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TKG
TKG
Telkom - Vodacom trading update for the period ended June 30, 2006
Telkom SA Limited
(Registration Number 1991/005476/06)
ISIN ZAE000044897
JSE and NYSE Share Code TKG
("Telkom")
Vodacom trading update for the period ended June 30, 2006
Vodacom Group (Proprietary) Limited ("Vodacom" or "Vodacom Group")
(unlisted), in which Telkom has a 50.0% holding, today announced a quarterly
update for the three months ended June 30, 2006.
As at June 30, 2006, Vodacom Group recorded 25.2 million customers across
its networks operating in South Africa, Tanzania, the Democratic Republic of
the Congo, Lesotho and Mozambique, reflecting a 7.3% increase in the three
months since March 31, 2006. The growth in the customer base is a result of
high gross customer connections of 3.5 million for the quarter. The Group"s
other non South African operations comprised 4.9 million customers, or 19.3%
of the total customer base.
South Africa
South Africa includes the operations of Vodacom South Africa, Smartphone SP
(Pty) Limited, Smartcom (Pty) Limited and Cointel VAS (Pty) Limited.
South Africa increased its customer base by 6.4% since March 31, 2006 to
20.4 million customers in an increasingly competitive market. South
Africa"s customer base comprises 2.5 million contract customers and 17.8
million prepaid customers, reflecting increases of 5.3% and 6.3% since March
31, 2006, respectively. South African ARPU declined to R121 per month for
the three months to June 30, 2006, compared to R139 per month for the twelve
months which ended March 31, 2006.
South Africa defines an active customer as a SIM card that had a revenue
generating activity in the three months leading up to the reporting date.
Up to mid June 2006 calls forwarded to voicemail was regarded as a revenue
generating activity, and such SIM cards classified as active customers.
An analysis of the customer base, based on statistical sampling, has
revealed that a material number of SIM cards have calls forwarded to
voicemail as its only revenue generating activity. The majority of such
messages are never retrieved by the customer. It is estimated that these
SIM cards have an ARPU of less that R1 per month which is below the cost of
maintaining such SIM cards on the network. It is therefore not justifiable
to keep such SIM cards on the network.
South Africa has therefore decided to change its definition of an active
customer to exclude calls forwarded to voicemail from the definition of a
revenue generating activity. Such SIM cards would be disconnected from the
network after being inactive for a 215 consecutive day period in accordance
with the business rules of the company. The retrieval of a voice message by
a customer is classified as a revenue generating activity.
Based on statistical analyses it is estimated that approximately 3.5 million
affected pre-paid SIM cards, included in the customer base on June 30, 2006,
will be deleted by December 31, 2006. It is also expected that normal
monthly churn from July 2006 onwards would increase as a result of the
activity rule change.
The impact of the activity rule change will have an immaterial impact on
revenue, but it would have the effect of increasing prepaid ARPU for the
period.
South Africa customers, year-to-date ARPU and churn as at June 30, 2006
compared to March 31, 2006 are as follows:
South Africa March 31, 2006 June 30, 2006 % change
Customers (thousands) 19,162 20,380 6.4
Contract 2,362 2,488 5.3
Prepaid 16,770 17,834 6.3
Community services 30 58 93.3
telephones
ARPU (ZAR) 139 121 (12.9)
Contract 572 526 (8.0)
Prepaid 69 61 (11.6)
Community services 1,796 1,154 (35.7)
telephones
Churn (%) 17.7 27.6 9.9 pts
Contract 10.0 10.8 0.8 pts
Prepaid 18.8 29.9 11.1 pts
Other non South African operations
Vodacom"s other non South African operations increased their total customer
base by 11.6% since March 31, 2006 to 4.9 million customers. Satisfactory
customer growth was achieved in all Vodacom"s other non South African
operations, most notably Mozambique with a 19.2% increase in its customer
base.
Vodacom"s other non South African operations" customers, year-to-date ARPU
and churn as at June 30, 2006 compared to March 31, 2006 are as follows:
Other non South African March 31, 2006 June 30, 2006 % change
operations
Vodacom Tanzania
Customers (thousands) 2,091 2,289 9.5
Contract 7 11 57.1
Prepaid 2,081 2,275 9.3
Public phones 3 3 -
ARPU (ZAR) 67 51 (23.9)
Churn (%) 28.5 32.9 4.4 pts
Other African operations
Vodacom Congo
Customers (thousands) 1,571 1,768 12.5
Contract 14 15 7.1
Prepaid 1,538 1,730 12.5
Public phones 19 23 21.1
ARPU (ZAR) 86 81 (5.8)
Churn (%) 28.1 29.5 1.4 pts
Other non South African March 31, 2006 June 30, 2006 % change
operations (continued)
Vodacom Lesotho
Customers (thousands) 206 221 7.3
Contract 3 3 -
Prepaid 200 215 7.5
Public phones 3 3 -
ARPU (ZAR) 78 75 (3.8)
Churn (%) 22.3 19.6 (2.7 pts)
Vodacom Mozambique
Customers (thousands) 490 584 19.2
Contract 8 9 12.5
Prepaid 482 575 19.3
ARPU (ZAR) 36 26 (27.8)
Churn (%) 32.2 28.9 (3.3 pts)
Johannesburg
26 July 2006
Sponsor: UBS Warburg
Date: 26/07/2006 08:30:08 AM Produced by the JSE SENS Department
