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Vodacom Sales Growth Slows on South Africa Data Pricing Cuts

Vodacom Sales Growth Slows on South Africa Data Pricing Cuts

(Bloomberg) -- Vodacom Group Ltd. sales growth slowed as Africa’s largest wireless carrier by market value battled tougher data-price regulations and a sluggish economy in its home market of South Africa.

  • Service revenue gained 3.9% in the three months through June, compared with 5.2% a year earlier. Subscriber numbers across the group’s markets rose by 1.2 million to 79 million.

Key Insights

  • Vodacom’s international business growth offset a decline in South Africa as use of data and mobile-money services across the continent continue to gather momentum. Management is looking to expand its international footprint by entering Ethiopia, which recently unveiled plans to award two new licenses to operators.
  • One problematic area is the Democratic Republic of Congo, which threatened to withdraw the carrier’s 2G license over a dispute over how it was awarded.
  • In South Africa, President Cyril Ramaphosa said in June that operators would soon have more clarity on spectrum allocation, and expectations are that it will be awarded in 2019. That will deliver a boost to Vodacom and crosstown rival MTN Group Ltd., which are both having to comply with new restrictions on data pricing.

Market Reaction

  • Vodacom shares rose 2.1% as of 9.14 a.m. in Johannesburg, paring the year’s decline to 11%. MTN, which is more exposed to other markets and thus more insulated against South Africa, has gained 23%, narrowing the gap in market value to just 10 billion rand.
Vodacom Sales Growth Slows on South Africa Data Pricing Cuts

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  • Company statement

To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John Bowker

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