DRC

Vodacom DRC’s revenue for the year ended 31 March 2009 rose 27.5% to R2 928 million, primarily due to a 26.8% increase in customers to 4.2 million, increase in data revenue and the strengthening of the US dollar to the rand over the period, offset by a decrease in net interconnect revenue and lower ARPUs in local currency. In US dollars, revenue increased by 2.6% in the year. Data revenue accounted for 4.1% of Vodacom DRC’s revenue for the year and increased 53.2% to R121 million.

The impact of the slump in mineral resource prices and the closing or downsizing of many mines has had a devastating impact on the DRC economy. Furthermore, the decrease in mining exports caused severe shortages of US dollars, which resulted in significant depreciation of the local CDF currency. A weaker local currency impacts negatively on the affordability of mobile offers which are charged for in US dollars. The severe economic conditions have spurred increased price competition, which is expected to get worse as the full effect of the economic downturn filters through the economy and with the entry of new mobile operators into the market.

While customer growth in the DRC was hampered by the harsh economic conditions, gross connections were supported by aggressive customer acquisition campaigns and connection incentives, the launch of per second billing and lower denomination vouchers and increased network coverage. Vodacom DRC maintained its leadership position.

Churn remained high at 50.5%, compared to 48.0% in the prior year, as a result of the increasingly competitive environment. During the year total ARPU increased 5.5% to R63 per month, as compared to R60 per month for the prior year. This was primarily due to currency fluctuations offset by the connection of lower ARPU customers, an increase in inactive customers and lower usage. In US dollars, ARPU was 14.3% lower, mainly due to increasing competition and the weakening economic climate together with local currency weakness against the US dollar. Local currency depreciation severely affects the purchasing power =of customers who pay in local currency for airtime which is charged in US dollars. The local currency weakened by 47.0% in the six months ended 31 March 2009.

Vodacom DRC’s operating profit for the year ended 31 March 2009 was R204 million and EBITDA was R743 million, decreasing by 44.0% and 0.3% respectively on the prior year. The EBITDA margin was down to 25.4% from 32.4% in the prior year. Profitability was negatively impacted by an increase in indirect taxes, changes in interconnection rates, increases in network maintenance and site costs due to fuel and security cost increases and the market conditions. In US dollars, EBITDA and operating profit decreased by 19.7% and 54.9% respectively.

Capital expenditure rose 5.3% to R693 million, or 23.7% of revenue. During the year an additional 93 sites were rolled out, bringing the total to 518 as at 31 March 2009.

After several postponements, the commencement date for implementation of excise duty tax was set at 15 April 2009, and the full 10% excise duty tax will gradually be introduced in the following 12-month period. All mobile operators agreed to pass the excise duty tax on to customers and retail tariffs were increased by 4% on 14 April 2009. The tax rate and fees specific to the telecommunications sector have also been increased, and the FEC (Chamber of Commerce) has asked for a review of the high increases. Following a request for further extension of customer registration, the period was verbally extended by six months to the end of June 2009.