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VOD - Vodacom Group Limited - Vodacom Group Limited trading statement for the

Release Date: 08/02/2012 13:00
Code(s): VOD
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VOD - Vodacom Group Limited - Vodacom Group Limited trading statement for the quarter ended 31 December 2011 Vodacom Group Limited (Incorporated in the Republic of South Africa) Registration number: 1993/005461/06 (ISIN: ZAE000132577 Share Code: VOD) (ISIN: ZAG000091067 JSE Code: VOD002) (`Vodacom`) News release 8 February 2012 Vodacom Group Limited trading statement for the quarter ended 31 December 2011 Highlights Strong customer growth underpins robust Group performance Group revenue up 12.2% (9.9%*) Group service revenue up 11.2% (8.7%*) Record net customer additions of 5.0 million in the quarter Group customers up 27.3% to 52.9 million Demand for data services remains high Group data revenue growth of 23.8% 41.2% increase in Group active data customers to 13.8 million Strong commercial success in South Africa Revenue up 7.6% Service revenue up 5.6% (7.9% excluding the impact of MTRs) Customers up 25.4% to 31.7 million, adding 2.8 million in the quarter Excellent momentum continues in International operations Service revenue up 45.2% (24.8%*) Customers up 30.2% to 21.2 million, adding 2.2 million in the quarter 2.7 million active M-Pesa customers in Tanzania Pieter Uys, Vodacom Group CEO commented: "This was a good quarter for Vodacom, with a record increase in our customers of five million pushing us past the 50 million customers milestone. Overall Group revenue increased 12% to R18 billion. The South African business defied the somewhat gloomy economic conditions and achieved a 25% increase in customers, ending the quarter at 32 million customers. More than nine billion voice minutes were carried over the three month period. The success of our summer campaigns, targeted promotions and very attractive handset deals boosted customer additions, particularly in the rural areas. The strong growth in customers and data usage helped offset the year to date reduction of 16% in both voice and data prices. Our International operations maintained the positive momentum and accounted for more than 40% of the increase in our total customers. Network investment continued to be a major focus with on-going upgrades to our transmission and radio access networks supporting the 41% increase in Group data customers. Vodacom now delivers data connectivity to nearly 14 million people." * Represents normalised growth at a constant currency. All growth rates refer to the quarter compared to prior year unless stated otherwise. Operating review Group Group service revenue for the quarter ended 31 December 2011 increased 11.2% (8.7%*) year on year and 7.8% (7.5%*) for the nine months. Growth was driven by a 27.3% increase in customers to 52.9 million and stronger voice revenue growth. Data revenue increased 23.8% to R2 082 million as active data customers grew 41.2% to 13.8 million. Equipment revenue was particularly strong, growing 19.4%, contributing to overall revenue growth of 12.2% (9.9%*). South Africa South Africa delivered a solid performance with service revenue growing 5.6% to R12 755 million (7.9% excluding the impact of cuts in mobile termination rates). Service revenue growth was boosted by strong net customer additions, higher voice revenue growth and good performance in data and enterprise services. The quarter was characterised by attractive handset deals and summer promotions with 5.1 million gross connections, up 49.9% year on year. Customers increased 25.4% year on year to 31.7 million, a record net increase of 2.8 million in the quarter. Ten customers won R1 million each as part of our Millionaire Mofaya summer campaign, which saw in excess of 58 million entries. Total ARPU was down 14.6% to R140; largely due to lower interconnect rates and the higher prevalence of lower usage customers in the mix. We expect a seasonal increase in churn in the coming quarters from the current low level. Following our data price cuts in the previous quarter, data revenue growth slowed to 19.3% year on year to R1 929 million. The active data customers increased 31.5% to 11.4 million; a third of these customers are now buying data bundles compared to a quarter a year ago. Demand for smartphones remains high, with 655 000 devices activated during the quarter. We now have 4.8 million active smartphones on the network, which as of 31 December 2011 accounted for 18.0% of all active devices. We continue to make substantial investments in the network, to enhance quality and support the growth in data traffic. Our radio access network renewal initiative is now complete in Gauteng and we have commenced similar initiatives in Kwa-Zulu Natal, Limpopo, Free State and North West provinces. This is expected to further improve network quality and operational efficiency. International Service revenue increased 45.2% (24.8%*) to R2 905 million mainly driven by strong customer growth and the positive impact from foreign exchange translation. The International operations recorded customer growth of 30.2% to 21.2 million, adding 2.2 million customers in the quarter. In Tanzania, customer growth of 34.1% was supported by promotional offerings and improved distribution. During the quarter pricing increased in the market after a long period of unsustainably low tariffs. Our capital investment in Mozambique, smarter pricing and a specific focus on distribution underpinned a 16.9% increase in customers. Despite uncertain political conditions during the quarter, the DRC delivered a good performance and also received a boost from the regulated minimum price. Data revenue in the International operations increased by 135.4% (115.5%*) as the appetite for data and mobile financial services continues to grow. M-Pesa growth accelerated in Tanzania where we now have 2.7 million active customers representing 23.4% of the base. The M-Pesa system processed transactions in Tanzania worth more than US$400 million during the month of December alone. M- Pesa now accounts for 8.5% of Tanzania`s service revenue, compared to 3.1% a year ago. Outlook While we are encouraged by the strong revenue growth in the quarter, we remain focused on tackling the increased competition in all our geographies and also remain alert to fragile global economic conditions. Therefore our medium-term service revenue guidance of "low single digit" remains unchanged. The quarterly information has not been audited or reviewed by Vodacom`s external auditors. Financial review for the quarters ended Revenue December September December Year on Quarterly year
Rm 2011 2011 2010 % change % change South Africa 15 135 13 881 14 072 7.6 9.0 International 2 983 2 394 2 056 45.1 24.6 Corporate and (121) (97) (95) (27.4) (24.7) eliminations Revenue 17 997 16 178 16 033 12.2 11.2 Service revenue December September December Year on Quarterly
year Rm 2011 2011 2010 % change % change South Africa 12 755 11 947 12 075 5.6 6.8 International 2 905 2 326 2 001 45.2 24.9 Corporate and (93) (73) (78) (19.2) (27.4) eliminations Service revenue 15 567 14 200 13 998 11.2 9.6 Key indicators for the quarters ended South Africa key indicators December September December Year on Quarterly year 2011 2011 2010 % change % change
Customers 31 727 28 907 25 302 25.4 9.8 (thousand)1 Prepaid 26 189 23 468 20 310 28.9 11.6 Contract 5 538 5 439 4 992 10.9 1.8 Churn (%)2 30.7 44.6 32.7 Prepaid 35.3 53.0 38.3 Contract 10.1 8.9 10.3 Traffic (millions 9 012 9 186 8 402 7.3 (1.9) of minutes)3 Outgoing 6 741 7 050 6 307 6.9 (4.4) Incoming 2 271 2 136 2 095 8.4 6.3 MOU per month4 99 108 114 (13.2) (8.3) Prepaid 83 91 92 (9.8) (8.8) Contract 171 181 202 (15.3) (5.5) Total ARPU (rand 140 140 164 (14.6) - per month)5 Prepaid 80 77 93 (14.0) 3.9 Contract 362 370 408 (11.3) (2.2) Notes: 1. Customers are based on the total number of mobile customers registered on Vodacom`s network, which have not been disconnected, including inactive customers, at the end of the period indicated. Prepaid customers inactive for three months were 14.2% (2010: 6.3%) at 31 December 2011. 2. Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly total reported mobile customers during the period. 3. Traffic comprises total traffic registered on Vodacom`s mobile network, including bundled minutes, promotional minutes and outgoing international roaming calls, but excluding national roaming calls, incoming international roaming calls and calls to free services. 4. Minutes of use (`MOU`) per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly total reported mobile customers during the period. 5. Total ARPU is calculated by dividing average monthly service revenue by the average monthly total reported mobile customers during the period. Prepaid and contract ARPU only includes service revenue generated from Vodacom customers. International key indicators December September December Year on Quarterly
year 2011 2011 2010 % change % change Customers (thousand)1 21 200 18 990 16 288 30.2 11.6 Tanzania 11 621 10 273 8 665 34.1 13.1 DRC 5 119 4 783 3 847 33.1 7.0 Mozambique 3 451 2 990 2 953 16.9 15.4 Lesotho 1 009 944 823 22.6 6.9 Churn (%)2 Tanzania 37.7 35.2 41.5 DRC 66.5 64.3 80.8 Mozambique 48.2 111.7 45.3 Lesotho 24.3 24.5 24.6 MOU per month3 Tanzania 51 56 58 (12.1) (8.9) DRC 42 47 74 (43.2) (10.6) Mozambique 44 33 43 2.3 33.3 Lesotho 29 30 32 (9.4) (3.3) Total ARPU (rand per month)4 Tanzania 23 20 20 15.0 15.0 DRC 38 37 32 18.8 2.7 Mozambique 48 32 23 108.7 50.0 Lesotho 58 55 62 (6.5) 5.5 Total ARPU (local currency per month)4 Tanzania (TZS) 4 752 4 550 4 330 9.7 4.4 DRC (USD) 4.7 5.1 4.7 - (7.8) Mozambique (MZN) 158 122 115 37.4 29.5 Notes: 1. Customers are based on the total number of mobile customers registered on Vodacom`s network, which have not been disconnected, including inactive customers, as at the end of the period indicated. Prepaid customers inactive for three months were 19.1% (2010: 19.7%) for Tanzania, 21.6% (2010: 34.0%) for Mozambique and 21.3% (2010: 17.5%) for Lesotho at 31 December 2011. DRC reports 90 day active customers. 2. Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly total reported mobile customers during the period. 3. Minutes of use (`MOU`) per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly total reported mobile customers during the period. 4. Total ARPU is calculated by dividing average monthly service revenue by the average monthly total reported mobile customers during the period. Historical key indicators for the quarters ended Revenue December September June Rm 2011 2011 2011 South Africa 15 135 13 881 13 537 International 2 983 2 394 2 119 Corporate and (121) (97) (87) eliminations Revenue 17 997 16 178 15 569 March December September June Rm 2011 2010 2010 2010 South Africa 13 602 14 072 13 130 12 567 International 2 138 2 056 2 080 1 922 Corporate and eliminations (92) (95) (100) (83) Revenue 15 648 16 033 15 110 14 406 Service revenue December September June March Rm 2011 2011 2011 2011 South Africa 12 755 11 947 11 558 11 863 International 2 905 2 326 2 064 2 081 Corporate and (93) (73) (70) (74) eliminations Service revenue 15 567 14 200 13 552 13 870 December September June
Rm 2010 2010 2010 South Africa 12 075 11 442 11 012 International 2 001 2 016 1 859 Corporate and (78) (76) (69) eliminations Service revenue 13 998 13 382 12 802 South Africa December September June March
2011 2011 2011 2011 Customers 31 727 27 731 (thousand)1 28 907 26 535 Prepaid2 26 189 23 468 22 411 21 409 Contract 5 538 5 439 5 320 5 126 Churn (%)3 30.7 44.6 35.5 28.5 Prepaid2 35.3 53.0 41.9 33.0 Contract 10.1 8.9 8.5 9.7 Traffic (millions 9 012 8 141 of minutes)4 9 186 8 108 Outgoing 6 741 7 050 6 079 6 060 Incoming 2 271 2 136 2 062 2 048 MOU per month5 99 108 100 104 Prepaid2 83 91 81 82 Contract 171 181 181 195 Total ARPU (rand 140 140 142 153 per month)6 Prepaid2 80 77 79 85 Contract 362 370 369 387 December September June
2010 2010 2010 Customers 25 302 23 161 (thousand)1 23 873 Prepaid2 20 310 19 074 18 489 Contract 4 992 4 799 4 672 Churn (%)3 32.7 35.9 87.2 Prepaid2 38.3 42.5 105.0 Contract 10.3 9.6 9.5 Traffic (millions 8 402 6 371 of minutes)4 7 352 Outgoing 6 307 5 351 4 442 Incoming 2 095 2 001 1 929 MOU per month5 114 105 86 Prepaid2 92 79 59 Contract 202 207 205 Total ARPU (rand 164 163 149 per month)6 Prepaid2 93 90 79 Contract 408 411 411 International December September June March 2011 2011 2011 2011 Customers 21 200 18 990 17 686 16 957 (thousand)1 Tanzania 11 621 10 273 9 260 8 861 DRC 5 119 4 783 4 245 4 155 Mozambique 3 451 2 990 3 277 3 082 Lesotho 1 009 944 904 859 Churn (%)3 Tanzania 37.7 35.2 43.5 51.1 DRC 66.5 64.3 75.3 45.3 Mozambique 48.2 111.7 42.5 43.0 Lesotho 24.3 24.5 20.3 21.5 MOU per month 5 Tanzania 51 56 54 53 DRC 42 47 43 38 Mozambique 44 33 34 36 Lesotho 29 30 28 32 Total ARPU (rand per month)6 Tanzania 23 20 19 19 DRC 38 37 33 34 Mozambique 48 32 24 22 Lesotho 58 55 54 55 Total ARPU (local currency per month)6 Tanzania (TZS) 4 752 4 550 4 276 4 098 DRC (USD) 4.7 5.1 4.8 4.9 Mozambique (MZN) 158 122 106 102 December September June 2010 2010 2010 Customers 16 288 15 504 14 561 (thousand)1 Tanzania 8 665 8 421 8 009 DRC 3 847 3 638 3 419 Mozambique 2 953 2 676 2 411 Lesotho 823 769 722 Churn (%)3 Tanzania 41.5 41.9 42.9 DRC 80.8 91.1 77.5 Mozambique 45.3 65.3 76.9 Lesotho 24.6 20.2 17.2 MOU per month 5 Tanzania 58 55 58 DRC 74 77 56 Mozambique 43 49 29 Lesotho 32 33 31 Total ARPU (rand per month)6 Tanzania 20 21 22 DRC 32 39 39 Mozambique 23 22 22 Lesotho 62 60 62 Total ARPU (local currency per month)6 Tanzania (TZS) 4 330 4 393 4 127 DRC (USD) 4.7 5.3 5.2 Mozambique (MZN) 115 109 98 Notes: 1. Customers are based on the total number of mobile customers registered on Vodacom`s network, which have not been disconnected, including inactive customers, at the end of the period indicated. 2. South Africa changed its disconnection policy for call-forward SIMs from 13 months inactivity to seven months during the quarter ended 30 June 2010. 3. Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly total reported mobile customers during the period. 4. Traffic comprises total traffic registered on Vodacom`s mobile network, including bundled minutes, promotional minutes and outgoing international roaming calls, but excluding national roaming calls, incoming international roaming calls and calls to free services. 5. Minutes of use (`MOU`) per month is calculated by dividing the average monthly minutes (traffic) during the period by the average monthly total reported mobile customers during the period. 6. Total ARPU is calculated by dividing average monthly service revenue by the average monthly total reported mobile customers during the period. Prepaid and contract ARPU only include service revenue generated from Vodacom customers. Revenue for the quarter ended 31 December 2011 Yoy % Inter- Rm South Africa change national Mobile voice 7 753 4.3 1 440 Mobile interconnect 1 611 (9.4) 213 Mobile messaging1 823 6.5 75 Mobile data1 1 929 19.3 153 Other service revenue2 639 34.8 1 024 Service revenue 12 755 5.6 2 905 Equipment revenue 2 208 19.4 39 Non-service revenue2 172 17.0 39 Revenue 15 135 7.6 2 983 Corporate/
Rm Yoy % Elimina- Yoy % change tions Group change Mobile voice 60.4 - 9 193 10.3 Mobile interconnect 54.3 (32) 1 792 (5.0) Mobile messaging1 27.1 - 898 7.9 Mobile data1 135.4 - 2 082 23.8 Other service 21.8 (61) 1 602 26.5 revenue2 Service revenue 45.2 (93) 15 567 11.2 Equipment revenue 39.3 (11) 2 236 19.4 Non-service 44.4 (17) 194 19.8 revenue2 Revenue 45.1 (121) 17 997 12.2 Notes: 1. In the prior year December quarter, we reclassified year-to-date revenue of R194 million relating to telemetry, from mobile messaging to mobile data revenue of which R65 million related to the December quarter only. Reclassified values for the quarter ended 31 December 2010: South Africa: Mobile messaging R773 million; Mobile data R1 617 million; Group: Mobile messaging R832 million; Mobile data R1 682 million. 2. In the prior year December quarter, we reclassified year-to-date revenue of R134 million relating to tower sharing revenue and returned debit order handling fees, from non-service revenue to other service revenue of which R44 million related to the December quarter only. Reclassified values for the quarter ended 31 December 2010: South Africa: Other service revenue R474 million; Non-service revenue R147 million; Group: Other service revenue R1 266 million; Non-service revenue R162 million. Average quarterly exchange rates December September December Year on year% Quarterly% 2011 2011 2010 change change USD/ZAR 8.10 7.15 6.90 17.4 13.3 ZAR/MZN 3.32 3.86 5.12 (35.2) (14.0) ZAR/TZS 208.36 226.02 215.19 (3.2) (7.8) EUR/ZAR 10.92 10.09 9.37 16.5 8.2 Non-GAAP information This trading statement contains certain non-GAAP financial information which has not been reviewed or reported on by the Group`s auditors. The Group`s management believes these measures provide valuable additional information in understanding the performance of the Group or the Group`s businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group`s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to the comparable GAAP measures. Trademarks Vodafone, the Vodafone logo, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone Passport, Vodafone live!, Power to You, Vodacom, Vodacom M-Pesa, Vodacom Millionaires, Vodacom 4 Less and Vodacom Change the World are trademarks of Vodafone Group Plc (or have applications pending). The trademarks RIMRegistered and BlackBerryRegistered are owned by Research in Motion Limited and are registered in the US and may be pending or registered in other countries. JavaRegistered is a registered trademark of Oracle and/or its affiliates. Microsoft, Windows Mobile and ActiveSync are either registered trademarks or trademarks of Microsoft Corporation in the US and/or other countries. Google, Google Maps and Android are trademarks of Google Inc. Apple, iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. Other product and company names mentioned herein may be trademarks of their respective owners. Forward-looking statements This trading statement which sets out the quarterly results for Vodacom Group Limited for the quarter ended 31 December 2011 contains `forward-looking statements`, which have not been reviewed or reported on by the Group`s auditors, with respect to the Group`s financial condition, results of operations and businesses and certain of the Group`s plans and objectives. In particular, such forward-looking statements include statements relating to: the Group`s future performance; future capital expenditures, acquisitions, divestitures, expenses, revenues, financial conditions, dividend policy and future prospects; business and management strategies relating to the expansion and growth of the Group; the effects of regulation of the Group`s businesses by governments in the countries in which it operates; the Group`s expectations as to the launch and roll out dates for products, services or technologies; expectations regarding the operating environment and market conditions; growth in customers and usage; and the rate of dividend growth by the Group. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as `will`, `anticipates`, `aims`, `could`, `may`, `should`, `expects`, `believes`, `intends`, `plans` or `targets`. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future, involve known and unknown risks, uncertainties and other facts or factors which may cause the actual results, performance or achievements of the Group, or its industry to be materially different from any results, performance or achievement expressed or implied by such forward-looking statements. Forward- looking statements are not guarantees of future performance and are based on assumptions regarding the Group`s present and future business strategies and the environments in which it operates now and in the future. www.vodacom.com Sponsor: UBS South Africa (Pty) Limited Debt sponsor: Absa Capital Date: 08/02/2012 13:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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