Wrap Text
Telkom SA Limited - Vodacom Results
Telkom SA Limited
(Registration Number 1991/005476/06)
ISIN ZAE000044897
JSE and NYSE Share Code TKG
("Telkom")
Telkom SA Limited - Vodacom results
Vodacom Group (Proprietary) Limited ("Vodacom") in which Telkom has a 50.0%
holding, today released its results for the year ended 31 March 2005:
Operating highlights
Total customers up 38.0% to 15.5 million
- Customers up 32.0% in South Africa to 12.8 million
- Customers up 54.0% in DRC to 1.0 million
- Customers up 75.6% in Tanzania to 1.2 million
South African market share of 56%
Vodafone strategic alliance announced in November 2004
First 3G network in South Africa launched in December 2004
Financial highlights
Revenue up 19.5% to R27.3 billion
Profit from operations up 23.9% to R6.5 billion
EBITDA up 23.6% to R9.6 billion
EBITDA margin up 1.1% points to 35.1%
Net profit up 27.2% to R3.9 billion
Dividends up 61.9% to R3.4 billion
Commentary
The year under review
We are pleased to present the Vodacom Group Annual Results for 2005 in what has
once again been another outstanding year in the history of Vodacom. Our strong
financial performance is underpinned by excellent growth in customers, improved
market share, good growth in revenues and profits, strong free cash flows, and a
continued improvement in productivity.
Vodacom South Africa has had an exceptional year in terms of growth in
customers, revenue, profit from operations and earnings before interest,
taxation, depreciation, amortisation and impairment (EBITDA), all underpinned by
a strategy of improving market share through aggressive growth and retention
initiatives. Trading conditions were favourable, with a growing customer market
and low inflation and interest rates in South Africa leading to customers having
higher disposable income. As a result, Vodacom South Africa had a record 6.2
million gross connections (2004: 5.0 million), fuelling customer growth of 32.0%
to a base of 12.8 million (2004: 9.7 million). Vodacom consequently saw an
increase in its market share to 56% (2004: 54%) at the end of the year. The
estimated penetration of the South African population is 48.5% and further
growth can be expected given the robustness of the market and the strong
economy.
Vodacom"s expansion outside South Africa contributed 8.3% (2004: 6.6%) to
revenue and with 2.6 million customers (2004: 1.5 million), these operations
constitute 17.1% of the total customer base (2004: 13.3%). All of Vodacom"s
other African operations, with the exception of Vodacom Mozambique, are now
profitable at the profit from operations level. Mozambique remains a tough
challenge, but we are confident that in the medium to long term it will also
contribute to the overall growth of Vodacom.
Performance
The Group delivered a strong financial performance for the year ended March 31,
2005. Growth has been driven by excellent performances from all the Group"s
operations, with the exception of Mozambique which remains in its start-up
phase.
Revenue continued its strong growth year on year, reaching R27.3 billion (2004:
R22.9 billion), a 19.5% increase over 2004. This increase was driven by customer
growth and an improved market share. Vodacom has experienced declining average
revenue per user (ARPU), with a decrease in monthly ARPU in South Africa to R163
(2004: R177) as a result of lower spending customers being connected and a
change in the customer mix. Nevertheless, the continued improvement in
productivity mitigates against reducing ARPUs through the maintenance of ARPU
margins.
Vodacom currently has 15.5 million customers (2004: 11.2 million), an increase
of 38.0% for the year. We remain the market leader in all the countries in which
we operate, with the exception of Mozambique.
As a result of sound cost management, Vodacom has ensured that its revenue
growth has been translated into increased profits from operations, which
increased 23.9% to R6.5 billion (2004: R5.2 billion), exceeding the revenue
growth of 19.5%. Vodacom"s EBITDA increased substantially by 23.6% to R9.6
billion (2004: R7.8 billion) and the EBITDA margin increased to 35.1% (2004:
34.0%).
Strategic acquisitions
There have been no acquisitions or investments in respect of African based
cellular networks. However, Vodacom continued acquisitions in South Africa of
businesses that are of strategic importance, including the process of gaining
control of its service provider channel.
Regulatory
In South Africa, Vodacom is preparing for a range of new regulatory legislation
such as the BEE ICT charter, number portability, the Convergence Bill, and the
Monitoring and Interception Act, amongst others. These regulatory developments
will lead to changes in the operating environment, and have an uncertain impact
on business. It is therefore critical that Vodacom remains innovative,
pragmatic, vigilant, pro-active, and quick in its decision-making process so as
to protect both the investment of its shareholders and its market share. In
Vodacom"s other African operations the regulatory and fiscal environment has
been subjected to changes and challenges and it faces the test of continued
management of these.
We support the industry initiative to formalise a BEE charter for the ICT
sector. The Group is well positioned to comply with the ICT charter and it is
committed to the transformation objectives of the charter.
Financial review
The year under review
The Vodacom Group achieved remarkable results in an ever more competitive and
demanding environment. Vodacom"s revenue increased by 19.5% to R27.3 billion
(2004: R22.9 billion) and the profit from operations increased by 23.9% to R6.5
billion (2004: R5.2 billion). Excluding the effects of Vodacom Mozambique, the
profit from operations would have been R6.9 billion (2004: R5.3 billion), a
30.4% increase on the prior year. EBITDA increased by 23.6% to R9.6 billion
(2004: R7.8 billion) and, despite the impairment of assets in respect of
Mozambique, net profit after taxation increased by 27.2% to R3.9 billion (2004:
R3.1 billion). South Africa constitutes the majority of Vodacom"s revenue at
91.7% (2004: 93.4%), although the other African operations continue to improve
their contribution, increasing to 8.3% (2004: 6.6%) of revenue. The growth in
the South African operations has been outstanding, fuelled by the favourable
economic conditions and strong consumer spending.
Two significant events need to be taken into account when analysing Vodacom"s
results for the year ended March 31, 2005. Firstly, with effect from April 1,
2004, Vodacom Congo meets the definition of a subsidiary because certain clauses
granting the outside shareholders participating rights have been removed from
the shareholders agreement. Consequently, it is now fully consolidated in the
Group annual financial statements. Prior to this date, the Group proportionally
consolidated 51% of the results of Vodacom Congo. Any comparison of consolidated
numbers with prior periods will therefore be distorted since prior periods
reflect only the Group"s share of 51% of revenues, expenses, assets and
liabilities, whereas the current period reflects 100%. To facilitate a better
comparison of numbers with prior periods, adjusted amounts have been presented
in the segmented analyses below, which reflect 100% of Vodacom Congo for the
prior periods. Secondly, IAS 36 - Impairment of Assets (IAS 36), has resulted in
an impairment charge to the assets of Vodacom Mozambique of R268 million. This
has been reflected separately in the income statement for the current year.
The performance of the South African operations has been impacted by a number of
factors which taken together resulted in improved margins. The factors
positively impacting on margins were the inclusion for the first full year of
Smartphone SP (Proprietary) Limited and Smartcom (Proprietary) Limited, as well
as increased operational efficiencies achieved from economies of scale.
It should be noted that in South Africa, the equipment sales revenue in 2004 and
2003 was restated by R623 million and R369 million, respectively, to eliminate
revenue from handset sales to Vodacom"s own distribution channel, as required by
IFRS. The amounts have been reallocated to other direct network operating costs
in those years, and therefore have a nil effect on profit from operations and
EBITDA, but have increased the margins in the comparative years.
Two factors have had a negative impact on margins. Firstly, incentives and
discounts for the higher volume of gross contract connections increased 28.0%
year on year and has led to higher customer acquisition costs and further margin
pressure. Secondly, the continuing trend of fixed-mobile substitution has seen
Vodacom"s net interconnect revenue declining further because of increased
interconnect costs. Interconnect costs increased because the cost of terminating
calls on other mobile networks is much higher than the cost of terminating calls
on Telkom"s fixed-line network. Despite these factors, the Vodacom Group
achieved strong results in an ever more competitive environment.
Key financial indicators
Year ended March 31, 2001 2002 2003 2004 2005
Profit from operations margin1 19.2% 22.4% 22.3% 22.9% 23.7%
EBITDA margin1 31.6% 35.2% 34.5% 34.0% 35.1%
Net profit margin1 9.9% 14.7% 11.6% 13.4% 14.2%
Net debt/EBITDA 63.1% 66.7% 36.5% 6.0% 4.4%
Net debt/equity 75.4% 69.4% 35.8% 6.1% 5.4%
Net debt/net tangible assets 99.0% 81.1% 38.4% 6.9% 6.1%
Gross capital expenditure as % of
revenue1 24.0% 25.3% 17.5% 12.6% 12.8%
South African equipment sales revenue and operating costs have been restated in
2003 and 2004 by R369 million and R623 million, respectively, to eliminate
revenue and costs relating to handset sales to Vodacom"s own distribution
channel, as required by IFRS. Margins have been restated accordingly. The
restatement does not impact the Group"s results for the years ended March 31,
2003 and 2004.
Revenue - geographical split
Rand millions % change
Year ended March 31, 2003 2004 2005 04/03 05/04
South Africa(1) 18,175 21,350 25,041 17.5 17.3
Tanzania 880 897 959 1.9 6.9
DRC2 259 476 1,075 83.8 125.8
Lesotho 96 119 137 24.0 15.1
Mozambique - 13 103 - 692.3
Revenue 19,410 22,855 27,315 17.7 19.5
DRC (100%)(2) 508 933 1,075 83.7 15.2
Adjusted revenue 19,659 23,312 27,315 18.6 17.2
1 South African equipment sales revenue has been restated in 2003 and 2004 by
R369 million and R623 million, respectively, to eliminate revenue from handset
sales to Vodacom"s own distribution channel, as required by IFRS. Margins have
been restated accordingly.
2 During the years ended March 31, 2003 and 2004, 51% of Vodacom Congo was
proportionally consolidated in the group financial statements. Effective April
1, 2004, Vodacom Congo is being fully consolidated as a subsidiary after certain
clauses granting the outside shareholders participating rights have been removed
from the shareholders agreement. The adjusted revenue has been adjusted to
reflect 100% of Vodacom Congo"s revenue for the prior periods for comparison
purposes.
Revenue
Revenue increased 19.5% to R27.3 billion (2004: R22.9 billion). The increase in
revenues was primarily driven by strong customer growth in all of Vodacom"s
operations coupled with lower overall churn and the inclusion of 100% of Vodacom
Congo"s results. However, the contribution of Vodacom"s other African operations
has been negatively impacted by the strong South African Rand.
South Africa
South Africa is by far the biggest contributor to Vodacom"s revenue growth,
accounting for 82.8% or R3.7 billion of the growth in revenue. Revenue from
Vodacom"s South African operations increased by 17.3% to R25.0 billion (2004:
R21.4 billion), driven by the robust growth in customers in South Africa of
32.0% to 12.8 million customers (2004: 9.7 million). Revenue growth was
marginally diluted by declining ARPU, in particular in respect of the connection
of prepaid customers who are lower spending customers.
The number of contract customers increased by 31.8% to 1.9 million (2004: 1.4
million) and the number of prepaid customers increased by 32.1% to 10.9 million
as at March 31, 2005 (2004: 8.3 million). Revenue growth from contract customers
was slightly inhibited by a reduction in the average usage per customer to 226
monthly minutes (2004: 263), offset by standard tariff increases and increased
value-added services usage. South African contract ARPU decreased marginally by
1.6% to R624 per month (2004: R634) for the year ended March 31, 2005.
Revenue growth from prepaid customers was negatively impacted by a reduction in
the average usage per customer to 52 monthly minutes (2004: 56), as a result of
increased penetration into the lower spending prepaid customer market. Prepaid
ARPU consequently decreased by 13.3% to R78 (2004: R90) per month. Total blended
ARPU decreased by 7.9% to R163 per month (2004: R177).
Other African countries
Vodacom"s revenue from its other African operations increased 51.1% to R2.3
billion (2004: R1.5 billion) for the year ended March 31, 2005, contributing
8.3% (2004: 6.6%) to total revenue. The increase in revenue was driven by very
strong customer growth, which mitigated the effect of a declining ARPU and lower
Rand-based revenues in these countries, due to the strengthening of the South
African Rand against the US Dollar and Tanzanian Shilling, although it weakened
against the Mozambique Metical.
Tanzania
Vodacom Tanzania"s revenue increased by 6.9% to R1.0 billion (2004: R0.9
billion), driven primarily by the increase in the customer base. The customer
base at March 31, 2005 of 1.2 million (2004: 0.7 million) represents a
substantial increase of 75.6% on the prior year, primarily achieved through
increases in the prepaid customer base. The customer growth has been driven by
sustained sales marketing campaigns focused on customer acquisition and
additional coverage. ARPU levels have decreased by 36.7% to R81 (2004: R128), as
a result of two tariff reductions, which were necessitated by a competitive
environment. In addition, regulatory intervention and substantially reducing
interconnect revenue also contributed to the lower ARPU. Vodacom Tanzania"s
billing currency is the Tanzanian Shilling, which was effective from April 1,
2004. Prior to this date, the billing currency was the US Dollar.
In Tanzanian shilling terms, Vodacom Tanzania"s revenue grew by 25.3% to
TSH167.7 billion (2004: TSH133.5 billion) and Tanzanian shilling ARPUs decreased
by 28.8% to TSH14,130 (2004: TSH19,850) per month.
Democratic Republic of Congo (DRC)
Vodacom Congo"s revenue increased by 15.2% to R1.1 billion (2004: R0.9 billion),
driven by a 54.0% increase in customers to 1.0 million (2004: 0.7 million).
However, due to the inclusion of 100% of Vodacom Congo"s results, effective
April 1, 2004, the Group"s portion of the revenue included in the results
increased 125.8% from R476 million in 2004 to R1.1 billion in 2005. There has
been pressure on ARPU which has declined 34.7% to R98 (2004: R150), principally
due to the connection of lower spending prepaid customers, coupled with the
32.9% devaluation of the local currency against the US Dollar, which resulted in
lower disposable US Dollar incomes for customers. In US Dollar terms, Vodacom
Congo"s revenue grew by 32.3% to US$172 million (2004: US$130 million) and US
Dollar-based ARPUs decreased by 23.8% to $16 (2004: $21) per month.
Lesotho
Vodacom Lesotho"s revenue increased by 15.1% to R137 million (2004: R119
million), and its customer base increased by 83.8% to 147,000 customers (2004:
80,000). ARPU decreased by 26.4% to R92 (2004: R125). Vodacom Lesotho"s billing
currency is the Maloti, which is linked to the Rand on a 1:1 basis.
Mozambique
Vodacom Mozambique"s revenue increased substantially to R103 million (2004: R13
million), in the company"s first full year of operation. Its customer base
increased 356.9% to 265,000 (2004: 58,000) customers. With Vodacom Mozambique
being the second entrant to the Mozambique market it is connecting lower
spending customers and as a result ARPU has decreased 52.7% to R52 (2004: R110),
due to decreased customer usage. Vodacom Mozambique"s billing currency is the
Metical. In Metical terms, Vodacom Mozambique"s revenue was MZM353.6 billion for
the year ended March 31, 2005 (2004: MZM49.5 billion) and Metical-based ARPU was
MZM177,954 per month (2004: MZM425,511).
Profit from operations
Profit from operations increased by 23.9% to R6.5 billion for the year ended
March 31, 2005 (2004: R5.2 billion), fuelled by buoyant consumer spending and a
low inflationary environment in South Africa, and cost containment in all
operations. Operating expenses increased by 18.2% which was lower than revenue
growth of 19.5%. This resulted in Vodacom"s profit from operations margin
increasing to 23.7% (2004: 22.9%). The profit from operations was negatively
impacted by losses in Mozambique of R454 million including a R268 million
impairment charge to Vodacom Mozambique"s assets, the high levels of contract
customer connections in South Africa, the implementation of a new Corporate
Governance division, costs associated with the Vodafone alliance and the
implementation of 3G and Vodafone live!. Excluding Vodacom Mozambique"s losses
yields an operating profit margin of 25.5% (2004: 23.3%), a substantial increase
on the margin of the prior period. Operating profit margins in all other
operations increased.
Profit from operations - geographical split
Rand millions % change
Year ended March 31, 2003 2004 2005 04/03 05/04
South Africa excluding
holding companies1 4,295 5,282 6,625 23.0 25.4
Tanzania 178 135 183 (24.2) 35.6
DRC2 (117) 10 50 108.5 400.0
Lesotho 4 1 25 (75.0) -
Mozambique - (88) (454) - (415.9)
Holding companies (33) (105) 56 218.2 153.3
Profit from operations 4,327 5,235 6,485 21.0 23.9
DRC (100%)2 (229) 20 50 108.6 155.0
Adjusted profit from operations 4,215 5,245 6,485 24.4 23.6
1 South African equipment sales revenue and operating costs have been
restated in 2003 and 2004 by R369 million and R623 million, respectively, to
eliminate revenue and costs relating to handset sales to Vodacom"s own
distribution channel, as required by IFRS. Margins have been restated
accordingly. The restatement does not impact the Group"s results for the years
ended March 31, 2003 and 2004.
2 During the years ended March 31, 2003 and 2004, 51% of Vodacom Congo was
proportionally consolidated in the Group financial statements. Effective April
1, 2004, Vodacom Congo is being fully consolidated as a subsidiary after certain
clauses granting the outside shareholders participating rights have been removed
from the shareholders agreement. The adjusted profit from operations has been
adjusted to reflect 100% of Vodacom Congo"s profit/(loss) from operations for
the prior periods for comparison purposes.
South Africa
Vodacom South Africa"s profit from operations increased by 25.4% to R6.6 billion
for the year (2004: R5.3 billion) and profit from operations margin increased to
26.5% for 2005 (2004: 24.7%) despite more competitive operating conditions and
increased interconnect costs due to the negative impact of the change in traffic
mix. However, these pressures were offset by the consolidation of a part of
Vodacom"s distribution channel, including Smartcom and Smartcall.
Operating expenses in South Africa grew by 14.6% versus the revenue growth of
25.4%, resulting in the increased South African margin.
Other African countries
Tanzania
Vodacom Tanzania"s profit from operations improved substantially by 35.6% to
R183 million for the year (2004: R135 million), and operating profit margin
increased to 19.1% (2004: 15.1%), despite pressures from tariff reductions in
response to the competitive market environment. The improvement in profit from
operations was aided by sound cost management.
DRC
Vodacom Congo experienced excellent growth with profit from operations
increasing 155.0% to R50 million for the year (2004: R20 million) and operating
profit margin increasing to 4.7% (2004: 2.1%). The profit from operations has
been negatively affected by higher direct expenditure on the implementation of a
new dealer incentive and discount scheme. The effect of this was mitigated by
increased revenue.
Lesotho
Vodacom Lesotho"s profit from operations increased substantially to R25 million
for the year (2004: R1 million) and operating profit margin increased to 18.2%,
despite an increase in termination tariffs and increased interconnect
expenditure on more calls to South Africa.
Mozambique
Vodacom Mozambique"s loss from operations worsened to R454 million for the year
(2004: R88 million loss), primarily due to an impairment charge of R268 million,
and as a result of low spending customers leading to lower than expected
revenue, offset by savings in respect of operational and administrative
expenses. Management expects Vodacom Mozambique"s performance to improve going
forward.
The impairment of capital assets of R268 million was done in compliance with IAS
36, which requires Vodacom to recognise an impairment loss to the extent that
the carrying values of Vodacom Mozambique assets exceed their recoverable
amounts, which is defined as the higher of the net present value of expected
future cash flows and the fair value less cost of disposal. Vodacom Mozambique
has consequently impaired the assets to their estimated fair value less cost of
disposal, which was R268 million less than the book values at March 31, 2005.
The standard requires expected future pre-tax cash flows to be discounted at a
rate commensurate with the riskiness of the assets producing the cash flows.
Because of the high perceived risk of assets in Mozambique, this discount rate
is relatively high. The high discount rate used, and the substantial capital
outlay required at the beginning of the project, resulted in the calculated net
present value of expected future cash flows being lower than the expected fair
value less cost of disposal.
Holding companies
The holding companies have become profitable, with a profit from operations of
R56 million (2004: R105 million loss), mainly as a result of management and
directors fees received from Vodacom Congo relating to the outside shareholder
agreement of US$9 million, and revenue and costs relating to Nigeria which have
not been repeated in the current year.
EBITDA - geographical split
Rand millions % change
Year ended March 31, 2003 2004 2005 04/03 05/04
South Africa excluding
holding companies1 6,423 7,536 9,002 17.3 19.5
Tanzania 333 278 345 (16.5) 24.1
DRC2 (49) 97 252 298.0 159.8
Lesotho 26 27 48 3.8 77.8
Mozambique - (71) (111) - (56.3)
Holding companies (30) (100) 61 233.3 161.0
EBITDA 6,703 7,767 9,597 15.9 23.6
DRC (100%)2 (96) 190 252 297.9 32.6
Adjusted EBITDA 6,656 7,860 9,597 18.1 22.1
1 South African equipment sales revenue and operating costs have been
restated in 2003 and 2004 by R369 million and R623 million, respectively, to
eliminate revenue and costs relating to handset sales to Vodacom"s own
distribution channel, as required by IFRS. Margins have been restated
accordingly. The restatement does not impact the Group"s results for the years
ended March 31, 2003 and 2004.
2 During the years ended March 31, 2003 and 2004, 51% of Vodacom Congo was
proportionally consolidated in the Group financial statements. Effective April
1, 2004, Vodacom Congo is being fully consolidated as a subsidiary after certain
clauses granting the outside shareholders participating rights have been removed
from the shareholders agreement. The adjusted EBITDA has been adjusted to
reflect 100% of Vodacom Congo"s EBITDA for the prior periods for comparison
purposes.
EBITDA
EBITDA increased by 23.6% to R9.6 billion (2003: R7.8 billion) for the year
ended March 31, 2005, with Vodacom"s other African operations contributing 5.6%
(2004: 4.3%). Vodacom"s EBITDA margin increased to 35.1% (2004: 34.0%).
The satisfactory improvement in the EBITDA margin is the result of lower prepaid
acquisition costs and lower contract retention costs in South Africa, the
consolidation of Smartcom and Smartcall, savings in distribution expenses and
operational improvement of all productivity ratios. A healthy increase in on-net
traffic also contributed favourably to profit margins. The margin improvement
was further helped by increased EBITDA margins in all of Vodacom"s other African
operations. Vodacom Mozambique, in its first full year of operation, showed a
decline in EBITDA to a negative EBITDA of R111 million (2004: R71 million
negative EBITDA), due to low ARPUs and a competitive environment. Excluding the
impact of sales of low margin cellular phone and equipment sales, Vodacom
Group"s EBITDA margin was 40.2% (2004: 38.0%).
Revenue
Revenue composition
Rand millions % of total % change
Year ended
March 31, 2003 2004 2005 2003 2004 2005 04/03 05/04
Airtime,
connection and
access 10,647 12,738 16,191 54.8 55.7 59.4 19.6 27.1
Data revenue 654 1,039 1,340 3.4 4.5 4.9 58.9 29.0
Interconnection 5,309 5,785 5,924 27.4 25.3 21.7 9.0 2.4
Equipment
sales1 1,895 2,275 2,687 9.8 10.0 9.8 20.1 18.1
International
airtime 539 659 887 2.8 2.9 3.2 22.3 34.6
Other sales and
services 366 359 286 1.9 1.6 1.0 (1.9) (20.3)
Revenue 19,410 22,855 27,315 100.0 100.0 100.0 17.7 19.5
1 South African equipment sales revenue has been restated in 2003 and 2004 by
R369 million and R623 million, respectively, to eliminate revenue from handset
sales to Vodacom"s own distribution channel, as required by IFRS. Margins have
been restated accordingly.
Airtime, connection and access
Vodacom"s airtime, connection and access revenue increased 27.1% to R16.2
billion (2004: R12.7 billion) during the year ended March 31, 2005, primarily
due to the increase in the number of customers, as well as the 100%
consolidation of Vodacom Congo from April 1, 2004, offset by declining ARPUs in
all operations.
Total customers increased 38.0% to 15.5 million (2004: 11.2 million), primarily
due to strong prepaid customer growth in operations. In South Africa, gross
contract connections of 610,000 (2004: 377,000) exceeded the prior year
connections by 61.8%. South African APRU decreased 7.9% to R163 (2004: R177) due
to the strong increase in prepaid customers and lower usage by the new
connections.
Data revenue - geographical split
Rand millions % of total % change
Year ended
March 31, 2003 2004 2005 2003 2004 2005 04/03 05/04
South
Africa 581 943 1,246 88.8 90.8 93.0 62.3 32.1
Tanzania 71 91 74 10.9 8.8 5.5 28.2 (18.7)
DRC - - 9 - - 0.7 - -
Lesotho 2 5 9 0.3 0.4 0.7 150.0 80.0
Mozambique - - 2 - - 0.1 - -
Data
revenue 654 1,039 1,340 100.0 100.0 100.0 58.9 29.1
Data revenue
Vodacom"s data revenue increased 29.1% to R1.3 billion (2004: R1.0 billion),
mainly due to growth in SMS traffic, as well as increased usage and popularity
of other data products.
The contribution to data revenue from other African operations declined from
9.2% to 7.0%. New data revenues from Vodacom Congo and an increase in Vodacom
Lesotho data revenues were offset by a decrease of 18.7% in Vodacom Tanzania
data revenues, which was adversely affected by aggressive pricing by
competitors. Vodacom Tanzania has subsequently matched the competitors" lower
tariffs, which has resulted in increased usage, with data revenue stabilising at
a lower level.
Vodacom transmitted 2.4 billion SMSs (2004: 2.0 billion) over its South African
network during the year ended March 31, 2005, up 25.2% from 2004. The number of
active MMS users on the network as at March 31, 2005 was 328,974 (2004: 61,374),
sending an average of 811,270 messages (2004: 165,951) per month. The number of
active GPRS users on the network was 579,581 (2004: 100,128). In respect of 3G
services, the number of active 3G users on the network as at March 31, 2005 was
10,853 and the number of active Mobile Connect Card users on the network as at
March 31, 2005 was 5,105.
Interconnection
Vodacom"s interconnection revenue increased by only 2.4% during the year to R5.9
billion (2004: R5.8 billion) primarily due to little growth in fixed to mobile
traffic.
In South Africa, the growth in interconnection revenue was negatively affected
by a 0.5% decline in the traffic originating from Telkom and terminating on
Vodacom"s network caused by the changing call patterns of cellular users through
fixed-mobile substitution.
Equipment sales
Vodacom"s revenue from equipment sales increased by 18.1% to R2.7 billion (2004:
R2.3 billion) during the year. Equipment sales was restated in 2004 and 2003 by
R623 million and R369 million, respectively, as noted earlier in this report. In
South Africa, handset sales increased 14% to 2.4 million units (2004: 2.0
million). The growth in equipment unit sales was primarily due to growth of
Vodacom"s customer base and the continued uptake of new handsets in South Africa
fuelled by Vodacom"s successful strategic drive to increase access in the robust
South African market. Sales were further driven by cheaper Rand-prices of new
handsets coupled with the added functionality of the new phones, based on new
technologies such as camera phones and colour screens.
International airtime
International airtime revenues are predominantly from international calls by
Vodacom customers, roaming revenue from Vodacom"s customers making and receiving
calls while abroad, and revenue from international customers roaming on
Vodacom"s networks. International airtime increased 34.6% to R887 million (2004:
R659 million) for the year ended March 31, 2005, primarily as a result of
healthy increases in international airtime from Vodacom Congo and Vodacom South
Africa, as well as an increase in roaming partners. The increase in South
African international airtime was offset to a degree by the strengthening of the
Rand against the trade-weighted basket of international currencies during 2005.
Other sales and services
Revenue from other sales and services includes revenue from non-core operations
such as income from Vodacom"s cell captive insurance scheme. Revenue decreased
by 20.3% to R286 million (2004: R359 million), primarily as a result of the
reallocation of value-added services revenue, which was previously included
under other sales and services, to airtime connection and access. The decrease
was offset marginally by other sales and services revenue received in Smartcom
(Proprietary) Limited.
Operating expenses
Operating expenses included the effect of the first full year of consolidating
Smartcall (Proprietary) Limited, Smartcom (Proprietary) Limited and Vodacom
Mozambique, as well as including 100% of Vodacom Congo, compared to 51% in the
prior year.
Depreciation, amortisation and impairment
Vodacom"s depreciation, amortisation and impairment increased by 22.9% to R3.1
billion in the year ended March 31, 2005 (2004: R2.5 billion). The biggest
contributing factor to this increase was the impairment of Vodacom Mozambique"s
assets which amounted to R268 million, and which has been reflected as a
separate line item in the income statement in terms of IAS 36. The increase in
the depreciation and amortisation would have been 12.3% if the Mozambique
impairment was excluded.
Although Vodacom"s biggest capital investments have already been made in South
Africa, the aggressive roll-out of infrastructure, in particular with the
introduction of 3G, and the amortisation of intangible assets in Smartcall, has
caused an increase in South African depreciation and amortisation. The continued
strengthening of the Rand against most other currencies again resulted in
depreciation on foreign-denominated capital expenditure in Vodacom"s other
African operations being translated at a lower exchange rate than in the past,
which resulted in only a marginal increase in depreciation and amortisation in
Vodacom"s other African operations, despite increased capital expenditure. A
comparison of the exchange rates applicable to Vodacom is presented under the
section "Financial instruments and risk management".
Payments to other network operators
Vodacom"s payments to other network operators increased by 22.1% to R3.7 billion
in 2005 (2004: R3.0 billion) as a result of an increased amount of outgoing
traffic terminating on other cellular networks, rather than on fixed-line
networks. As the cost of terminating calls on other cellular networks is
materially higher than calls terminating on fixed-line networks, and as mobile
substitution increases with the growing number of total mobile users in South
Africa, interconnection charges will continue to increase, putting pressure on
margins.
Operating expenses composition
Rand millions % change
Year ended March 31, 2003 2004 2005 04/03 05/04
Depreciation, impairment
and amortisation 2,376 2,532 3,112 6.6 22.9
Payments to other network 2,217 2,990 3,652 34.9 22.1
operators
Other direct network operating 8,274 9,440 10,962 14.1 16.1
costs(1, 2)
Staff expenses 1,019 1,332 1,653 30.7 24.1
Marketing and advertising 653 702 767 7.5 9.3
General administration expenses 612 682 748 11.4 9.7
Other operating income (68) (58) (64) (14.7) 10.3
Operating expenses 15,083 17,620 20,830 16.8 18.2
1 Direct network operating costs excluding payments to other operators.
2 South African equipment sales revenue and operating costs have been
restated in 2003 and 2004 by R369 million and R623 million, respectively, to
eliminate revenue and costs relating to handset sales to Vodacom"s own
distribution channel, as required by IFRS. Margins have been restated
accordingly. The restatement does not impact the Group"s results for the years
ended March 31, 2003 and 2004.
Other direct network operating costs
Other direct network expenses increased 16.1% to R11.0 billion
(2004: R9.4 billion) in the year ended March 31, 2005. The low growth in
direct network operating expenses was achieved due to lower prepaid
acquisition costs, lower cost of retention, as well as the positive impact
of the strong Rand on the translation of foreign currency denominated
expenses.
Other direct network operating costs include the cost to connect customers
onto the network which are incurred to support growth in the customer base,
as well as other direct network expenses such as cost of goods sold,
commissions, customer retention expenses, regulatory and licence fees,
distribution expenses and site and maintenance costs.
Staff expenses
Staff expenses increased by 24.1% in the year ended March 31, 2005 to R1.7
billion (2004: R1.3 billion) primarily as a result of an increase in
headcount of 8.3% in 2005 to support the growth in operations, as well as
an average Group-wide salary increase of approximately 8.0%. Staff expenses
also increased further due to a higher deferred bonus incentive accrual
brought about by Vodacom"s increased profits.
Vodacom"s staff expenses include fees to directors, secondment fees and
expenses raised in connection with our deferred bonus incentive scheme.
Total headcount in Vodacom"s South African operations increased by 2.8% to
3,954 employees (2004: 3,848). Total headcount in our other African
operations increased by a significant 36.5% to 1,039 employees (2004: 761)
to meet the demands of the rapid expansion of these operations. Employee
productivity has improved in all of Vodacom"s operations, as measured by
customers per employee, improving by 22.7% to 2,986 customers per employee
(2004: 2,434), which includes 4,993 Group employees and 191 outsourced
customer care employees in South Africa. Excluding the outsourced
employees, the Group customers per employee is 3,101.
Marketing and advertising
Marketing and advertising expenses increased by 9.3% in 2005 to R767
million, (2004: R702 million) driven mainly by an amplified marketing drive
in South Africa, in particular in connection with the Vodafone alliance and
the launch of 3G, BlackBerry and Vodafone live!, coupled with the
marketing expenses related to establishing Vodacom Mozambique.
General administration expenses
General administration expenses increased by 9.7% to R748 million
(2004:R682 million), where the increase was mitigated by the effect of a
strong Rand and improvements in productivity. General administration
expenses comprise a number of expenses including accommodation, information
technology costs, office administration, consultant expenses, social
economic investment and insurance.
Other operating income
Other operating income increased 10.3% to R64 million (2004: R58 million).
Other operating income comprises income that Vodacom does not view as part
of its core activities, such as risk management services, consultant cost
recoveries, franchise fees, and the recovery of costs relating to Nigeria,
and is therefore shown separately.
Capital expenditure
The total cumulative capital expenditure of the Group at March 31, 2004
increased by 18.2% to R24.4 billion (2004: R20.7 billion). The Group invested
R3.5 billion (2004: R2.9 billion) in property, plant and equipment, of which
R3.4 billion (2004: R2.8 billion) was for cellular network infrastructure and
related information technology and billing systems.
It is Vodacom"s policy to hedge all foreign denominated commitments from South
Africa; however, Vodacom does not qualify for hedge accounting in terms of IAS
39 and therefore all capital expenditure in South Africa is recorded at the
exchange rate ruling at the date of acceptance of the equipment. Capital
expenditure of Vodacom"s other African operations is translated at the average
exchange rate of the Rand against the operation"s reporting currency for the
period, while closing capital expenditure is translated at the closing exchange
rate of the Rand against the reporting currency. For this reason Vodacom"s
capital expenditure in any given year cannot be properly evaluated without
taking the exchange rate movements against the Rand into account, which are
shown under the section "Financial instruments and risk management".
Vodacom (Proprietary) Limited, the subsidiary that owns the South African
cellular operator licence, had a capital expenditure per customer of R1,471
(2004: R1,720) as at March 31, 2005, which is once again at its lowest level
ever. Despite the African expansion, gross capital expenditure as a percentage
of revenue was only 12.8% in 2005 (2004: 12.6%).
Capital expenditure additions - geographical split
Rand millions % of total % change
Year ended 2003 2004 2005 2003 2004 2005 04/03 05/04
March 31,
South
Africa
excluding
holding 67.9
companies 2,482 1,654 2,777 73.0 57.3 79.5 (33.4)
Tanzania 323 351 234 9.5 12.1 6.7 8.7 (33.3)
DRC1 516 395 335 15.2 13.7 9.6 (23.4) (15.2)
Lesotho 72 7 10 2.1 0.3 0.3 (90.3) 42.9
Mozambique - 478 115 - 16.5 3.3 - (75.9)
Holding
companies 6 6 23 0.2 0.2 0.6 - 283.3
Capital
expenditure
for the
year 3,399 2,891 3,494 100.0 100.0 100.0 (14.9) 20.9
DRC (100%)1 1,012 775 335 26.0 23.7 9.6 (23.4) (56.8)
Adjusted
capital
expenditure 3,895 3,271 3,494 100.0 100.0 100.0 (16.0) 6.8
Cumulative capital expenditure - geographical split
Year ended March 31, 2004 2005
R billion Foreign R billion Foreign
South Africa 18.2 18.2 20.3 20.3
Tanzania (Foreign: TSH 1.1 201.0 1.4 240.1
billion)
DRC (Foreign: US$ million)1 0.7 114 1.8 281
Lesotho (Foreign: Maloti 0.2 201 0.2 211
million)
Mozambique (Foreign: MZM 0.5 1,785.6 0.7 2,173.7
billion)
Cumulative capital 20.7 - 24.4 -
expenditure
DRC (100%) (Foreign: US$ 1.4 227 1.8 281
million)1
Adjusted cumulative capital 21.4 - 24.4 -
expenditure
1 During the years ended March 31, 2003 and 2004, 51% of Vodacom Congo was
proportionally consolidated in the Group financial statements. Effective April
1, 2004, Vodacom Congo is being fully consolidated as a subsidiary after certain
clauses granting the outside shareholders participating rights have been removed
from the shareholders agreement. The adjusted capital expenditure has been
adjusted to reflect 100% of Vodacom Congo"s capital expenditure for the prior
periods for comparison purposes.
Financial structure and funding
Vodacom"s consolidated net debt position has decreased to R426 million as at
March 31, 2005 (2004: R463 million), despite the inclusion of 100% of Vodacom
Congo"s debt, compared to 51% in the prior year. The Group"s net debt to EBITDA
ratio was 4.4% as at March 31, 2005 (2004: 6.0%). Vodacom"s net debt to equity
ratio improved to 5.4% at March 31, 2005, (2004: 6.1%). However, the final
dividend of R1.8 billion, which was paid on April 1, 2005, should be taken into
account when evaluating the net debt to equity ratio. In addition, in terms of
covenant calculations intangible assets are excluded from the calculation. If
the shareholders for dividends is included in, and intangible assets are
excluded from, the calculation, the net debt to equity ratio at March 31, 2005,
increases to 31.7% (2004: 29.5%).
A medium term loan of R1,129 million (US$180.0 million) was obtained for Vodacom
Congo during the year, which is collateralised by guarantees provided by the
Group. This loan replaced Vodacom Group"s share of extended credit facilities
relating to Vodacom Congo of R312.2 million (US$16.3 million) and R310.1 million
(E38.8 million), which was repaid during the year. For further details refer to
Note 18 of the annual financial statements.
Summary of net debt and maturity profile
Repayment of 2005 debt
Year ended March 31, 2004 2005 2006 2007 2008 2009 2010 2011
Finance leases
South Africa 886 858 51 79 114 194 98 322
Funding loans
Vodacom Tanzania
shareholder and
project
finance loans 426 369 92 104 89 - 84 -
Vodacom Congo medium - 1,129 - 1,129 - - - -
term loan1
Vodacom Congo
extended and
revolving
credit facilities1 626 6 6 - - - - -
Vodacom Congo 119 232 232 - - - - -
preference share
liability1
Vodacom Lesotho 4 4 4 - - - - -
minority
shareholders" loan
Other - 1 1 - - - - -
Debt excluding bank 2,061 2,599 386 1,312 203 194 182 322
overdrafts
Less: Net bank and (1,598) (2,173)
cash balances
Net debt 463 426
Vodacom Congo (100%) 1,435 1,378
Adjusted net debt 1,167 426
During the years ended March 31, 2003 and 2004, 51% of Vodacom Congo was
proportionally consolidated in the Group financial statements. Effective April
1, 2004, Vodacom Congo is being fully consolidated as a subsidiary after certain
clauses granting the outside shareholders participating rights have been removed
from the shareholders agreement. The adjusted capital expenditure has been
adjusted to reflect 100% of Vodacom Congo"s capital expenditure for the prior
periods for comparison purposes.
Funding sources
Vodacom"s ongoing objective is to fund all its other African operations by means
of project finance, structured such that there is no recourse to our South
African operations. Strong South African cash flows would therefore principally
be utilised to pay dividends and make new, growth enhancing investments. We
utilise own funds and Group supported funding structures, subject to South
African Reserve Bank approval, to fund offshore investments in the initial
stages of the investment, until the project is able to support project funding.
While we have project funding in place for our Tanzania investment, at this
stage Vodacom Congo and Vodacom Mozambique are still substantially dependent on
funding from South Africa. These operations are funded by a mix of market priced
direct loans as well as security to facilitate their own credit lines. Vodacom
Lesotho repaid its shareholder loans during the year.
In South Africa, debt consists of finance lease liabilities of R858 million
(2004: R886 million) and net positive bank balances of R2.0 billion (2004: R1.4
billion) held principally on money market at variable rates. Vodacom has funded
all of its major properties by way of finance leases.
Financial instruments and risk management
Subject to central bank regulations in the various countries, and the local
market condition restrictions, Vodacom actively manages foreign currency risk,
interest rate risk, credit risk and liquidity risk on an ongoing basis.
Management believes that Vodacom"s procedures are adequate for the organisation.
The Group"s risk management procedures are described fully in Note 41 of the
Group"s annual financial statements.
Foreign exchange rates
Rand exchange rate % change
Year ended March 31, 2003 2004 2005 04/03 05/04
US Dollar
Average 9.81 7.17 6.24 26.9 13.0
Closing 7.97 6.32 6.27 20.7 0.8
Tanzanian Shilling
Average 129.00 163.31 175.01 26.6 7.2
Closing 129.11 174.19 176.68 34.9 1.4
Mozambique Metical
Average - 3,734.52 3,418.17 - (8.5)
Closing - 3,745.36 3,122.82 - (16.6)
Taxation
The taxation expense increased 51.5% to R2.6 billion (2004: 1.7 billion) for the
year ended March 31, 2005, mainly due to a significant increase in secondary
taxation on companies (STC) paid on higher dividends, as well as higher South
African normal tax. Vodacom"s effective tax rate increased to 40.2% (2004:
36.1%), with STC increasing Vodacom"s effective tax rate by 6.6% (2004: 5.5%).
Furthermore, no deferred tax asset was raised in respect of Vodacom Mozambique"s
impairment of assets, resulting in a higher effective tax rate.
Shareholder distributions
Dividends for the 2005 financial year totalled R3.4 billion (2004: 2.1 billion)
an increase of 61.9%. One of the largest dividends paid by a South African
company to date. In 2004, shareholder distributions included R47 million of
shareholder interest, which is not repeated in 2005 as shareholder loans have
been repaid.
Cash flow
The Group had a positive free cash flow before shareholder distributions and
financing activities of R3.9 billion (2004: R3.0 billion), an increase of 27.6%,
mainly due to the greater cash generation from operations. Free cash flow growth
was negatively impacted by an increase in taxation paid of 87.5% to R2.7 billion
(2004: R1.5 billion) on increased profits and STC on increased dividends, an
increase in cash utilised in investing activities of 12.5% to R3.4 billion
(2004: R3.0 billion). These factors were partially offset by an increase in cash
generated from operations of 31.8% to R10.0 billion (2004: R7.6 billion).
Conclusion
The Vodacom Group has performed well in an evolving and competitive African
market. The performance of the South African market continues to be robust and
management believes that a lot of growth can still be extracted from it. The
strong cash generation ability of Vodacom"s South African operations ensured
that its consolidated balance sheet remained sturdy, even after paying out
substantial dividends to its shareholders and funding the investments in
Mozambique and the DRC. Vodacom continues to be confident of its success in all
of its operations despite a challenging competitive and regulatory environment.
In South Africa, Vodacom intends to position itself strategically to minimise
any negative impact from the pending deregulation of the South African market
and to seize any opportunities that may emerge. With its strong brand and robust
balance sheet, the Group is well positioned to capitalise on investment and
growth opportunities.
Vodacom South Africa review
Customers and traffic
Customer growth and connections
The South African customer base continued to grow this year, showing the market
is larger than previously forecast. Total customers increased by 32.0% to 12.8
million (2004: 9.7 million) with the majority of the growth coming from the
prepaid market. The number of prepaid customers increased by 32.1% to 10.9
million, while the number of contract customers increased by 31.8% to 1.9
million. However, despite the increase in contract customers Vodacom has seen a
decrease in connection incentive levels in the market. The strong growth in
customers was a direct result of the remarkable number of gross connections
achieved, with continued levels of handset support to service providers in
respect of the contract base, coupled with decreased churn in the contract and
prepaid bases.
Contract gross connections increased by 61.8% to 610,000 (2004: 377,000), while
prepaid gross connections increased 20.6% to 5.6 million (2004: 4.6 million),
bringing the total number of connections for the year to 6.2 million (2004: 5.0
million). The growth in the contract connections was largely due to the
increased connections in the hybrid product, Family Top Up, in which the
customer signs up for a 24 month airtime contract and receives a monthly amount
of airtime after which he is able to recharge using prepaid vouchers. This
product, allowing the customer to control his spend, has been particularly
popular in the youth market.
The year under review was another year of records in South Africa with 715,000
prepaid gross connections achieved in December 2004, the highest ever monthly
figure and 22.3% more than the previous record of December 2003. Contract gross
connections of 61,000 achieved in December 2004, was also the highest ever,
31.3% higher than the previously reported record of March 2004.
Loyalty and retention programmes continue to play an integral role in achieving
the strategy of retaining market share and attracting new customers.
ARPU
The developing market through the prepaid service continued to drive market
penetration in 2005 and made up 90.1% (2004: 92.4%) of all gross connections.
During the period under review, ARPU decreased to R163 per month (2004: R177)
due to the continued dilution of ARPU caused by the higher proportion of lower
ARPU prepaid connections and lower usage as the lower end of the market is
penetrated.
Contract customer ARPU has decreased by 1.6% to R624. The main contributing
factor to this decrease has been the high growth in the low end hybrid, Family
Top Up. The prepaid customer ARPU decreased by 13.3% to R78
(2004: R90) per customer per month.
Community services ARPU increased by 7.7% to R2,321 (2004: R2,155) due to tariff
increases coupled with stable usage patterns. One community services phone is
equivalent to approximately 45 prepaid customers on an outgoing revenue basis
and nearly 128 on an outgoing usage basis, due to the subsidisation of community
service tariffs.
Churn
The cost to acquire contract customers in a highly developed market is high.
Vodacom has therefore implemented upgrade and retention policies over the last
couple of years. Through the continued high level of handset support to service
providers, Vodacom has ensured the decrease in contract churn to the lowest
level in our history of 9.1% in 2005 (2004: 10.1%).
The developing prepaid market is characterised by low acquisition costs due to
the flexibility required by this market to access our services. The decrease in
prepaid churn experienced during the year under review to 30.3% (2004: 41.3%) is
partly a result of a change in business rules.
Traffic and minutes of use
Total traffic on the network, excluding the impact of national and international
roaming, has shown an increase of 22.1% to 15.0 billion minutes in 2005 (2004:
12.3 billion). This growth was due mainly to the 32.0% growth in the total
customer base from 9.7 million to a base of 12.8 million as at the end of March
2005. Also evident was a marked change in customer calling patterns, with total
mobile to mobile traffic increasing by 31.6% while total mobile to fixed and
fixed to mobile traffic decreased by 0.9%.
Key operational information
Year ended March 31, % change
2001 2002 2003 2004 2005 02/01 03/02 04/03 05/04
Customers 5,108 6,557 7,874 9,725 12,838 28.4 20.1 23.5 32.0
(`000)1
Contract 1,037 1,090 1,181 1,420 1,872 5.1 8.3 20.2 31.8
Prepaid 4,046 5,439 6,664 8,282 10,941 34.4 22.5 24.3 32.1
Community 25 28 29 23 25 12.0 3.6 (20.7) 8.7
services
Gross
connections
(`000) 2,990 3,038 3,495 4,998 6,180 1.6 15.0 43.0 23.6
Contract 263 199 197 377 610 (24.3) (1.0) 91.4 61.8
Prepaid 2,725 2,836 3,295 4,617 5,566 4.1 16.2 40.1 20.6
Community 2 3 3 4 4 50.0 - 33.3 -
services
Inactives
(3 months - n/a 13.9 18.2 17.6 7.9 - 4.3 (0.6) (9.7)
%)2
Contract n/a 3.8 5.3 5.7 1.5 - 1.5 0.4 (4.2)
Prepaid n/a 15.9 20.5 19.7 9.0 - 4.6 (0.8) (10.7)
Total churn 23.3 27.2 30.4 36.6 27.1 3.9 3.2 6.2 (9.5)
(%)3
Contract 18.7 14.5 11.9 10.1 9.1 (4.2) (2.6) (1.8) (1.0)
Prepaid 24.8 30.1 34.0 41.3 30.3 5.3 3.9 7.3 (11.0)
Traffic
(millions 7,472 8,881 10,486 12,297 15,014 18.9 18.1 17.3 22.1
of
minutes)4
Outgoing 4,052 4,967 6,343 7,772 10,027 22.6 27.7 22.5 29.0
Incoming 3,420 3,914 4,143 4,525 4,987 14.4 5.9 9.2 10.2
ARPU
(Rand per 208 182 183 177 163 (12.5) 0.5 (3.3) (7.9)
month)5
Contract 493 560 629 634 624 13.6 12.3 0.8 (1.6)
Prepaid 98 93 90 90 78 (5.1) (3.2) - (13.3)
Community 1,453 1,719 1,861 2,155 2,321 18.3 8.3 15.8 7.7
service
Minutes of
use
per month 137 111 101 96 84 (19.0) (9.0) (5.0) (12.5)
(MOU)6
Contract 270 264 269 263 226 (2.2) 1.9 (2.2) (14.1)
Prepaid 70 58 54 56 52 (17.1) (6.9) 3.7 (7.1)
Community 2,859 3,354 3,162 3,061 3,185 17.3 (5.7) (3.2) 4.1
service
Cumulative 10,232 14,317 16,535 18,132 20,358 39.9 15.5 9.7 12.3
capex
SA network
capex per
customer 2,053 1,991 1,933 1,720 1,515 (3.0) (2.9) (11.0) (13.5)
(Rand)
Number of 4,102 3,859 3,904 3,848 3,954 (5.9) 1.2 (1.4) 2.8
employees8
Customers 1,245 1,699 2,017 2,527 3,247 36.5 18.7 25.3 28.5
per
employee8
Market 61 61 57 54 56 - (4.0) (3.0) 2.0
share (%)7
Notes
1. Customer totals are based on the total number of customers registered on
Vodacom"s network which have not been disconnected including inactive customers
as at the end of the period indicated.
2. n/a - not available. A software error was identified in the calculation of
inactive which has been confirmed by independent auditors. Vodacom was unable to
restate prior year figures including 2002 to 2004 statistics. This does not
impact any other statistics presented as all are based on registered customers.
3. Churn is calculated by dividing the average monthly number of
disconnections during the period by the average monthly total reported customer
base during the period. From December 1, 2003, to align ourselves with industry
standards, any Vodago or 4U connection for which the network records no revenue
generating activity within a period of 215 consecutive days will be deleted and
counted as churn.
4. Traffic comprises total traffic registered on Vodacom"s network, including
bundled minutes, outgoing international roaming calls and calls to free
services, but excluding national roaming and incoming international roaming
calls.
5. ARPU is calculated by dividing the average monthly revenue during the
period by the average monthly total reported customer base during the period.
ARPU excludes revenues from equipment sales, other sales and services and
revenues from national and international users roaming on Vodacom"s networks.
6. Minutes of use per month is calculated by dividing the average monthly
minutes during the period by the average monthly total reported customer base
during the period. Minutes of use excludes calls to free services, bundled
minutes and data minutes.
7. Market share is calculated based on Vodacom"s total reported customers and
the estimated total customers of MTN and Cell C.
8. The number of employees in 2005 excludes 191 outsourced customer care
employees, which yields customers per employee of 3,097, a 22.5% increase on the
prior year.
Minutes of use is reflective of voice trends outside, and in excess of the
bundle, and shows a stabilised trend for the period under review as contract
minutes show a 14.1% decrease to 226 per month for 2005 (2004: 263 per month),
and prepaid minutes decreased 7.1% to 52 per month in 2005 (2004: 56 per month).
Market share
Vodacom has retained its leadership in the South African market with an
estimated 56% (2004: 54%) market share as at March 31, 2005, despite strong
competition. The improved market share is as a result of the increased
competitiveness of Vodacom in acquiring contract customers, as well as the
stability of prepaid sales. The cellular industry in South Africa has grown by
27.4% since March 2004, a net growth of 5.0 million, of which Vodacom has
contributed 62.7%. The market penetration of the cellular industry is now an
estimated 48.5% (2004: 41.2%) of the population with a total cellular market of
23.0 million customers (2004: 18.1 million). Prepaid customers continue to
dominate the market and comprise 83.7% of the total cellular market (2004:
83.8%).
Vodafone strategic alliance
The signing of an alliance with Vodacom"s 35% shareholder Vodafone during the
year was of strategic importance, as well as the associated launch of third
generation (3G), or UMTS, cellular services, and the launch of Vodafone Live!.
Vodacom"s alliance with the world"s largest cellular operator will give Vodacom
access to Vodafone"s global research and development, buying power, products,
services and content, and benchmarking, under a co-branding arrangement.
Vodacom obtained a 3G licence during the year and launched the first commercial
3G network in South Africa in December 2004. This is an important step in the
technical evolution of our business and the greater telecommunications market.
Vodacom is excited and proud of its first mover commitment to 3G and expects,
given the competitive pricing, low entry costs and excellent timing, that 3G
will create a competitive advantage in the new liberalised sector. R400 million
has been spent in rolling out the initial 487 3G sites in the major metropolitan
areas. In the forthcoming year, there are plans to spend an additional R835
million on 3G capital expenditure, which will include the roll-out of a further
1,000 3G sites.
Products and services
Vodacom has a culture of innovation and our record of accomplishments with
regard to our product offering bears testimony to this. Recent significant
products launched include 3G, BlackBerry and Vodafone live!. Vodacom offers
contract, prepaid, data and value-added voice and data services.
Contract services
Vodacom offers contract customers a range of mobile service packages designed to
appeal to specific customer segments, with packages such as Weekend Everyday for
consumer customers and business packages such as Business Call for business
customers.
As at March 31, 2005, 14.6% (2004: 14.6%) of Vodacom"s customers were contract
customers. The high spending contract customer market is of strategic
importance, and therefore a number of retention and upgrade strategies have been
implemented to retain these customers. The decrease in churn rates for contract
customers bears testimony to our continued success in achieving this goal.
The innovative Top Up product that was launched in 2003, designed to facilitate
migrations to contract packages from existing prepaid packages, has proved
highly successful and has contributed to the growth in contract customers. As at
March 31, 2005, 19.8% (2004: 5.1%) of Vodacom"s contract customers were Top Up
customers.
Prepaid services
The majority of Vodacom"s customers are prepaid customers and at March 31, 2005
comprised 85.2% (2004: 85.3%) of the customer base.
Vodacom has three prepaid products namely Vodago, SmartStep and 4U. Our 4U
offering, which was primarily aimed at the youth market, continues to prove
highly successful and as at March 31, 2005, 70.7% (2004: 67.9%) of Vodacom"s
prepaid customers comprised 4U customers.
During the year, Vodacom introduced a new Super six 4U starter pack and changed
the Vodago Super six starter pack to include free SMSs.
Recharge related innovations include the Yebo 5 voucher, adding SMS as a
recharge channel, and the addition of electronic recharge as a service to the
Vodacom4me portal.
Value-added voice and data services
A comprehensive Value Added Services (VAS) portfolio complements our contract
and prepaid offerings. Vodacom"s current data portfolio includes various pay-as-
you-use and bundled GPRS and 3G offerings available to prepaid, Top Up and
contract customers.
Vodacom was the first operator to introduce a commercial 3G offer into the local
market in December 2004 and has created a new niche market in data related
products and services. The take up by customers during this initial period of
deployment has been encouraging. The number of active 3G users on the network as
at March 31, 2005 was 10,853. The 3G launch included a number of innovative
products, such as the Vodafone Mobile Connect Card, and after 4 months we had
already acquired 5,105 users.
Vodacom was also the first to launch BlackBerry devices into the South African
market, shifting the focus to data and email on demand, and was one of the
messaging highlights for the year.
At the same time we introduced new data tariffs for our contract customers and
dramatically reduced our data pricing from R10 to an effective 60 cents per
megabyte. Whilst prepaid customers currently enjoy a competitive data tariff,
during the course of 2005 we plan to make data bundles available to them.
During the year there was an increase in the usage of GPRS, with the number of
GPRS users increasing to 579,581 as at March 31, 2005 (2004: 100,128).
On the messaging side, our aim was to make SMS and MMS more affordable. To this
end, we introduced an SMS voucher for prepaid customers in December 2004 and
changed the MMS pricing so that the cost of sending an MMS is the same as that
of sending an SMS. Both these initiatives have contributed to increased usage.
In addition, the volumes of preconfigured mobile phones supporting MMS
registered on the network increased to 2.0 million (2004: 510,000). The number
of active MMS users on the network as at March 31, 2005 was 328,974 (2004:
61,374). MMS messages volumes continued to grow from 350,260 messages in March
2004 to 1,780,657 in March 2005, with an average of 811,270 messages sent
monthly.
On the VAS side new, innovative additions include call sponsor, airtime
transfer, detailed billing and the prepaid passport number securing product.
Further additions and enhancements include SMS-only roaming, video telephony
charged at the same rate as voice calls, video mail and the missed call keeper
service.
Vodacom continued to deliver on its data strategy which is centred on a Wireless
Application Service Provider (WASP) model for ease of connectivity and
standardised interfaces. Currently, the WASP model is driven largely by consumer
applications with the majority of interest being in premium-rated outgoing SMS
and bulk incoming SMS services. As at March 31, 2005, 136 WASPs (2004: 106) had
applied for connectivity to the Vodacom network.
Premium rated SMS content is still focused on competitions, accounting for
approximately 20% of new services and information and alerts which account for
roughly 18%. There has been a substantial increase in messaging services which
represented 12% of new services in 2005. Consumer sensitivity to pricing appears
to be stabilising, as average monthly volumes have grown to 9.8 million.
Strategic acquisitions
On April 16, 2004 Smartphone SP (Proprietary) Limited, a subsidiary of Vodacom
Group, acquired 85.8% of Smartcom (Proprietary) Limited for a purchase
consideration of R77.2 million, giving Vodacom an effective interest of 43.7% in
Smartcom. Vodacom believes that effective control of the customer base will
facilitate enhanced communication with customers and improve margins. On
February 1, 2005 Vodacom acquired its customer base from Tiscali South Africa
for a purchase consideration of R40.1 million. Vodacom South Africa now directly
controls 78.3% of its contract customers and 98.4% of its prepaid customers.
Vodacom Tanzania review
Key indicators
Year ended March 31, % change
2003 2004 2005 04/03 05/04
Customers (`000)1 447 684 1,201 53.0 75.6
Contract 5 5 5 - -
Prepaid 440 676 1,193 53.6 76.5
Community services 2 3 3 50.0 -
Gross connections (`000) 262 404 746 54.2 84.7
Churn (%) 13.3 30.0 29.6 16.7 (0.4)
ARPU (Rand)2 217 128 81 (41.0) (36.7)
Cumulative capex (Rand 1,058 1,146 1,359 8.3 18.6
millions)
Number of employees 224 316 340 41.1 7.6
Customers per employee 1,996 2,165 3,532 8.5 63.2
Mobile penetration (%)3 2.2 3.3 5.1 1.1 1.8
Mobile market share (%)3 53 57 59 4.0 2.0
Notes
1. Customer totals are based on the total number of customers registered on
Vodacom"s network, which have not been disconnected, including inactive
customers, as of end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the
period by the average monthly total reported customer base during the period.
ARPU excludes revenue from equipment sales, other sales and services and revenue
from national and international users roaming on Vodacom"s networks.
Penetration and market share is calculated based on Vodacom estimates.
Vodacom Tanzania has overcome the challenges it faced and continues to
contribute to Vodacom"s growth and profitability. Under the leadership of
Managing Director Jose Dos Santos, Vodacom Tanzania has improved its performance
in respect of profit from operations and EBITDA, through redesigning aspects of
its distribution channel, complimented by sound cost management.
Vodacom Tanzania achieved a substantial 75.6% increase in customers to 1.2
million (2004: 0.7 million), primarily through increases in the prepaid customer
base, offset slightly by higher churn. Per-second billing continues to prove
highly successful.
Despite increased competition from all market participants, Vodacom Tanzania has
achieved exceptional growth and has increased its market share to 59% (2004:
57%).
ARPU levels have decreased by 36.7% to R81 (2004: R128) as a result of both
increased penetration and two tariff reductions during the period. Vodacom
anticipates that continued tariff pressure is possible in the future.
Vodacom Congo review
Key indicators (all indicators include 100% of Vodacom Congo)
Year ended March 31, % change
2003 2004 2005 04/03 05/04
Customers (`000)1 248 670 1,032 170.2 54.0
Contract 4 8 10 100.0 25.0
Prepaid 237 653 1,010 175.5 54.7
Community services 7 9 12 28.6 33.3
Gross connections (`000) 260 513 565 97.3 10.1
Churn (%) 24.2 20.2 23.1 (4.0) 2.9
ARPU (Rand)2 200 150 98 (25.0) (34.7)
Cumulative capex (Rand 944 1,432 1,759 51.7 22.8
millions)
Number of employees 204 334 527 63.7 57.8
Customers per employee 1,216 2,006 1,958 64.9 (2.4)
Mobile penetration (%)3 1.0 2.3 3.5 1.3 1.2
Mobile market share (%)3 44 47 47 3.0 -
Notes
1. Customer totals are based on the total number of customers registered on
Vodacom"s network, which have not been disconnected, including inactive
customers, as of end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the
period by the average monthly total reported customer base during the period.
ARPU excludes revenue from equipment sales, other sales and services and revenue
from national and international users roaming on Vodacom"s networks.
3. Penetration and market share is calculated based on Vodacom estimates.
Vodacom Congo has performed above expectations over the past year, with solid
growth in customers, profit from operations and EBITDA under the leadership of
Managing Director, Dietlof Mare. Vodacom Congo"s focus on being competitive in
coverage and quality has been successful to date. Notwithstanding the
uncertainties surrounding the elections, which are planned for later this year,
management is confident of the future success of the operations.
Vodacom Congo achieved a 54.0% increase in customers to 1.0 million customers
(2004: 670,000), as a result of substantial gross connections and a low churn
rate.
Vodacom Congo continues to be the market leader with an estimated market share
of 47% on March 31, 2005 (2004: 47%). A key success factor in achieving the
market share is Vodacom Congo"s effective distribution channels.
There has been increased pressure on ARPU, with a decline of 34.7% to R98 as
lower spending prepaid customers are connected coupled with the devaluation of
the local currency against the US Dollar. As tariffs are denominated in US
Dollars, the devaluation has impacted spending patterns, as it has resulted in
lower disposable incomes in US Dollar terms for current and new customers.
Vodacom Lesotho review
Key indicators
Year ended March 31, % change
2003 2004 2005 04/03 05/04
Customers (`000)1 78 80 147 2.6 83.8
Contract 4 3 4 (25.0) 33.3
Prepaid 73 76 142 4.1 86.8
Community services 1 1 1 - -
Gross connections (`000) 76 51 70 (32.9) 37.3
Churn (%) 70.6 65.1 17.3 (5.5) (47.8)
ARPU (Rand)2 104 125 92 20.2 (26.4)
Cumulative capex (Rand 185 201 210 8.6 4.5
millions)
Number of employees 74 68 63 (8.1) (7.4)
Customers per employee 1,054 1,176 2,333 11.6 98.3
Mobile penetration (%)3 4.3 5.1 7.4 0.8 2.3
Market share (%)3 80 80 80 - -
Notes
1. Customer totals are based on the total number of customers registered on
Vodacom"s network, which have not been disconnected, including inactive
customers, as of end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the
period by the average monthly total reported customer base during the period.
ARPU excludes revenue from equipment sales, other sales and services and revenue
from national and international users roaming on Vodacom"s networks.
3. Penetration and market share is based on Vodacom estimates.
Although Vodacom Lesotho will always remain a small operation, under its
Managing Director, Mervyn Visagie, it has improved significantly on the previous
year"s performance in respect of revenues, profit from operations and EBITDA.
The collection of interconnection revenue from the government-owned LTC
continues to be a challenge.
Vodacom Lesotho increased its customer base by 83.8% to 147,000 customers (2004:
80,000) as at March 31, 2005, constituted mainly of prepaid customers, resulting
from substantial gross connections, coupled with a much improved churn rate.
Vodacom Lesotho has retained its 80% share of the market by continually
providing the best coverage, brand and distribution and introducing new products
and services.
ARPU decreased by 26.4% to R92 (2004: R125) and is an area of focus for
improvement through the introduction of new products and services.
Vodacom Mozambique review
Key indicators
Year ended % change
March 31,
2004 2005 05/04
Customers (`000)1 58 265 356.9
Contract 1 4 300.0
Prepaid 57 261 357.9
Gross connections (`000) 58 225 287.9
Churn (%) 0.3 11.3 11.0
ARPU (Rand)2 110 52 (52.7)
Cumulative capex (Rand millions) 478 696 45.6
Number of employees 43 109 153.5
Customers per employee 1,349 2,431 80.2
Mobile penetration (%)3 2.6 4.2 1.6
Mobile market share (%)3 11 33 22
Notes
1. Customer totals are based on the total number of customers registered on
Vodacom"s network, which have not been disconnected, including inactive
customers, as of end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the
period by the average monthly total reported customer base during the period.
ARPU excludes revenue from equipment sales, other sales and services and revenue
from national and international users roaming on Vodacom"s networks.
3 Penetration and market share is calculated based on Vodacom estimates.
Vodacom Mozambique remains in its infancy, having just experienced its first
full year of operations. Performance has been disappointing due to extremely low
ARPUs. ARPU decreased 52.7% to R52 (2004: R110), below what was envisaged for
the operations. On the positive side, Vodacom Mozambique has rolled out a
competitive network from a coverage and quality point of view.
Vodacom Mozambique increased its customer base by a substantial 356.9%, albeit
off a low base, to 265,000 customers (2004: 58,000) as at March 31, 2005 and
increased its market share to 33% (2004: 11%). Vodacom Mozambique intends to
revisit its approach to the market in the year ahead.
Vodacom Mozambique"s challenge is to raise usage on its network which will
improve ARPU. Following his success in Tanzania, Jose Dos Santos has been
identified as the new Managing Director to lead Vodacom Mozambique in the next
financial year.
WYN Luhabe
Non-executive chairman
ADC Knott-Craig
Chief Executive Officer
Johannesburg
6 June 2005
Consolidated income statements
for the three years ended March 31, 2005
2003 2004 2005
Restated Restated Restated
Rm Rm Rm
Revenue 19,409.7 22,855.2 27,315.3
Other operating income 68.0 57.6 63.8
Direct network operating cost (10,491.4) (12,430.1) (14,614.1)
Depreciation (2,163.0) (2,316.9) (2,611.1)
Staff expenses (1,018.6) (1,331.6) (1,652.9)
Marketing and advertising expenses (652.5) (702.0) (767.3)
General administration expenses (611.6) (682.3) (747.9)
Amortisation of intangible assets (213.2) (214.8) (232.1)
Impairment of assets - - (268.4)
Profit from operations 4,327.4 5,235.1 6,485.3
Interest, dividends and other 649.6 656.6 662.8
financial income
Finance costs (1,546.3) (1,107.5) (641.7)
Profit before taxation 3,430.7 4,784.2 6,506.4
Taxation (1,171.1) (1,725.0) (2,614.2)
Net profit 2,259.6 3,059.2 3,892.2
Attributable to:
Equity shareholders 2,212.1 3,033.0 3,861.4
Minority interests 47.5 26.2 30.8
2003 2004 2005
R R R
Basic and diluted earnings per share 221,210 303,300 386,140
Dividend per share 60,000 210,000 340,000
Consolidated balance sheets
as at March 31, 2005
2003 2004 2005
Restated Restated Restated
Rm Rm Rm
ASSETS
Non-current assets 12,024.2 12,865.0 13,903.7
Property, plant and equipment 10,675.0 10,858.6 12,230.7
Investment properties - 63.8 49.7
Intangible assets 535.5 1,002.7 940.8
Financial assets 373.0 258.3 137.5
Deferred taxation 154.9 277.8 308.1
Deferred cost 285.8 403.8 236.9
Current assets 4,971.7 7,286.8 8,662.2
Inventory 238.8 288.5 479.5
Trade and other receivables 2,896.0 3,450.0 3,621.4
Deferred cost 544.9 859.8 428.3
Short-term financial assets 85.5 318.4 142.9
Cash and cash equivalents 1,206.5 2,370.1 3,990.1
Total assets 16,995.9 20,151.8 22,565.9
EQUITY AND LIABILITIES
Equity 6,909.8 7,664.7 7,954.3
Ordinary share capital - - -
Non-distributable reserves (141.0) (324.9) (298.0)
Retained earnings 6,962.8 7,896.6 8,123.6
Minority interests 88.0 93.0 128.7
Non-current liabilities 2,617.6 2,234.8 3,137.8
Interest bearing debt 1,732.2 1,216.6 2,213.5
Deferred taxation 443.3 436.0 499.2
Deferred revenue 285.8 403.8 240.7
Provisions 156.3 178.4 184.4
Current liabilities 7,468.5 10,252.3 11,473.8
Trade and other payables 2,918.5 3,862.1 4,830.8
Deferred revenue 1,190.1 1,883.4 1,411.4
Taxation payable 315.2 852.0 632.6
Shareholder loans 920.0 - -
Non-interest bearing debt 4.3 4.3 4.3
Short-term interest bearing debt 436.4 839.9 381.6
Short-term provisions 324.4 473.7 595.0
Dividends payable 600.0 1,500.0 1,800.0
Derivative financial liabilities 200.6 64.5 1.0
Bank overdraft 559.0 772.4 1,817.1
Total equity and liabilities 16,995.9 20,151.8 22,565.9
Consolidated statements
of changes in equity
for the three years ended March 31, 2005
Share Retained Non- Minority Total
capital earnings distributable interest
reserves
Restated Restated Restated Restated Restated
Rm Rm Rm Rm Rm
Balance at March 31,
2002
- previously
reported - 5,357.7 106.1 10.6 5,474.4
Changes in
accounting policies,
reclassifications
and restatements - (4.4) 31.7 - 27.3
Balance at March 31,
2002 - restated - 5,353.3 137.8 10.6 5,501.7
Net profit for the
year - 2,212.1 - 47.5 2,259.6
Dividends declared - (600.0) - - (600.0)
Contingency reserve - (2.6) 2.6 - -
Capital contribution - - - 65.0 65.0
Net gains and losses
not recognised in
the income statement
Foreign currency
translation reserve - - (302.4) (35.1) (337.5)
Foreign currency
translation reserve
- deferred
taxation - - 21.0 - 21.0
Balance at March 31,
2003 - restated - 6,962.8 (141.0) 88.0 6,909.8
Net profit for the
year - 3,033.0 - 26.2 3,059.2
Dividends declared - (2,100.0) - - (2,100.0)
Contingency reserve - 0.8 (0.8) - -
Net gains and losses
not recognised in
the income statement
Foreign currency
translation reserve - - (194.0) (21.2) (215.2)
Foreign currency
translation reserve
- deferred
taxation - - 10.9 - 10.9
Balance at March 31,
2004 - restated - 7,896.6 (324.9) 93.0 7,664.7
Net profit for the
year - 3,861.4 - 30.8 3,892.2
Dividends declared - (3,400.0) - (3.8) (3,403.8)
Contingency reserve - (1.0) 1.0 - -
Acquired reserves
from the minorities
of
Vodacom Congo (RDC)
s.p.r.l. - (233.4) 82.1 - (151.3)
Acquisition of
subsidiary - - - 10.1 10.1
Revaluation of
available-for-sale
investments - - 0.2 0.1 0.3
Net gains and losses
not recognised in
the income statement
Foreign currency
translation reserve - - (56.4) (1.5) (57.9)
Balance at March 31,
2005 - 8,123.6 (298.0) 128.7 7,954.3
Consolidated cash flow statements
for the three years ended March 31, 2005
2003 2004 2005
Restated Restated Restated
Rm Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 18,980.0 22,175.5 27,078.8
Cash paid to suppliers and employees (12,258.9) (14,578.8) (17,066.8)
Cash generated from operations 6,721.1 7,596.7 10,012.0
Finance costs paid (721.7) (512.3) (259.2)
Interest, dividends and other
financial income received 280.0 368.7 246.8
Taxation paid (1,337.4) (1,463.3) (2,744.4)
Dividends paid - equity shareholders (600.0) (1,200.0) (3,100.0)
Dividends paid - minority shareholders - - (5.2)
Net cash flows from operating
activities 4,342.0 4,789.8 4,150.0
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and
equipment (3,066.5) (2,813.8) (3,253.4)
Proceeds on disposal of property, 7.7 5.0 20.1
plant and equipment
Acquisition of intangible assets - (121.1) -
Disposal of subsidiaries 31.5 - -
Acquisition of subsidiaries - 149.6 (289.8)
Acquired cash from Vodacom Congo (RDC)
s.p.r.l. - - 12.9
Advance to minority shareholders (157.9) - -
Disposal of other investments 9.0 - -
Other investing activities (67.0) (219.5) 136.0
Net cash flows utilised in investing
activities (3,243.2) (2,999.8) (3,374.2)
CASH FLOW FROM FINANCING ACTIVITIES
Shareholder loans repaid - (920.0) -
Interest bearing debt incurred 774.1 186.9 1,165.3
Interest bearing debt repaid (426.1) (55.6) (1,332.3)
Finance lease capital repaid (1.6) (9.6) (28.1)
Finance lease capital incurred 13.2 - -
Funding received from minority
shareholders 157.9 - -
Net cash flows (utilised in)/from
financing activities 517.5 (798.3) (195.1)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 1,616.3 991.7 580.7
Cash and cash equivalents at the
beginning of the year (857.6) 647.5 1,597.7
Effect of foreign exchange rate
changes (111.2) (41.5) (5.4)
CASH AND CASH EQUIVALENTS AT THE END
OF THE YEAR 647.5 1,597.7 2,173.0
Date: 06/06/2005 08:00:47 AM Supplied by www.sharenet.co.za
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