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VODACOM GROUP LIMITED - Vodacom Group Limited quarterly update for the period ended 30 June 2014

Release Date: 24/07/2014 07:05
Code(s): VOD     PDF:  
Wrap Text
Vodacom Group Limited quarterly update for the period ended 30 June 2014

Vodacom Group Limited
Quarterly update for the period ended 30 June 2014

Vodacom Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/005461/06)
Share code VOD       ISIN ZAE000132577
JSE code VOD008      ISIN ZAG000106063
ADR code VDMCY       ISIN US92858D2009


News release
Vodacom Group Limited quarterly update for the period ended 30 June 2014
24 July 2014

Salient features

-       Group revenue increased 4.3% (2.7%*) to R18 287 million

-       Group service revenue increased 1.8% to R14 897 million, up 5.0% excluding cuts in mobile termination rates (MTRs)

-       Group data revenue increased 23.2% to R3 584 million, now 24.1% of service revenue

-       Group active customers grew 15.6% to 59.6 million and active data customers(1) grew 36.7% to 25.3 million

-       South Africa service revenue declined 2.0% due to MTR cuts, 2.0% increase excluding impact of MTRs

-       International service revenue up 17.3% (7.8 %*) supported by strong customer growth and M-Pesa

                                                                   Quarter ended                  Year on year % change
Rm                                                                     June 2014                   Reported       Normalised*
Revenue                                                                   18 287                        4.3              2.7
  South Africa                                                            14 791                        1.7              1.7
  International                                                            3 591                       17.2              7.4
Service revenue                                                           14 897                        1.8                -
  South Africa                                                            11 442                       (2.0)            (2.0)
  International                                                            3 493                       17.3              7.8

Shameel Joosub, Vodacom Group CEO commented:

In the past year we've added more than eight million new customers, taking our active customer base to just shy of 60 million. Group
revenue for the quarter was R18.3 billion, an increase of 4.3% over last year. Data and the International businesses have once again
been the largest contributors to growth, and the entire business is seeing the benefit of our sustained investment programme.

In South Africa we executed well operationally and grew our customer base by 11.0%, but revenue was impacted by the dramatic
decrease in MTRs. We continued with our price transformation strategy, bringing down the overall effective price per minute by 25.3%
to 68 cents and driving an increase in outgoing voice traffic of 26.1%. The elasticity effect was even more notable on data, with a
30.3% reduction in the average effective price per megabyte more than offset by a 70.1% increase in data traffic.

Supporting this increase in traffic in South Africa, we added another 473 LTE sites in the quarter, an increase of more than 50%. On top
of this we added another 293 3G sites, and 74.5% of our sites are now connected using our own self-provided high capacity
transmission. This increase in capacity has the dual benefit of giving us the best possible platform from which to grow the South
African business as well as the ability to reduce prices on a sustainable basis. The additional capacity means that we are able to
maintain superior network performance even as traffic increases in response to lower prices.

The International businesses performed well with service revenue increasing 17.3% and the customer base increasing 21.7%. The
contribution of the International businesses to Group service revenue increased to 23.4%. Data continues to be a key growth driver
with the number of active data customers increasing 69.5%. Mobile data revenue including M-Pesa grew 51.1%. We now have more
than 6.6 million M-Pesa customers. We increased the number of 3G sites in our International operations by more than 50%.

* Represents normalised growth at a constant currency (using current period as base). Refer below for a reconciliation of normalised growth.
1. Excluding M2M customers
All growth rates refer to the quarter compared to prior year same quarter unless stated otherwise.



Operating review

South Africa
Revenue increased 1.7% to R14 791 million driven by a 16.9% growth in equipment revenue (device and accessories revenue).
Equipment revenue now represents 21.4% (2013: 18.6%) of total revenue.

Service revenue fell 2.0% to R11 442 million mainly due to a 50% cut in MTRs in April 2014 which led to a 44.0% reduction in
incoming voice revenue. Excluding the impact of MTRs service revenue grew 2.0%. Mobile customer revenue increased 0.4% to
R10 057 million driven by a 3.0% increase in prepaid customer revenue. The rise in prepaid revenue offset a 2.0% decline in contract
customer revenue resulting from our pricing transformation strategy and increased price competition.

Our drive to transform pricing through integrated contract price plans and prepaid bundles resulted in 25.3% reduction in our blended
price per minute (PPM) to 68 cents (2013: 91 cents). Total outgoing traffic grew 26.1%. Our pricing transformation strategy is designed
to reduce our effective PPM and therefore the cost to communicate.

Active prepaid customers grew 13.2% adding 997k customers to 27.7 million. We achieved 14.3% growth in minutes of use by
introducing time based bundles at lower price points to cater for consumers who remain under pressure as a result of a weak
macroeconomic environment.

Active contract customers were flat at 4.8 million (excluding machine to machine (M2M)) mainly due to our continued efforts to
reduce the prevalence of non-revenue generating customers in our contract base. Contract ARPU declined 3.9% in the quarter to
R372 impacted by lower MTRs and migration of our customers from voice centric plans to integrated price plans. 63.2% (2013: 35.1%)
of our contract customers (excluding Top Up) are now on the integrated plans and in-bundle spend increased to 68.2% (2013: 63.1%)
giving our customers a worry-free experience. There has been great take up of our uChoose packages which give customers access to
integrated plans and an option to have access to prepaid promotions on an ad hoc basis; 82.7% of new Top Up connections are now
on these packages.

The Vodafone global M2M platform combined with our network investment and dedicated sales channels is delivering large scale
M2M contracts. Active M2M customers increased 22.0% to 1.5 million.

Strong growth in data revenue and 41.7% growth in business managed services revenue offset a 5.3% decline in voice revenue
reflecting the success of our strategy to diversify revenue.

Data revenue grew 18.4% to R2 948 million to represent 25.8% (2013: 21.3%) of service revenue. We increased the data allocated in
our integrated plans and launched time based micro bundles to reduce our effective price of data by 30.3% year on year. On a
quarterly basis, effective price per megabyte declined 4.2% quarter on quarter. We attracted 1.8(1) million new data users to grow our
data customers to 17.01 million and increased total data usage by 70%. We continue to make progress with our handset financing
programme to put data capable devices into people's hands. The number of active smartphones and tablets on our network increased
19.3% to 8.0 million devices. The average monthly data usage on smartphones increased 44.5% to 312 MB per device and usage on
tablets increased 43.0% to 848 MB per device.

Our accelerated capex investment programme to further enhance our network and service differentiation is on track. This being the
first year of acceleration of our investment, we increased our LTE sites by 473 to 1 389 sites and our 3G sites by 293 to 7 541 sites in
the quarter. 74.5% of our sites are now connected to our self-provided high capacity transmission network and we expect to complete
our Radio Access Network renewal (RAN) program in the next quarter.

On 19 May 2014, we announced our intention to acquire 100% of Neotel for a cash consideration equivalent to an enterprise value of
R7.0 billion. During the quarter, we made formal submissions for approval of the proposed transaction to the regulator ICASA and the
Competition Commission. The combination of Neotel and our existing fibre network and enterprise business will accelerate our
unified communications strategy in addition to yielding substantial cost and capex synergies.


1. Excluding M2M customers



International
International operation's service revenue grew 17.3% (7.8%*) to R3 493 million driven by continued customer growth, higher voice
usage, increased data usage and M-Pesa. Although overall growth was impacted by intense price competition, the International
segment's contribution increased strongly to 23.4% (2013: 20.3%) of Group service revenue.

Our bundle strategy has increased our resilience against price competition in all our markets. We continued to refine the composition
and size of our bundles to improve value to our customers, resulting in 21.7% growth in customers and 26.3% increase in minutes of
use.

Mobile data revenue grew 51.1% to contribute 18.2% (2013: 14.1%) of service revenue. Mobile data revenue (excluding M-Pesa) grew
69.5% supported by an increase of 69.5% in active data customers to 8.3 million, reflecting strong demand for mobile data services in
all our markets.

M-Pesa revenue growth remained strong, up 33.9%. In Tanzania it now represents 21.3% of service revenue. Our total active M-Pesa
base across all our markets grew 27.0% to 6.6 million. Nearly 50% of new M-Pesa users are from DRC, Lesotho and Mozambique,
where we launched during the previous year.

Enhancements to our networks through our capex investment programme are on-going. We increased 3G sites by 52.6% to further
drive growth of mobile data and we increased both capacity and coverage by increasing the number of 2G sites by 26.4%.


The quarterly information has not been audited or reviewed by Vodacom's external auditors.



Financial review

Revenue
                                                     June              March            June          Year on year % change                Quarterly % change
Rm                                                   2014               2014            2013         Reported    Normalised*              Reported Normalised*
South Africa                                       14 791             15 170          14 549              1.7           1.7              (2.5)           (2.5)
International                                       3 591              3 798           3 065             17.2           7.4              (5.5)           (2.0)
Corporate and eliminations                            (95)              (164)            (78)            21.8          21.8             (42.1)          (42.1)
Revenue                                            18 287             18 804          17 536              4.3           2.7              (2.7)           (2.0)


Service revenue
                                                     June              March            June          Year on year % change                Quarterly % change
Rm                                                   2014               2014            2013            Reported Normalised*              Reported Normalised*
South Africa                                       11 442             11 982          11 678             (2.0)         (2.0)             (4.5)           (4.5)
International                                       3 493              3 684           2 978             17.3           7.8              (5.2)           (1.7)
Corporate and eliminations                            (38)               (80)            (20)            90.0          90.0             (52.5)          (52.5)
Service revenue                                    14 897             15 586          14 636              1.8             -              (4.4)           (3.6)


Revenue for the quarter ended 30 June 2014
                                             South Africa         Yoy %        International         Yoy %            Corporate/         Group          Yoy %
    Rm                                                           change                             change          Eliminations                       change
    Mobile contract revenue                         5 133          (2.0)                 230          22.3                    (1)        5 362           (1.1)
         In bundle                                  3 502           5.9                   63          12.5                     1         3 566            6.1
         Out of bundle                              1 631         (15.5)                 167          26.5                    (2)        1 796          (12.8)
    Mobile prepaid revenue                          4 924           3.0                2 501          15.9                     -         7 425            7.0
         In bundle                                    626          80.9                  399          >200                     -         1 025          154.3
         Out of bundle                              4 298          (3.1)               2 102           0.1                     -         6 400           (2.1)
    Mobile customer revenue                        10 057           0.4                2 731          16.5                    (1)       12 787            3.5
    Mobile interconnect                               521         (44.0)                 381          26.6                   (21)          881          (27.9)
    Other service revenue                             864          18.2                  381          14.4                   (16)        1 229           16.5
    Service revenue                                11 442          (2.0)               3 493          17.3                   (38)       14 897            1.8
    Equipment revenue                               3 160          16.9                   54          25.6                    (6)        3 208           17.0
    Non-service revenue                               189          12.5                   44             -                   (51)          182           15.9
    Revenue                                        14 791           1.7                3 591          17.2                   (95)       18 287            4.3

    Of which mobile voice                           6 589          (5.3)               1 949           8.0                               8 536           (2.6)
    Of which mobile messaging                         608          (9.9)                 148          21.3                                 756           (5.0)
    Of which mobile data                            2 948          18.4                  636          51.1                               3 584           23.2

Notes:

-     Mobile in-bundle revenue: Represents revenue from bundles that include a specified number of minutes, messages or megabytes of data that can be used for no
      additional charge, with some expectation of recurrence.
-     Mobile in-bundle revenue - Contract: Revenue from all bundles and add-ons lasting 30 days or more.
-     Mobile in-bundle revenue - Prepay: Revenue from bundles lasting seven days or more.
-     Out-of-bundle: Revenue from minutes, messages or megabytes of data which are in excess of the amount included in customer bundles.



Revenue for the quarter ended 30 June 2013

                                             South Africa         Yoy %        International         Yoy %            Corporate/         Group          Yoy %
    Rm                                                           change                             change          Eliminations                       change
    Mobile contract revenue                         5 236           0.1                  188          19.0                    (2)        5 422            0.6
         In bundle                                  3 306           1.5                   56          24.4                     -         3 362            1.8
         Out of bundle                              1 930          (2.2)                 132          16.8                    (2)        2 060           (1.2)
    Mobile prepaid revenue                          4 781           5.4                2 157          31.9                    (1)        6 937           12.4
         In bundle                                    346          34.6                   57         103.6                     -           403           41.4
         Out of bundle                              4 435           3.6                2 100          30.7                    (1)        6 534           11.0
    Mobile customer revenue                        10 017           2.5                2 345          30.8                    (3)       12 359            6.9
    Mobile interconnect                               930         (23.5)                 300          29.9                    (8)        1 222          (14.2)
    Other service revenue                             731           1.7                  333         (66.8)                   (9)        1 055          (37.4)
    Service revenue                                11 678          (0.2)               2 978          (1.7)                  (20)       14 636           (0.2)
    Equipment revenue                               2 703          33.7                   43          59.3                    (3)        2 743           34.3
    Non-service revenue                               168         (40.8)                  44           4.8                   (55)          157          (49.8)
    Revenue                                        14 549           3.9                3 065          (1.0)                  (78)       17 536            3.0

    Of which mobile voice                           6 956          (2.5)               1 805          21.8                               8 760            1.6
    Of which mobile messaging                         675         (11.5)                 122          37.1                                 796           (6.6)
    Of which mobile data                            2 489          21.8                  421          87.1                               2 909           28.2

Notes:

-     Mobile in-bundle revenue: Represents revenue from bundles that include a specified number of minutes, messages or megabytes of data that can be used for no
      additional charge, with some expectation of recurrence.
-     Mobile in-bundle revenue - Contract: Revenue from all bundles and add-ons lasting 30 days or more.
-     Mobile in-bundle revenue - Prepay: Revenue from bundles lasting seven days or more.
-     Out-of-bundle: Revenue from minutes, messages or megabytes of data which are in excess of the amount included in customer bundles.



Key indicators
South Africa
                                                                               June                 March                 June         Year on year             Quarterly
                                                                               2014                  2014                 2013             % change              % change
Active customers (thousand)(1)                                               32 516                31 520               29 282                 11.0                   3.2
Prepaid                                                                      27 723                26 726               24 488                 13.2                   3.7
Contract                                                                      4 793                 4 794                4 794                    -                     -
Machine to machine customers (thousand)                                       1 512                 1 443                1 239                 22.0                   4.8
Churn (%)(2)                                                                   51.9                  49.0                 55.5                 (6.5)                  5.9
Prepaid                                                                        57.5                  54.4                 62.1                 (7.4)                  5.7
Contract                                                                       10.4                  11.8                 11.6                (10.3)                (11.9)
Traffic (millions of minutes)(3)                                             11 776                11 453                9 752                 20.8                   2.8
Outgoing                                                                      9 392                 9 193                7 448                 26.1                   2.2
Incoming                                                                      2 384                 2 260                2 304                  3.5                   5.5
MOU per month(4)                                                                122                   122                  112                  8.9                     -
Prepaid                                                                         112                   112                   98                 14.3                     -
Contract                                                                        181                   179                  183                 (1.1)                  1.1
Total ARPU (rand per month)(5)
                                                                                110                   119                  125                (12.0)                 (7.6)
Prepaid                                                                          64                    71                   74                (13.5)                 (9.9)
Contract                                                                        372                   379                  387                 (3.9)                 (1.8)

Notes:
1.       Active customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly
         fee that entitles them to use the service even if they do not actually use the service and those customers who are active whilst roaming. As of 30 June 2013, this
         excludes M2M connections, prior periods have been restated.
2.       Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly customers during the period. Churn has been
         restated as a result of M2M connections excluded from active customers.
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 active customers
         during the period. MOU has been restated as a result of M2M connections excluded from active customers.
5.       Total ARPU is calculated by dividing the average monthly service revenue by the average monthly active customers during the period. Prepaid and contract
         ARPU only include service revenue generated from Vodacom mobile customers. ARPU has been restated as a result of M2M connections excluded from active
         customers.


Key indicators (continued)

International
                                                                               June                 March                 June         Year on year             Quarterly
                                                                               2014                  2014                 2013             % change              % change
Active customers (thousand)(1)                                               27 086                25 969               22 259                 21.7                   4.3
Tanzania                                                                     10 638                10 284                9 666                 10.0                   3.4
DRC                                                                          10 502                10 008                8 129                 29.2                   4.9
Mozambique                                                                    4 604                 4 333                3 310                 39.1                   6.3
Lesotho                                                                       1 342                 1 344                1 154                 16.3                  (0.1)
Churn (%)(2)
Tanzania                                                                       47.3                  49.9                 56.8                (16.7)                 (5.2)
DRC                                                                            74.8                  76.6                 87.7                (14.7)                 (2.3)
Mozambique                                                                     91.2                  87.2                 69.8                 30.7                   4.6
Lesotho                                                                        41.9                  50.9                 43.7                 (4.1)                (17.7)
MOU per month(3)
Tanzania                                                                        158                   131                  116                 36.2                  20.6
DRC                                                                              37                    31                   39                 (5.1)                 19.4
Mozambique                                                                      131                   118                   92                 42.4                  11.0
Lesotho                                                                          48                    49                   26                 84.6                  (2.0)
Total ARPU (rand per month)(4)
Tanzania                                                                         42                    43                   41                  2.4                  (2.3)
DRC                                                                              31                    35                   33                 (6.1)                (11.4)
Mozambique                                                                       49                    52                   57                (14.0)                 (5.8)
Lesotho                                                                          43                    41                   44                 (2.3)                  4.9
Total ARPU (local currency per month)(4)
Tanzania (TZS)                                                                6 655                 6 377                6 992                 (4.8)                  4.4
DRC (USD)                                                                       3.0                   3.2                  3.5                (14.3)                 (6.3)
Mozambique (MZN)                                                                146                   150                  182                (19.8)                 (2.7)

Notes:

1.       Active customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly
         fee that entitles them to use the service even if they do not actually use the service and those customers who are active whilst roaming.
2.       Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly 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 active customers
         during the period.
4.       Total ARPU is calculated by dividing the average monthly service revenue by the average monthly active customers during the period. ARPU has been restated
         to only include service revenue generated from Vodacom mobile customers.



Historical financial review

Revenue
                                       June       March    December    September      June    March    December
 Rm                                    2014        2014        2013         2013      2013     2013        2012
 South Africa                        14 791      15 170      16 502       15 585    14 549   14 699      15 475
 International                        3 591       3 798       3 838        3 655     3 065    2 553       2 875
 Corporate and eliminations            (95)        (164)       (121)         (88)      (78)     (55)        (56)
 Revenue                             18 287      18 804      20 219       19 152    17 536   17 197      18 294


Service revenue
                                       June       March    December    September      June    March    December
 Rm                                    2014        2014        2013         2013      2013     2013        2012
 South Africa                        11 442      11 982      12 587       12 069    11 678   11 894      12 507
 International                        3 493       3 684       3 695        3 538     2 978    2 480       2 786
 Corporate and eliminations             (38)        (80)        (34)         (30)      (20)     (19)        (20)
 Service revenue                     14 897      15 586      16 248       15 577    14 636   14 355      15 273



Historical key indicators

South Africa
                                       June       March    December    September      June    March    December
                                       2014        2014        2013         2013      2013     2013        2012
 Active customers (thousand)(1)      32 516      31 520      30 964       30 139    29 282   29 190      29 474
 Prepaid                             27 723      26 726      26 123       25 331    24 488   24 404      24 712
 Contract                             4 793       4 794       4 841        4 808     4 794    4 786       4 762
 Machine to machine customers
 (thousand)                           1 512       1 443       1 378        1 302     1 239    1 159       1 107
 Churn (%)(2)                          51.9        49.0        52.3         58.4      55.5     60.8        56.4
 Prepaid                               57.5        54.4        58.4         65.3      62.1     68.2        62.9
 Contract                              10.4        11.8        11.4         12.6      11.6     11.0        11.3
 Traffic (millions of minutes)(3)    11 776      11 453      11 298       11 034     9 752    9 252       9 631
 Outgoing                             9 392       9 193       8 928        8 681     7 448    7 018       7 238
 Incoming                             2 384       2 260       2 370        2 353     2 304    2 234       2 393
 MOU per month(4)                       122         122         124          124       112      105         109
 Prepaid                                112         112         113          112        98       91          93
 Contract                               181         179         183          183       183      180         191
 Total ARPU (rand per month)(5)         110         119         129          127       125      127         133
 Prepaid                                 64          71          80           75        74       76          80
 Contract                               372         379         393          398       387      391         409



Historical key indicators (continued)

International
                                       June       March    December    September      June    March    December
                                       2014        2014        2013         2013      2013     2013        2012
 Active customers (thousand)(1)        27 086      25 969      25 019       23 672    22 259   21 327      20 375
 Tanzania                            10 638      10 284      10 289       10 023     9 666    9 468       9 357
 DRC                                 10 502      10 008       9 334        8 790     8 129    7 706       7 086
 Mozambique                           4 604       4 333       4 120        3 688     3 310    3 045       2 861
 Lesotho                              1 342       1 344       1 276        1 171     1 154    1 108       1 071
 Churn (%)(2)
 Tanzania                              47.3        49.9        46.6         51.5      56.8     64.7        60.1
 DRC                                   74.8        76.6        88.6         88.8      87.7     90.0        69.2
 Mozambique                            91.2        87.2        74.3         71.4      69.8     69.0        73.2
 Lesotho                               41.9        50.9        34.1         39.5      43.7     31.9        38.9
 MOU per month(4)
 Tanzania                               158         131         131          122       116       83         102
 DRC                                     34          31          33           36        39       44          48
 Mozambique                             131         118         104           95        92       84          86
 Lesotho                                 48          49          51           35        26       26          34
 Total ARPU (rand per month)(5)
 Tanzania                                42          43          49           48        41       34          39
 DRC                                     31          35          34           37        33       28          35
 Mozambique                              49          52          61           61        57       54          62
 Lesotho                                 43          41          51           47        44       41          57
 Total ARPU (local currency per month)(5)
 Tanzania (TZS)                       6 655       6 377       7 700        7 801     6 992    6 092       7 066
 DRC (USD)                              3.0         3.2         3.4          3.7       3.5      3.1         4.0
 Mozambique (MZN)                       146         150         178          184       182      185         213

Notes:
1.       Active customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly
         fee that entitles them to use the service even if they do not actually use the service and those customers who are active whilst roaming. As of 30 June 2013, this
         excludes M2M connections, prior periods have been restated.
2.       Churn is calculated by dividing the annualised number of disconnections during the period by the average monthly 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 active customers
         during the period. MOU has been restated as a result of M2M connections excluded from active customers.
5.       Total ARPU is calculated by dividing the average monthly service revenue by the average monthly active customers during the period. Prepaid and contract
         ARPU only include service revenue generated from Vodacom mobile customers. ARPU has been restated as a result of M2M connections excluded from active
         customers.



Reconciliation of normalised growth

The reconciliation represents normalised growth at a constant currency (using current period as base) from on-going operations. The
presentation of the pro-forma constant currency information from on-going operations is the responsibility of the directors of
Vodacom Group Limited. The purpose to presenting this information is to assist the user in understanding the underlying growth
trends in these segments. It has been prepared for illustrative purposes only and may not fairly present the financial position, changes
in equity, and results of operations or cash flows of Vodacom Group Limited. This information has not been reviewed and reported on
by the Group's auditors.


Year on year reconciliation
                                                                                 Translation foreign
                                                           Reported(1)                      exchange(2)                    Normalised
                                                           % change                              ppt                         % change

                                                              14/15                                                             14/15
Revenue
Group                                                           4.3                             (1.6)                             2.7
International                                                  17.2                             (9.8)                             7.4
Service revenue
Group                                                           1.8                             (1.8)                               -
International                                                  17.3                             (9.5)                             7.8

Notes:
1.   The reported percentage change relates to the quarter to date year on year percentage growth between 30 June 2013 and 30 June 2014. The Group's
     presentation currency is the South African rand. Our International operations include functional currencies in United States dollar, Tanzanian shilling and
     Mozambican metical. The prevailing exchange rates for the current and comparative periods are disclosed below.
2.   Translation foreign exchange arises from the translation of the results, at average rates, of subsidiaries' functional currencies to Vodacom's presentation currency,
     being rand. The exchange variances are eliminated by applying the quarter 30 June 2014 average rate (which is derived by dividing the individual subsidiary's
     translated rand value with the functional currency for the quarter) to 31 March 2014 quarter numbers, thereby giving a user a view of the performance which
     excludes exchange rate variances. The prevailing exchange rates for the current and comparative quarters are disclosed below.


Quarter on quarter reconciliation
                                                                                 Translation foreign
                                                           Reported(1)                      exchange(2)                    Normalised
                                                           % change                              ppt                         % change

                                                              14/15                                                             14/15
Revenue
Group                                                          (2.7)                             0.7                             (2.0)
International                                                  (5.5)                             3.5                             (2.0)
Service revenue
Group                                                          (4.4)                             0.8                             (3.6)
International                                                  (5.2)                             3.5                             (1.7)

Notes:
1.   The reported percentage change relates to the quarter to date quarter on quarter percentage growth between 31 March 2014 and 30 June 2014. The Group's
     presentation currency is the South African rand. Our International operations include functional currencies in United States dollar, Tanzanian shilling and
     Mozambican metical. The prevailing exchange rates for the current and comparative periods are disclosed below.
2.   Translation foreign exchange arises from the translation of the results, at average rates, of subsidiaries' functional currencies to Vodacom's presentation currency,
     being rand. The exchange variances are eliminated by applying the quarter 30 June 2014 average rate (which is derived by dividing the individual subsidiary's
     translated rand value with the functional currency for the quarter) to 31 March 2014 numbers, thereby giving a user a view of the performance which excludes
     exchange variances. The prevailing exchange rates for the current and comparative quarters are disclosed below.



Average quarterly exchange rates

                                                                   June              March              June      Year on year          Quarterly
                                                                   2014               2014              2013          % change           % change
USD/ZAR                                                           10.54              10.13              9.49              11.1                4.0
ZAR/MZN                                                            2.99               3.01              3.19              (6.3)              (0.7)
ZAR/TZS                                                          157.09             160.44            171.93              (8.6)              (2.1)
EUR/ZAR                                                           14.46              13.59             12.40              16.6                6.4

The quarterly information has not been audited or reviewed by Vodacom's external auditors.


Trademarks

Vodafone, the Vodafone logo, Vodacom and Vodacom M-Pesa, are trademarks of Vodafone Group Plc (or have applications pending).
Other product and company names mentioned herein may be trademarks of their respective owners.

Forward-looking statements

This quarterly update which sets out the quarterly results for Vodacom Group Limited for the period ended 30 June 2014 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.


Sponsor:                      UBS South Africa (Pty) Limited
Debt sponsor:                 Absa Bank Limited (acting through its Corporate and Investment Banking division)
ADR depository bank:          Deutsche Bank Trust Company Americas
Date: 24/07/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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