated to 151.9%, with 3.3 million customers now actively using data. Data growth was driven
by a combination of increased take up of mobile internet services as well as increased M-Pesa usage in Tanzania. M-Pesa is
progressing well in Tanzania, with active customers increasing 120.7% in to 3.6 million. M-Pesa revenue accounts for 70.8% of
Tanzania's overall data revenue and 12.3% of service revenue.
The quarterly information has not been audited or reviewed by Vodacom's external auditors.
1. International mobile operations includes the Group's cellular networks in Tanzania, DRC, Mozambique and Lesotho.
2. During the quarter we restated the number of active smartphone devices. The restated figure for March 2012 is 4.7 million.
3. Mybroadband survey June 2012.
Financial review for the quarters ended
Revenue
June March June Year on year Quarterly
Rm 2012 2012 2011 % change % change
South Africa 14 007 14 379 13 537 3.5 (2.6)
International 3 097 2 930 2 119 46.2 5.7
Corporate and eliminations (80) (124) (87) 8.0 35.5
Revenue 17 024 17 185 15 569 9.3 (0.9)
Service revenue
June March June Year on year Quarterly
Rm 2012 2012 2011 % change % change
South Africa 11 769 12 167 11 558 1.8 (3.3)
International 3 028 2 848 2 064 46.7 6.3
Corporate and eliminations (61) (89) (70) 12.9 31.5
Service revenue 14 736 14 926 13 552 8.7 (1.3)
Key indicators for the quarters ended
South Africa key indicators
June March June Year on year Quarterly
2012 2012 2011 % change % change
Total customers (thousand)1 37 661 34 306 27 731 35.8 9.8
Prepaid 31 976 28 677 22 411 42.7 11.5
Contract 5 685 5 629 5 320 6.9 1.0
Customers (thousand)2 30 970 28 941 23 991 29.1 7.0
Prepaid 25 284 23 312 18 671 35.4 8.5
Contract 5 686 5 629 5 320 6.9 1.0
Churn (%)3 37.8 36.7 35.5
Prepaid 43.3 42.4 41.9
Contract 8.7 8.3 8.5
Traffic (millions of minutes)4 8 657 8 690 8 141 6.3 (0.4)
Outgoing 6 459 6 471 6 079 6.3 (0.2)
Incoming 2 198 2 219 2 062 6.6 (0.9)
MOU per month5 96 103 116 (17.2) (6.8)
Prepaid 81 85 97 (16.5) (4.7)
Contract 158 174 181 (12.7) (9.2)
Total ARPU (rand per month)6 130 144 164 (20.7) (9.7)
Prepaid 73 83 95 (23.2) (12.0)
Contract 333 348 369 (9.8) (4.3)
Notes:
1. Total customers are based on the total number of mobile customers registered on Vodacom's network, which have not been disconnected (customers are disconnected after
215 days of inactivity), including inactive customers, as at the end of the period indicated.
2. Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly fee that entitles them to
use the service even if they do not actually use the service and those customers who are active whilst roaming.
3. Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly total customers during the period.
4. Traffic comprises total traffic registered on Vodacom's mobile network, including bundled minutes, promotional minutes and outgoing international roaming calls, but excluding
national roaming calls, incoming international roaming calls and calls to free services.
5. Minutes of use ('MOU') per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly customers during the period. As at
31 March 2012, MOU is calculated in line with the change in the basis of reporting customers and prior periods have been restated accordingly.
6. Total ARPU is calculated by dividing the average monthly service revenue by the average monthly customers during the period. As at 31 March 2012, total ARPU is calculated in
line with the change in the basis of reporting customers and prior periods have been restated accordingly.
Key indicators for the quarters ended (continued)
International key indicators
June March June Year on year Quarterly
2012 2012 2011 % change % change
Total customers (thousand)1 18 971 22 997 17 686 7.3 (17.5)
Tanzania 9 065 12 612 9 260 (2.1) (28.1)
DRC 6 240 5 643 4 245 47.0 10.6
Mozambique 2 700 3 701 3 277 (17.6) (27.0)
Lesotho 966 1 041 904 6.9 (7.2)
Customers (thousand)2 18 971 18 894 14 657 29.4 0.4
Tanzania 9 065 9 665 7 656 18.4 (6.2)
DRC 6 240 5 643 4 245 47.0 10.6
Mozambique 2 700 2 784 2 054 31.5 (3.0)
Lesotho 966 802 702 37.6 20.4
Churn (%)3
Tanzania 192.6 41.8 43.5
DRC 75.6 72.2 75.3
Mozambique 163.9 40.8 42.5
Lesotho 65.3 21.6 20.3
MOU per month4
Tanzania 66 57 65 1.5 15.8
DRC 43 40 43 7.5
Mozambique 63 56 55 14.5 12.5
Lesotho 35 40 36 (2.8) (12.5)
Total ARPU (rand per month)5
Tanzania 31 26 23 34.8 19.2
DRC 34 35 33 3.0 (2.9)
Mozambique 58 52 39 48.7 11.5
Lesotho 60 66 68 (11.8) (9.1)
Total ARPU (local currency per month)5
Tanzania (TZS) 5 991 5 417 5 227 14.6 10.6
DRC (USD) 4.2 4.6 4.8 (12.5) (8.7)
Mozambique (MZN) 196 181 172 14.0 8.3
Notes:
1. Total customers are based on the total number of mobile customers registered on Vodacom's network, which have not been disconnected (customers are disconnected after
215 days of inactivity), including inactive customers, as at the end of the period indicated. During the quarter ended 30 June 2012, Tanzania, Mozambique and Lesotho changed
their disconnection policy from 215 days inactivity to 90 days inactivity. Prior period numbers have not been restated.
2. Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly fee that entitles them to
use the service even if they do not actually use the service and those customers who are active whilst roaming.
3. Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly total customers during the period. During the quarter ended
30 June 2012, Tanzania, Mozambique and Lesotho changed their disconnection policy from 215 days inactivity to 90 days inactivity. Prior period numbers have not been restated.
The normalised churn for this quarter is 59.5% for Tanzania, 49.2% for Mozambique and 21.2% for Lesotho.
4. Minutes of use ('MOU') per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly customers during the period. As at
31 March 2012, MOU is calculated in line with the change in the basis of reporting customers and prior periods have been restated accordingly.
5. Total ARPU is calculated by dividing the average monthly service revenue by the average monthly customers during the period. As at 31 March 2012, total ARPU is calculated in
line with the change in the basis of reporting customers and prior periods have been restated accordingly.
Financial review for the quarters ended
Historical financial review for the quarters ended
Revenue
June March December September June March December
Rm 2012 2012 2011 2011 2011 2011 2010
South Africa 14 007 14 379 15 135 13 881 13 537 13 602 14 072
International 3 097 2 930 2 983 2 394 2 119 2 138 2 056
Corporate and eliminations (80) (124) (121) (97) (87) (92) (95)
Revenue 17 024 17 185 17 997 16 178 15 569 15 648 16 033
Service revenue
June March December September June March December
Rm 2012 2012 2011 2011 2011 2011 2010
South Africa 11 769 12 167 12 755 11 947 11 558 11 863 12 075
International 3 028 2 848 2 905 2 326 2 064 2 081 2 001
Corporate and eliminations (61) (89) (93) (73) (70) (74) (78)
Service revenue 14 736 14 926 15 567 14 200 13 552 13 870 13 998
Key indicators for the quarters ended
Historical key indicators for the quarters ended
South Africa
June March December September June March December
2012 2012 2011 2011 2011 2011 2010
Total customers (thousand)1 37 661 34 306 31 727 28 907 27 731 26 535 25 302
Prepaid 31 976 28 677 26 189 23 468 22 411 21 409 20 310
Contract 5 685 5 629 5 538 5 439 5 320 5 126 4 992
Customers (thousand)2 30 970 28 941 27 373 25 261 23 991 22 880 22 356
Prepaid 25 284 23 312 21 835 19 822 18 671 17 754 17 364
Contract 5 686 5 629 5 538 5 439 5 320 5 126 4 992
Churn (%)3 37.8 36.7 30.7 44.6 35.5 28.5 32.7
Prepaid 43.3 42.4 35.3 53.0 41.9 33.0 38.3
Contract 8.7 8.3 10.1 8.9 8.5 9.7 10.3
Traffic (millions of minutes)4 8 657 8 690 9 012 9 186 8 141 8 108 8 402
Outgoing 6 459 6 471 6 741 7 050 6 079 6 060 6 307
Incoming 2 198 2 219 2 271 2 136 2 062 2 048 2 095
MOU per month5 96 103 114 125 116 119 130
Prepaid 81 85 99 109 97 98 109
Contract 158 174 171 181 181 195 202
Total ARPU (rand per month)6 130 144 161 162 164 174 186
Prepaid 73 83 96 92 95 101 109
Contract 333 348 362 370 369 387 408
Key indicators for the quarters ended (continued)
Historical key indicators for the quarters ended (continued)
International
June March December September June March December
2012 2012 2011 2011 2011 2011 2010
Total customers (thousand)1 18 971 22 997 21 200 18 990 17 686 16 957 16 288
Tanzania 9 065 12 612 11 621 10 273 9 260 8 861 8 665
DRC 6 240 5 643 5 119 4 783 4 245 4 155 3 847
Mozambique 2 700 3 701 3 451 2 990 3 277 3 082 2 953
Lesotho 966 1 041 1 009 944 904 859 823
Customers (thousand)2 18 971 18 894 18 047 16 225 14 657 13 939 13 458
Tanzania 9 065 9 665 9 417 8 432 7 656 7 184 6 969
DRC 6 240 5 643 5 118 4 782 4 245 4 156 3 846
Mozambique 2 700 2 784 2 717 2 275 2 054 1 910 1 963
Lesotho 966 802 795 736 702 689 680
Churn (%)3
Tanzania 192.6 41.8 37.7 35.2 43.5 51.1 41.5
DRC 75.6 72.2 66.5 64.3 75.3 45.3 80.8
Mozambique 163.9 40.8 48.2 111.7 42.5 43.0 45.3
Lesotho 65.3 21.6 24.3 24.5 20.3 21.5 24.6
MOU per month5
Tanzania 66 57 62 69 65 66 71
DRC 43 40 42 47 43 38 74
Mozambique 63 56 57 50 55 56 64
Lesotho 35 40 37 39 36 40 39
Total ARPU (rand per month)6
Tanzania 31 26 28 24 23 24 25
DRC 34 35 38 37 33 34 32
Mozambique 58 52 62 49 39 35 34
Lesotho 60 66 74 71 68 67 76
Total ARPU (local currency per
month)6
Tanzania (TZS) 5 991 5 417 5 816 5 522 5 227 5 048 5 332
DRC (USD) 4.2 4.6 4.7 5.1 4.8 4.9 4.7
Mozambique (MZN) 196 181 204 187 172 158 172
Notes:
1. Total customers are based on the total number of mobile customers registered on Vodacom's network, which have not been disconnected (customers are disconnected after
215 days of inactivity), including inactive customers, as at the end of the period indicated. During the quarter ended 30 June 2012, Tanzania, Mozambique and Lesotho changed
their disconnection policy from 215 days inactivity to 90 days inactivity. Prior period numbers have not been restated.
2. Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly fee that entitles them to
use the service even if they do not actually use the service and those customers who are active whilst roaming.
3. Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly total customers during the period. During the quarter ended
30 June 2012, Tanzania, Mozambique and Lesotho changed their disconnection policy from 215 days inactivity to 90 days inactivity. Prior period numbers have not been restated.
The normalised churn for this quarter is 59.5% for Tanzania, 49.2% for Mozambique and 21.2% for Lesotho.
4. Traffic comprises total traffic registered on Vodacom's mobile network, including bundled minutes, promotional minutes and outgoing international roaming calls, but excluding
national roaming calls, incoming international roaming calls and calls to free services.
5. Minutes of use ('MOU') per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly customers during the period. As at
31 March 2012, MOU is calculated in line with the change in the basis of reporting customers and prior periods have been restated accordingly.
6. Total ARPU is calculated by dividing the average monthly service revenue by the average monthly customers during the period. As at 31 March 2012, total ARPU is calculated in
line with the change in the basis of reporting customers and prior periods have been restated accordingly.
Revenue for the quarter ended 30 June 2012
South Africa Yoy % International Yoy % Corporate/ Group Yoy %
Rm change change Eliminations change
Mobile voice 7 136 1.5 1 490 58.2 8 626 8.2
Mobile interconnect 1 215 (17.3) 231 47.1 (22) 1 424 (10.8)
Mobile messaging 763 2.7 89 56.1 852 6.5
Mobile data 2 044 10.1 225 150.0 2 269 16.6
Other service revenue 611 32.3 993 21.4 (39) 1 565 26.1
Service revenue 11 769 1.8 3 028 46.7 (61) 14 736 8.7
Equipment revenue 2 021 11.1 27 (10.0) (5) 2 043 11.3
Non-service revenue 217 35.6 42 68.0 (14) 245 35.4
Revenue 14 007 3.5 3 097 46.2 (80) 17 024 9.3
Average quarterly exchange rates
June March June Year on year Quarterly
2012 2012 2011 % change % change
USD/ZAR 8.14 7.75 6.79 19.9 5.0
ZAR/MZN 3.41 3.52 4.43 (23.0) (3.1)
ZAR/TZS 194.82 205.67 226.86 (14.1) (5.3)
EUR/ZAR 10.43 10.17 9.77 6.8 2.6
Non-GAAP information
This trading statement contains certain non-GAAP financial information which has not been reviewed or reported on by the Group's
auditors. The Group's management believes these measures provide valuable additional information in understanding the
performance of the Group or the Group's businesses because they provide measures used by the Group to assess performance.
However, this additional information presented is not uniformly defined by all companies, including those in the Group's industry.
Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although
these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or
alternatives to, but rather as complementary to, the comparable GAAP measures.
Trademarks
Vodafone, the Vodafone logo, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone Passport, Vodafone live!, Power to You,
Vodacom, Vodacom M-Pesa, Vodacom Millionaires, Vodacom4Less and Vodacom Change the World are trademarks of Vodafone
Group Plc (or have applications pending). The trademarks RIM?, BlackBerry?, are owned by Research in Motion Limited and are
registered in the US and may be pending or registered in other countries. Java? is a registered trademark of Oracle and/or its affiliates.
Microsoft, Windows Mobile and ActiveSync are either registered trademarks or trademarks of Microsoft Corporation in the US and/or
other countries. Google, Google Maps and Android are trademarks of Google Inc. Apple, iPhone and iPad are trademarks of Apple Inc.,
registered in the US and other countries. Other product and company names mentioned herein may be trademarks of their respective
owners.
Forward-looking statements
This trading statement which sets out the quarterly results for Vodacom Group Limited for the quarter ended 30 June 2012 contains
'forward-looking statements', which have not been reviewed or reported on by the Group's auditors, with respect to the Group's
financial condition, results of operations and businesses and certain of the Group's plans and objectives. In particular, such forward-
looking statements include statements relating to: the Group's future performance; future capital expenditures, acquisitions,
divestitures, expenses, revenues, financial conditions, dividend policy, and future prospects; business and management strategies
relating to the expansion and growth of the Group; the effects of regulation of the Group's businesses by governments in the countries
in which it operates; the Group's expectations as to the launch and roll out dates for products, services or technologies; expectations
regarding the operating environment and market conditions; growth in customers and usage; and the rate of dividend growth by the
Group.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'will',
'anticipates', 'aims', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans' or 'targets'. By their nature, forward-looking statements
are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances
that will occur in the future, involve known and unknown risks, uncertainties and other facts or factors which may cause the actual
results, performance or achievements of the Group, or its industry to be materially different from any results, performance or
achievement expressed or implied by such forward-looking statements. Forward-looking statements are not guarantees of future
performance and are based on assumptions regarding the Group's present and future business strategies and the environments in
which it operates now and in the future.
Sponsor: UBS South Africa (Pty) Limited
Debt sponsor: Absa Capital (the investment banking division of Absa Bank Limited and affiliated with Barclays)
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