South Africa’s
Vodacom beat expectations with both its full-year profit and dividend,
helped by a surge in mobile data usage that showed its diversification
beyond voice revenue is paying off.
Vodacom, which
operates mainly in South Africa, the Democratic Republic of Congo and
Tanzania, is fighting to defend market share from competitors such as
MTN Group and India’s Bharti Airtel, both of which have a bigger
presence across Africa.
The company is
increasingly focused on broadening its mobile broadband business, which
is seen as having huge growth potential on a continent where most
people lack traditional Internet access.
“This is the real
growth engine in the business,” Vodacom Chief Executive Pieter Uys told
an analyst briefing, adding he aimed to nearly triple the number of
data customers to 25 million from in the next two years.
Data revenue rose
by nearly 36 percent to 6.4 billion rand, the company said. That would
account for slightly more than 10 percent of its total revenue.
“Over time, one
will expect that data will become a larger and larger contributor,”
said Rob Forsyth, an analyst at Investec Asset Management.
“I think usage is
going to go up a lot in terms of data for the whole industry. Vodacom
will be very successful in that … they are the leaders in data.”
Shares of Vodacom, a unit of Britain’s Vodafone and South Africa’s
largest mobile operator, rose more than 2 percent.
Essential for Africa
Emerging markets
telecoms research firm Delta Partners said at the start of this year it
expected non-voice revenue in Africa, including short messaging
services, to hit $10 billion by 2014, from about $5 billion currently.
Increased broadband
usage is critical for the development of the world’s poorest continent.
A 10 percent rise in broadband penetration is linked to a 1.3 percent
increase in economic growth, according to the World Bank.
Vodacom is also
pushing ahead with its plans to end a long-standing dispute with its
joint venture partner in the Democratic Republic of Congo (DRC), Uys
said.
The company last
year said it appointed investment bank Rothschild to explore options
for the unit, where it is in arbitration with its local partner,
Congolese Wireless Network, over a fee dispute.
“That process is
well underway,” Mr Uys told reporters on a conference call, adding that
a sale continued to be a potential outcome for the stake.
Vodacom said
diluted headline earnings per share totalled 654.3 cents in the year to
end-March, up 28 percent from 509.4 cents a year earlier.
That was above the
average estimate of 639.95 cents in a poll of 15 analysts by Thomson
Reuters. The company said in a trading statement last month it expected
earnings to be as much as 30 percent higher.
