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VODACOM GROUP LIMITED - Vodacom Group Limited trading update for the quarter ended 31 December 2016

Release Date: 01/02/2017 07:05
Code(s): VOD     PDF:  
Wrap Text
Vodacom Group Limited trading update for the quarter ended 31 December 2016

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

News release

Vodacom Group Limited trading update for the quarter ended 31 December 2016

1 February 2017

Salient features

- Group service revenue up 1.3% to R17 443 million with revenue up 1.2% to R21 222 million, normalised growth, excluding currency translation effects,
  was 4.4%* and 3.9%* respectively
- We added 1.6 million Group active customers during the quarter, 690 000 in South Africa and 876 000 in our International operations, to now reach 
  65.2 million active customers across the Group
- Group data revenue increased 18.4% to R6 533 million, representing 37.5% of service revenue
- South Africa service revenue grew 5.5% to R13 410 million, driven by strong data revenue growth of 22.0%
- International service revenue declined 8.2% (+3.4%*) to R4 206 million; impacted by customer registration processes and currency volatility

                                                      Quarter ended          Yoy % change
 Rm                                                   December 2016              Reported          Normalised*
 
 Group revenue                                               21 222                   1.2                 3.9
  South Africa                                               17 142                   4.9                 4.9
  International                                               4 316                  (8.9)                3.0
 Group service revenue                                       17 443                   1.3                 4.4
  South Africa                                               13 410                   5.5                 5.5
  International                                               4 206                  (8.2)                3.4


Shameel Joosub, Vodacom Group CEO commented:

I am pleased with what we achieved in the quarter. Performance was driven by strong customer growth in South Africa and strong data demand. In
our International operations the effect of customer disconnections in Q4 of the prior year are still impacting its performance. Group service revenue
growth of 1.3% was impacted by the strengthening of the rand to reporting currencies in our International operations, excluding which, normalised
growth was 4.4%*.

Strong growth in South Africa was delivered through our strategy of sustained investment in network infrastructure, growing data demand and
successful execution of our pricing strategy. This includes the continued impact of our segmented pricing offers, a key highlight of this quarter.
Combined with our network advantage and delivering value for money propositions, this contributed to almost 700 000 new customers joining our
network in South Africa this quarter, showcasing the success of our focus on bundle adoption through 'Just 4 You,' our youth proposition under the
NXTLVL banner and our summer campaign. Strong growth in data demand outstripped declining voice revenues with service revenue growth of 5.5%
to R13.4 billion in South Africa.

In our International operations, we added 876 000 customers in the quarter mirroring the positive trend that we reported in front at our Interim
Results, as we continue to claw back many of the customers disconnected during Q4 of the prior year. Challenging conditions in the DRC were offset
by a better performance in Tanzania and sustained growth in Mozambique resulting in a 3.4%* increase in normalised International service revenue.

The strong demand for data continues with traffic growth of 44.8% in South Africa and 61.7% across our International operations. Data now comprises
40.8% (from 35.3% a year ago) of service revenue in South Africa and 25.2% (from 22.5% a year ago) in the International operations. To support this
continued growth and to strengthen our network and service differentiation, we invested R2.7 billion in our infrastructure including R2.1 billion in
South Africa where we expanded 4G coverage to 70% of the population and 3G to 99%. Including the current period, capital expenditure across
the Group will total at R40.6 billion over a three-year period with R27.4 billion in South Africa alone.

As part of our effort to continuously reduce the cost to communicate in South Africa through our bundle pricing strategy, voice and data prices fell by
17.6% and 15.4% respectively as significantly more prepaid and contract customers benefitted from using bundles. Over the past four years we have
reduced the price of data by more than 60%. Another significant win in helping bridge the digital divide was the introduction of a 4G device below the
key R1 000 price-point to add to the success of the Smart Kicka 2, a low-priced yet high quality 3G smartphone.

The unavailability of spectrum, further delayed by the publication of the White Paper by the Ministry of Telecommunications and Postal Services in
October last year, remains a concern. We have been involved in a number of positive engagements with relevant industry stakeholders as we seek to
find a workable solution to make broadband even more accessible and affordable for South Africans. This is the express objective of the White Paper
and Vodacom is aligned with this goal.

* Normalised growth adjusted at a constant currency using the current year as the base. Refer below for a reconciliation of
  adjustments. All growth rates quoted are year-on-year growth rates and refer to the quarter ended 31 December 2016 compared
  to the quarter ended 31 December 2015, unless stated otherwise.


Operating review

South Africa

Service revenue growth was sustained at 5.5% to R13 410 million underpinned by solid customer net additions and continued growth in data demand.
The declining trend in equipment revenue reversed to a growth of 1.6%. Device sales volumes increased as a result of improved selling prices, which
were aided by the stronger rand against major currencies. This resulted in overall revenue growth of 4.9% to R17 142 million.

Our segmented pricing offers, catering for specific customer needs continues to deliver strong results. Nearly a million youth customers have
registered for our youth proposition 'NXTLVL', while 'Just 4 You' personalised offers continue to boost bundle sales and engagement.

Active customers increased 6.7% reaching 36.4 million following a successful summer campaign and our bundle proposition resonated with
customers. Customer adoption of affordable bundles continues to improve. During the quarter we sold 418 million bundles up 34.8%. The number of
bundle users increased 13.3% to 16.3 million. Active prepaid customers increased 6.8% to 31.2 million largely due to the success of our personalised
'Just 4 You' offers. Prepaid ARPU was down as we continue to attract value seeking customers. Active contract customers increased by 143 000 in the
quarter to 5.2 million with contract ARPU up 1.2% to R414. ARPU growth was impacted by the customer disconnections of 75 000 by Altech Autopage
(Pty) Limited and consequent revenue deferral release of R102 million in the prior year, excluding which ARPU grew 3.6%.

Voice revenue declined 6.2%, due to the lapping of the 'Just 4 You' launch in the prior year, and a one-off impact from Altech Autopage (Pty) Limited in
the prior year. Underlying voice revenue decline was 4.6%.

Data revenue growth improved to 22.0% to R5 473 million. Data now makes up 40.8% of service revenue compared to 35.3% a year ago, with active
data customers up 4.9% to 19.3 million. Improvements made to our out-of-data-bundle notification journey have resulted in an improved customer
experience by giving customers more control. This together with the success of our pricing strategy of making data more affordable to all customers
has resulted in a 49.0% increase in bundle sales and an overall effective price per MB reduction of 15.4%. Smartphone sales volumes accelerated this
quarter, up 29.0%, comprising 62.3% of device sales. We added 1.1 million 4G customers in the quarter to reach 4.8 million as devices became more
affordable. We launched a new 4G device at sub R1 000 in the quarter. Active smart devices on the network increased 23.1% to 16.6 million with the
average monthly data usage on these devices at 667MB contributing to the 44.8% improvement in data traffic.

Enterprise continues to grow with revenue up 13.6%1 and now contributed 24.5% (2016: 22.2%) of service revenue. Supported by our strategic
enterprise partnerships with IBM and SAP HANA. Our fixed-line and business managed services revenue grew 29.1% and our cloud and hosting services
delivered strong revenue growth of 25.8%. Our mobile customer revenue delivered strong growth of 12.1%1 to R2 027 million as we continue to add
new customers. Internet of things (IoT) connections increased 29.3% to 2.8 million. We have secured certain mobile, voice and data communications
contracts with national and provincial government departments' for a period of four years.

1. Growth excluding the impact from the acquisition of Autopage in the prior year.

Capital expenditure of R2.1 billion in the quarter allowed us to expand 4G population coverage to 70.0%, up from 54.1% a year ago. We extended our
high-speed transmission to 91.4% of our sites. As data demand continues to grow exponentially we entered into a commercial agreement to roam on
the newly built data network of Wireless Business Solution (WBS) for additional capacity.


International

Service revenue declined 8.2% to R4 206 million, impacted by the improvement of the rand against mainly the US dollar and continued weakness
in the Mozambican metical. Normalised for currency translation effects, underlying growth was up 3.4%*. The improvement in underlying trend
was driven by better performance in Tanzania benefitting from the launch of 'Just 4 You' in August, sustained growth in Mozambique through strong
commercial execution, offset by challenging trading conditions in the DRC and the impacts from customer registration requirements in the majority of
our markets.

Active customers are down 7.5% to 28.8 million as a result of disconnections during the fourth quarter of the prior year, in compliance with customer
registration requirements. We have managed to claw back a significant amount of these customers resulting in positive trends in net customer
additions, adding 876 000 customers in the quarter.

Mobile data revenue grew 2.6% (12.8%*) driven by a 12.4% increase in active data customers to 12.6 million, representing 43.8% of the active
customer base. Data traffic grew 61.7%, reflecting strong demand for mobile data services in all our markets. Mobile data revenue now comprised
25.2% (2016: 22.5%) of International service revenue.

M-Pesa revenue continues to grow strongly at 12.4% (17.4%*). We added 1.1 million customers in the quarter to reach 12.0 million2. Tanzania continues
to improve on the M-Pesa offering with 39% of airtime purchases going through the M-Pesa system in the quarter compared to 32% in the prior year.
DRC has more than doubled their number of customers, and in Mozambique 42.6% of customers are now using the service.

2. Number of unique customers who have generated revenue related to M-Pesa in the past 90 days,of these 8.8 million have been active in the past 30 days.

Capital expenditure of R612 million enabled us to continue to invest in all our markets to strengthen network and service differentiation and to
support data growth and wider voice coverage. During the quarter, 2G and 3G sites increased 8.4% and 32.1% respectively.


Regulatory matters

South Africa Integrated information and communication technology ICT Policy White Paper (White Paper)

The Ministry of Telecommunications and Postal Services published a White Paper, as approved by cabinet, on 2 October 2016. We support the
objectives of the White Paper to make broadband more accessible and affordable for all. However, as it now stands, we do not believe the White Paper
will achieve these objectives.

The Group believes the White Paper, as it currently stands, contains a number of policy elements and interventions which are unclear and require more
detail. For the White Paper to have legal effect, a number of new laws would need to be promulgated and/or existing laws amended. Consultation with
all stakeholders would be required to give effect to these changes.

Initial exploratory meetings for implementation of the policy paper between the Minister and industry were held during November and December with
the objective of finding a workable solution to meet South Africa's social and economic objectives.

The Invitation to Apply (ITA) for high demand spectrum issued by ICASA, which is a polar opposite approach to the White Paper, remains subject to legal
challenge from the Ministry, the outcome of which is still pending.

Listing of Vodacom Tanzania

In June 2016, the Parliament of Tanzania passed The Finance Act, 2016 which amends listing requirements under the Electronic and Postal
Communication Act, 2010, to introduce mandatory listing requirements and require licensed telecommunications operators to list 25% of their
authorised share capital through an initial public offering (IPO) on the Dar es Salaam stock exchange (DSE) within six months from 1 July 2016 (listing
requirements).

Vodacom Tanzania submitted its prospectus with the Capital Markets and Securities Authority Tanzania (CMSA) during November 2016 and is awaiting
approval before the offering can proceed.

1.Number of unique customers who have generated revenue related to M-Pesa in the past 90 days, of these 8.8 million have been active in the past 30 days.


Financial review

Revenue for the quarter ended1
                                                                                                  Quarterly %
                                     31 December   30 September     31 December   Yoy % change         change
Rm                                          2016           2016            2015       Reported     Normalised*      Reported    Normalised*

South Africa                              17 142         16 003          16 347            4.9            4.9            7.1           7.1
International                              4 316          4 429           4 740           (8.9)           3.0           (2.6)         (0.4)
Corporate and eliminations                 (236)           (183)           (115)        (105.2)        (105.2)         (29.0)        (29.0)
Revenue                                   21 222         20 249          20 972            1.2            3.9            4.8           5.3


Service revenue for the quarter ended
                                                                                                  Quarterly %
                                     31 December   30 September     31 December   Yoy % change         change
Rm                                          2016           2016            2015       Reported     Normalised*      Reported    Normalised*

South Africa                              13 410         13 037          12 707            5.5            5.5            2.9           2.9
International                              4 206          4 246           4 581           (8.2)           3.4           (0.9)          1.2
Corporate and eliminations                 (173)           (121)            (64)        (170.3)        (170.3)         (43.0)        (43.0)
Service revenue                           17 443         17 162          17 224            1.3            4.4            1.6           2.2


Revenue for the quarter ended 31 December 2016

                                    South Africa          Yoy %   International          Yoy %     Corporate/          Group         Yoy %
Rm                                                       change                         change   Eliminations                       change

Mobile contract revenue                    6 097            5.0             222          (34.3)             -          6 319           2.9
  In bundle2,3                             4 346            4.7              66              -              1          4 413           4.7
  Out of bundle5                           1 751            5.7             156          (42.6)            (1)         1 906          (1.1)
Mobile prepaid revenue                     5 656            4.6           3 148           (5.4)             2          8 806           0.9
 In bundle2,4                              1 404           28.2             337          (11.3)             -          1 741          18.0
 Out of bundle5                            4 252           (1.3)          2 811           (4.6)             2          7 065          (2.6)
Mobile customer revenue                   11 753            4.8           3 372           (8.0)            (1)        15 124           1.7
Mobile interconnect                          470           (0.2)            373          (13.5)          (102)           741         (15.4)
Other service revenue                      1 187           15.9             461           (5.1)           (70)         1 578           7.0
Service revenue                           13 410            5.5           4 206           (8.2)          (173)        17 443           1.3
Equipment revenue                          3 465            1.6              71          (33.6)           (20)         3 516           0.2
Non-service revenue                          267           15.6              39          (25.0)           (43)           263          10.0
Revenue                                   17 142            4.9           4 316           (8.9)          (236)        21 222           1.2


Included in service revenue
Mobile voice                               5 892           (6.2)          2 216          (11.9)            (2)         8 106          (7.8)
Mobile data                                5 473           22.0           1 059            2.6              1          6 533          18.4
Mobile messaging                             642            0.5             102          (15.0)             -            744          (2.2)

Notes:

1. Prior quarter South Africa and Group revenue numbers have been restated in line with the restatement explained in our annual results for the year
   ended 31 March 2016 available on www.vodacom.com.
2. 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.
3. Mobile in bundle revenue - Contract: Revenue from all bundles and add-ons lasting 30 days or more.
4. Mobile in bundle revenue - Prepaid: Revenue from bundles lasting seven days or more.
5. 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 31 December 2015
                                                       South Africa    International        Corporate/         Group
Rm                                                                                        Eliminations

Mobile contract revenue                                       5 807              338                (3)        6 142
 In bundle                                                    4 150               66                (1)        4 215
 Out of bundle                                                1 657              272                (2)        1 927
Mobile prepaid revenue                                        5 405            3 326                 -         8 731
 In bundle                                                    1 095              380                 -         1 475
 Out of bundle                                                4 310            2 946                 -         7 256
Mobile customer revenue                                      11 212            3 664                (3)       14 873
Mobile interconnect                                             471              431               (26)          876
Other service revenue                                         1 024              486               (35)        1 475
Service revenue                                              12 707            4 581               (64)       17 224
Equipment revenue1                                            3 409              107                (7)        3 509
Non-service revenue                                             231               52               (44)          239
Revenue1                                                     16 347            4 740              (115)       20 972


Included in service revenue
Mobile voice                                                  6 280            2 516                (2)        8 794
Mobile data                                                   4 487            1 032                 1         5 520
Mobile messaging                                                640              120                 1           761

Note:

1. Prior quarter South Africa and Group revenue numbers have been restated in line with the restatement explained in our annual results for the year
   ended 31 March 2016 available on www.vodacom.com.


Key indicators
South Africa
                                                  31 December    30 September     31 December           Yoy    Quarterly
                                                         2016            2016            2015      % change     % change

Active customers1 (thousand)                           36 375          35 685          34 103           6.7          1.9
Prepaid                                                31 188          30 641          29 206           6.8          1.8
Contract                                                5 187           5 044           4 897           5.9          2.8

Active data customers2 (thousand)                      19 261          18 158          18 353           4.9          6.1

Internet of Things connections3 (thousand)              2 810           2 626           2 174          29.3          7.0

MOU per month4                                            145             136             138           5.1          6.6
Prepaid                                                   138             127             129           7.0          8.7
Contract                                                  187             192             192          (2.6)        (2.6)

Total ARPU5 (rand per month)                              114             112             116          (1.7)         1.8
Prepaid                                                    64              63              66          (3.0)         1.6
Contract                                                  414             415             409           1.2         (0.2)

Traffic6 (millions of minutes)                         15 550          14 458          13 964          11.4          7.6
Outgoing                                               13 158          12 062          11 516          14.3          9.1
Incoming                                                2 392           2 396           2 448          (2.3)        (0.2)

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. Active data customers have been restated to exclude customers with free allocated data bundles used. Active data customers are based on the
   number of unique users generating billable data traffic during the month. Also included are users on integrated tariff plans, or who have access to
   corporate APNs, and users who have been allocated a revenue generating data bundle during this month. A user is defined as being active if they are
   paying a contractual monthly fee for this service or have used the service during the reported month.
3. Internet of Things (IoT), previously machine-to-machine, is the remote wireless interchange between two or more predefined devices or a central
   station without direct relationship with an end customer, in order to support a specific business process or product.
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.
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.
6. 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.


International
                                                            31 December   30 September   31 December          Yoy    Quarterly
                                                                   2016           2016          2015     % change     % change
Active customers1 (thousand)                                     28 794         27 918        31 130         (7.5)         3.1
Tanzania                                                         12 419         12 354        12 714         (2.3)         0.5
DRC                                                               9 702          9 204        11 814        (17.9)         5.4
Mozambique                                                        5 208          4 987         5 240         (0.6)         4.4
Lesotho                                                           1 465          1 373         1 362          7.6          6.7

Active data customers2 (thousand)                                12 620         11 965        11 231         12.4          5.5
Tanzania                                                          6 484          6 021         5 727         13.2          7.7
DRC                                                               3 354          3 191         2 806         19.5          5.1
Mozambique                                                        2 196          2 236         2 178          0.8         (1.8)
Lesotho                                                             586            517           520         12.7         13.3

MOU per month3
Tanzania                                                            162            162           130         24.6            -
DRC                                                                  48             56            39         23.1        (14.3)
Mozambique                                                          122            123           105         16.2         (0.8)
Lesotho                                                              90             81            83          8.4         11.1

Total ARPU4 (rand per month)
Tanzania                                                             40             40            39          2.6            -
DRC                                                                  48             56            41         17.1        (14.3)
Mozambique                                                           41             44            54        (24.1)        (6.8)
Lesotho                                                              66             63            65          1.5          4.8

Total ARPU4 (local currency per month)
Tanzania (TZS)                                                    6 279          6 187         5 957          5.4          1.5
DRC (USD)                                                           3.4            3.9           2.9         17.2        (12.8)
Mozambique (MZN)                                                    223            223           180         23.9            -

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. Active data customers are based on the number of unique users generating billable data traffic during the month. Also included are users on
   integrated tariff plans, or who have access to corporate APNs, and users who have been allocated a revenue generating data bundle during the
   month. A user is defined as being active if they are paying a contractual monthly fee for this service or have used the service during the
   reported month.
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 customer during the period.


Historical financial review

Revenue1
                                  31 December      30 September         30 June        31 March    31 December    30 September       30 June
Rm                                       2016              2016            2016            2016           2015            2015          2015

South Africa                           17 142            16 003          15 443          15 640         16 347          15 447        14 845
International                           4 316             4 429           4 620           5 086          4 740           4 435         4 095
Corporate and eliminations               (236)             (183)           (161)           (173)          (115)           (136)         (134)
Revenue                                21 222            20 249          19 902          20 553         20 972          19 746        18 806

Revenue yoy % change for the quarter ended
                                                       Reported                      Normalised
                                  31 December      30 September         30 June     31 December
%                                        2016              2016            2016            2016

South Africa                              4.9               3.6             4.0             4.9
International                            (8.9)             (0.1)           12.8             3.0
Corporate and eliminations             (105.2)            (34.6)          (20.1)         (105.2)
Revenue                                   1.2               2.5             5.8             3.9

Service revenue
                                  31 December      30 September         30 June        31 March    31 December     30 September      30 June
Rm                                       2016              2016            2016            2016           2015             2015         2015

South Africa                           13 410            13 037          12 426          12 503         12 707           12 348       11 762
International                           4 206             4 246           4 479           4 903          4 581            4 334        3 945
Corporate and eliminations               (173)             (121)            (99)           (111)           (64)             (98)         (47)
Service revenue                        17 443            17 162          16 806          17 295         17 224           16 584       15 660

Service revenue yoy % change for the quarter ended
                                                       Reported                      Normalised
                                  31 December      30 September         30 June     31 December
%                                        2016              2016            2016            2016

South Africa                              5.5               5.6             5.6             5.5
International                            (8.2)             (2.0)           13.5             3.4
Corporate and eliminations             (170.3)             23.5           110.6         (170.3)
Service revenue                           1.3               3.5             7.3             4.4

Note:

1. Prior quarter South Africa and Group revenue numbers have been restated in line with the restatement explained in our annual results for the year
   ended 31 March 2016 available on www.vodacom.com.


Historical key indicators

South Africa
                                   31 December      30 September         30 June        31 March     31 December      30 September       30 June
                                          2016              2016            2016            2016            2015              2015          2015
Active customers1 (thousand)            36 375            35 685          35 112          34 178          34 103            33 745        33 309
Prepaid                                 31 188            30 641          30 148          29 265          29 206            28 821        28 368
Contract                                 5 187             5 044           4 964           4 913           4 897             4 924         4 941
Active data customers2 (thousand)       19 261            18 158          18 054          18 056          18 353            17 443        17 442
Internet of Things                       2 810             2 626           2 515           2 264           2 174             2 057         1 925
connections3 (thousand)

MOU per month4                             145               136             134             134             138               130           124
Prepaid                                    138               127             124             125             129               119           113
Contract                                   187               192             190             191             192               189           184

Total ARPU5 (rand per month)               114               112             109             112             116               112           110
Prepaid                                     64               63               60              62              66                63            62
Contract                                   414               415             401             404             409               393           381

Traffic6 (millions of minutes)          15 550            14 458          13 939          13 699           13 964           13 073        12 181
Outgoing                                13 158            12 062          11 575          11 352           11 516           10 670         9 856
Incoming                                 2 392             2 396           2 364           2 347            2 448            2 403         2 325

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. Active data customers have been restated to exclude customers with free allocated data bundles used. Active data customers are based on the
   number of unique users generating billable data traffic during the month. Also included are users on integrated tariff plans, or who have access to
   corporate APNs, and users who have been allocated a revenue generating data bundle during this month. A user is defined as being active if they are
   paying a contractual monthly fee for this service or have used the service during the reported month.
3. Internet of Things (IoT), previously machine-to-machine, is the remote wireless interchange between two or more predefined devices or a central
   station without direct relationship with an end customer, in order to support a specific business process or product.
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.
5. Total ARPU is calculated by dividing the average monthly service revenue during the period by the average monthly active customers. Prepaid and
    contract ARPU only include service revenue generated from Vodacom mobile customers.
6. 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.


International
                                   31 December      30 September         30 June        31 March     31 December    30 September         30 June
                                          2016              2016            2016            2016            2015            2015            2015
Active customers1 (thousand)            28 794            27 918          26 722          27 127          31 130          31 373          30 193
Tanzania                                12 419            12 354          12 060          12 375          12 714          12 521          11 996
DRC                                      9 702             9 204           8 486           8 527          11 814          12 118          11 922
Mozambique                               5 208             4 987           4 817           4 826           5 240           5 464           5 031
Lesotho                                  1 465             1 373           1 359           1 399           1 362           1 270           1 244

Active data customers2                  12 620            11 965          10 919          10 055          11 231          10 496          10 292
(thousand)
Tanzania                                 6 484             6 021           5 440           5 415           5 727           5 553           5 501
DRC                                      3 354             3 191           2 885           1 996           2 806           2 297           2 332
Mozambique                               2 196             2 236           2 112           2 112           2 178           2 219           2 046
Lesotho                                    586               517             482             532             520             427             413

MOU per month3
Tanzania                                   162               162             158             124             130             123             120
DRC                                         48                56              50              40              39              43              34
Mozambique                                 122               123             109             111             105             104              97
Lesotho                                     90                81              79              78              83              73              68

Total ARPU4 (rand per month)
Tanzania                                    40                40              40              41              39              38              36
DRC                                         48                56              58              52              41              39              35
Mozambique                                  41                44              56              61              54              51              51
Lesotho                                     66                63              62              59              65              62              62

Total ARPU4 (local currency
per month)
Tanzania (TZS)                           6 279             6 187           5 876           5 631           5 957           6 265           6 046
DRC (USD)                                  3.4               3.9             3.9             3.3             2.9             3.0             2.9
Mozambique (MZN)                           223               223             207             185             180             157             154

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. Active data customers have been restated to exclude customers with free allocated data bundles used. Active data customers are based on the
   number of unique users generating billable data traffic during the month. Also included are users on integrated tariff plans, or who have access to
   corporate APNs, and users who have been allocated a revenue generating data bundle during this month. A user is defined as being active if they are
   paying a contractual monthly fee for this service or have used the service during the reported month.
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 during the period by the average monthly active customers. Prepaid and
   contract ARPU only include service revenue generated from Vodacom mobile customers.


Reconciliation of normalised growth

The reconciliation represents normalised growth at a constant currency (using the current period as the 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 of 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 being Price Waterhouse Coopers Inc.

Year-on-year reconciliation
                                                                       Translation foreign
                                                           Reported1             exchange2         Normalised
                                                            % change                   ppt           % change
Revenue
Group                                                            1.2                   2.7                3.9
International                                                   (8.9)                 11.9                3.0

Service revenue
Group                                                            1.3                   3.1                4.4
International                                                   (8.2)                 11.6                3.4

Data revenue
International                                                    2.6                  10.2               12.8

M-Pesa revenue
International                                                   12.4                   5.0               17.4


Quarter-on-quarter reconciliation
                                                                       Translation foreign
                                                           Reported3             exchange4         Normalised
                                                            % change                   ppt           % change
Revenue
Group                                                            4.8                   0.5                5.3
International                                                   (2.6)                  2.2               (0.4)

Service revenue
Group                                                            1.6                   0.6                2.2
International                                                   (0.9)                  2.1                1.2

Notes:

1. The reported percentage change relates to the quarter to date year-on-year percentage growth between 31 December 2015 and
   31 December 2016. The Group's presentation currency is the South African rand. Our International operations utilise a number of functional
   currencies, for example the United States dollar, Tanzanian shilling, Mozambican metical, Nigerian naira and Zambian kwacha. 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 31 December 2016 average rate (which is
   derived by dividing the individual subsidiary's translated rand value with the functional currency for the quarter) to 31 December 2015 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.
3. The reported percentage change relates to the quarter to date quarter on quarter percentage growth between 30 September 2016 and
   31 December 2016. The Group's presentation currency is the South African rand. Our International operations utilise a number of functional
   currencies, for example the United States dollar, Tanzanian shilling, Mozambican metical, Nigerian naira and Zambian kwacha. The prevailing
   exchange rates for the current and comparative periods are disclosed below.
4. 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 31 December 2016 average rate (which is derived
   by dividing the individual subsidiary's translated rand value with the functional currency for the quarter) to 30 September 2016 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
                                                                31 December   30 September   31 December          Yoy      Quarterly
                                                                       2016           2016          2015     % change       % change
 USD/ZAR                                                              13.90          14.08         14.22         (2.3)          (1.3)
 ZAR/MZN                                                               5.41           5.04          3.30         63.9            7.3
 ZAR/TZS                                                             156.99         155.33        152.46          3.0            1.1
 EUR/ZAR                                                              14.99          15.72         15.56         (3.7)          (4.6)


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

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).
Other product and company names mentioned herein may be the trademarks of their respective owners.


Forward-looking statements

This update which sets out the quarterly results for Vodacom Group Limited for the three months ended 31 December 2016, 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.

All subsequent oral or written forward-looking statements attributable to the Group or any member thereof or any persons acting on their behalf
are expressly qualified in their entirety by the cautionary statements above and below. Vodacom expressly disclaims any liability in respect of the
content of any forward looking statement and also expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein or to reflect any change in their expectations with regard thereto or any change in events, conditions or
circumstances on which any such forward-looking statement is based.

Sponsor:                         UBS South Africa (Pty) Limited
ADR depository bank:             Deutsche Bank Trust Company Americas

Date: 01/02/2017 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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