Vodacom Group Limited annual results for the year ended 31 March 2017
|Year ended 31 March||Year-on-year % change|
|Revenue||81 278||80 077||1.5||3.4|
|Service revenue||68 286||66 763||2.3||4.4|
|EBITDA||31 238||30 345||2.9||7.1|
|EBIT||22 126||21 696||2.0||6.5|
|Operating profit||21 750||21 059||3.3|
|Capital expenditure||11 292||12 875||(12.3)|
|Operating free cash flow||19 555||16 523||18.4|
|Headline earnings per share (cents)||923||883||4.5|
Shameel Joosub, Vodacom Group CEO commented:
A year ago we said that the strategies that we have implemented to differentiate our network experience, to proactively change our pricing and to offer customers more value through segmented and personalised offers, will continue to sustain revenue growth.
Our solid results this year show that we continue to make great progress against these strategic priorities with our performance driven, in particular, by strong customer growth in South Africa, where we added close to three million customers, largely contributing to a 5.6% increase in service revenue growth. This was offset by the impact of currency volatility and the anticipated effects of customer registrations and disconnections in our International operations, where service revenue declined by 5.6% (+2.2%*). Overall Group service revenue grew 2.3% (4.4%*).
In South Africa, customers have responded positively to our segmented marketing approach and concerted efforts to increase bundle adoption engagement, particularly through our ‘Just 4 You’ offers. This resulted in the sale of almost 1.5 billion bundles, an increase of 34.1% and ultimately in the increase in our Net Promoter Score lead over our next-best competitor.
The sustained demand for data remains a key driver for growth with active data users up 8.3% in South Africa and 29.3% across our International operations. Data now comprises 36.3% (up from 31.9% a year ago) of Group service revenue and grew at 16.4%.
To solidify our network and service differentiation and support this continued growth, we invested R11.3 billion in our infrastructure of which R8.5 billion was in South Africa where we expanded 4G coverage to 75.8% of the population and 3G to 99.8%. Over the past three years, capital expenditure across the Group will total at R37.5 billion with R25.9 billion in South Africa alone.
Enterprise revenue continues to grow strongly at 9.9%. This year, our cloud and hosting increased by 35.2%, and our IoT revenue was up 19.1% to R662 million.
In our International operations, we have recovered from the customers disconnected in the prior year, adding 2.5 million customers for the year. Although short-term pressures remain, we expect the introduction of ‘Just 4 You’ across all our operations and the continued success of M-Pesa to provide for improved commercial execution to this portfolio. Fuelled by expanding distribution channels and the expansion of products and services on offer, we increased the number of customers that use M-Pesa by 3.7 million to almost 13 million, contributing to a 19.4% rise in M-Pesa revenue.
In the past year, voice and data prices fell by 14.3% and 16.0% respectively in South Africa where significantly more customers benefitted from using bundles. This brings the cumulative reduction in voice and data prices to 42.2% and 44.3% over the past three years. Still, we remain focussed on addressing out-of-bundle pricing and recently launched an enhanced smart notification service to encourage in-bundle usage.
Cognisant of our responsibility to increase digital and social connectivity in South Africa, we introduced ‘Siyakha’ in early 2017. Siyakha is a platform that offers zero-rated content and lower priced products and services, which form part of our effort to help improve the lives of people that can least afford communication costs.
We have made significant strides in transformation, evident in our Level 2 contribution status which we achieved based on last year’s ICT Sector BEE Codes. As of November 2016, significant changes were made to the codes resulting in more stringent requirements and material amendment to the BBBEE status and recognition criteria. Had these criteria been applied without management and the Board implementing remedial action, within a limited timeframe of three months, it would have resulted in achieving a Level 8 contributor status. Through higher investment in transformation projects and introducing new transformation initiatives, we have achieved a Level 4 contribution status for this year’s assessment.
Looking ahead, we are fully alert to the changing regulatory and macroeconomic environments and have measures in place to ensure we have the agility to adapt to various relevant scenarios.