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Vodacom Group

Vodacom Group Limited Preliminary Results for the Year Ended 31 March 2015

Tuesday, 19 May 2015
Untitled Document Vodacom Group Limited Preliminary Results for the Year Ended 31 March 2015

·         Group active customers increased 7.2% to 61.6 million
·         Group revenue up 2.1% (1.1%*) and service revenue up 0.2% (-1.0%*)
·         Excluding the impact of a 50% cut in MTRs in South Africa, Group revenue increased 4.8% (3.7%**) and Group service revenue increased 3.4% (2.2%**)
·         Strong growth in Group data revenue of 25.0%; active data customers up 15.9% to 26.5 million and M2M customers up 18.5% to 1.8 million
·         Group EBITDA declined 1.5% (-1.1%*) with an EBITDA margin of 34.8%; strong recovery in SA EBITDA in H2
·         Capital expenditure increased 23.4% to R13 305 million (17.2% of Group revenue in line with medium-term guidance)
·         South Africa service revenue declined 2.7%; excluding the impact of MTR cuts, service revenue grew 1.5%
·         International service revenue grew 10.0% (4.5%*), representing 24.6% of Group service revenue
·         HEPS decreased 4.0% to 860 cents
·         Final dividend of 400 cents, taking the total dividend to 775 cents in line with our dividend policy
·         Solid performance in Q4, ending the year with promising growth


Year ended 31 March

Year on year % change







77 333

75 711



Service revenue

62 167

62 047




26 905

27 314



Capital expenditure

13 305

10 779



Operating free cash flow

14 003

19 410



Free cash flow
Headline earnings per share (cents)

7 763

13 185



* Normalised growth adjusted for trading foreign exchange and at a constant currency (using current year as base) (collectively 'foreign exchange').
** Growth adjusted for foreign exchange, and the MTR impact in South Africa.
All growth rates quoted are year-on-year growth rates unless stated otherwise.

Shameel Joosub, Vodacom Group CEO commented:

"The key highlights of our story for the year were network investment, data growth, and pricing transformation. This played out against a tough backdrop. In South Africa we faced major cuts in mobile termination rates ('MTRs'), a weak economic environment, exchange rate volatility and increased price competition. In Tanzania and the DRC, pricing pressure impacted our performance. Despite these challenging conditions, we increased the Group customer base by 7.2% to 61.6 million and grew revenue by 2.1% (1.1%*) to R77.3 billion. Headline earnings per share reduced 4.0% to 860 cents.

In South Africa we've attracted the majority of contract customers to integrated packages and established the value bundle approach within the prepaid segment, which has in effect rebased our pricing. This resulted in a 17.7% reduction in the blended average effective price per minute for calls, and a 24.1% reduction in the average effective price per MB of data. A second significant change was the 50% reduction in MTRs which was a major contributor to the 2.7% decline in service revenue in South Africa. Excluding the MTR cuts, service revenue in South Africa grew 1.5%. With these adverse factors behind us, we can now realise the full benefit of continued investment in network reach and capacity, as well as from our ongoing focus on enabling access to low-cost smartphones and tablets. This is reflected in a recovery in the fourth-quarter, resulting in a better performance in the second-half.

The delay in receiving regulatory approval for the acquisition of Neotel is disappointing. This transaction has been with the authorities for approval for almost a year now.

In our International operations, service revenue was up 10.0% (4.5%*). Lesotho and Mozambique performed well, while Tanzania and the DRC faced stiff pricing competition.

The smart device revolution continues, and we now have 26.5 million active data customers and 1.8 million machine to machine ('M2M') customers across the Group. Overall data revenue grew 25.0%. In South Africa, the number of smart data devices (smartphones, tablets and modems) active on the network grew by 29.7% to 11.6 million, boosted by the launch of Smart Kicka and Smart Tab, Vodacom's low-cost branded devices.

Our focus on network investment is the key enabler behind the increasing contribution that data is making to service revenue. We lifted Group capital expenditure 23.4% to R13.3 billion, adding another 2 576 3G sites across the Group and more than doubling our LTE/4G sites to 2 610. In South Africa, 3G coverage was extended to 95.6% of the population.

Looking forward, the improvement in fourth-quarter performance gives us cause for cautious optimism. The indications are that we've pulled through a transformative period and conditions over the medium-term look more favourable."

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