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VODACOM GROUP LIMITED - Vodacom Group Limited trading update for the quarter ended 30 June 2017

Release Date: 20/07/2017 07:05
Code(s): VOD     PDF:  
Wrap Text
Vodacom Group Limited trading update for the quarter ended 30 June 2017

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 30 June 2017
20 July 2017

Salient features
- Group revenue grew 3.9% to R20.7 billion, normalised growth, excluding currency translation effects, was 7.7%*
- Group service revenue grew 1.7% to R17.1 billion, normalised growth, excluding currency translation effects, was 5.9%*
- South Africa revenue growth accelerated to 7.8% aided by stronger device sales. Service revenue growth was sustained
  at 5.6%
- International revenue declined 8.2% and service revenue declined 8.0%. Normalised for currency fluctuations, revenue
  and service revenue grew 8.0%*. Underlying growth improved as a result of strong commercial execution
- Group data revenue increased 15.1%, normalised 18.3%*, to R6.7 billion, representing 39.0% of service revenue
- We added 2.5 million customers during the quarter, 2.3 million in South Africa and 280 thousand in our International
operations, to reach almost 70 million customers across the Group

                                               Quarter ended           Yoy % change
Rm                                                 June 2017       Reported Normalised*
Group revenue                                         20 685             3.9        7.7
South Africa                                          16 654             7.8        7.8
International                                          4 240            (8.2)       8.0
Group service revenue                                 17 098             1.7        5.9
South Africa                                          13 123             5.6        5.6
International                                          4 122            (8.0)       8.0

Shameel Joosub, Vodacom Group CEO commented:

The solid performance the Group delivered in FY2017, continued into the first quarter of the current financial year. In South
Africa, revenue growth accelerated to 7.8%, aided by increased smartphone device sales. We sustained South African service revenue
growth of 5.6%, underpinned by the consistent and significant investment in our network infrastructure and IT systems,
aimed at further enhancing the customer experience. Our pricing transformation strategy continues to deliver greater value
for our 39 million South African customers. The 9.1% and 18.9% decline in effective voice and data prices respectively over
the quarter reflects our commitment to driving down the cost to communicate in South Africa. As I have stated previously,
there is more work to be done on this front, and we will be introducing additional measures this year to give greater control
to customers by improving our out-of-bundle pricing.

Although the International operations have turned the corner, currency volatility is still negatively impacting translation of
these results. We now have 30 million customers outside of South Africa, an increase of 12.0%. Following the phenomenal
success in South Africa of our 'Just 4 You' platform, customers in all our operations are starting to enjoy the benefits of this
personalised offers platform. We expect that this will contribute to the operational momentum in these markets. Following
the shareholder approval of the acquisition of a stake in Safaricom on 18 July this will further boost contribution outside of
South Africa.

Our strategy to become a leading digital company and empowering a connected society is our key area of focus. We continue to
make substantial investments in all our operations so that we maintain our network lead and IT advantage. This will enable
us to transform our product offerings, customer experience, operations and organisation to deliver on our digital aspirations.

We remain cognisant of the weaker economic conditions that prevail in South Africa as well as some of our larger markets
and have put measures in place should these conditions deteriorate materially in these markets.

* Normalised growth adjusted at a constant currency (using the current quarter 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
30 June 2017 compared to the quarter ended 30 June 2016, unless stated otherwise

Operating review

South Africa

Service revenue growth was sustained, growing 5.6%, to R13.1 billion for the quarter. This performance was supported by
continued growth in our customer base and strong demand for data. Revenue growth accelerated to 7.8%, underpinned by a
17.0% increase in equipment revenue, reflecting the successful delivery of our strategy of driving the uptake of data-enabled
devices. The sale of smartphones grew by 29.0%, comprising 57.4% of total device sales.

We added 2.3 million customers in the quarter, reaching 39.4 million, up 12.2%. Our segmented offerings and 'Just 4 You'
personalised offers continue to play an important role both in increasing customer activity and generating greater value
for our customers. During the quarter, we sold 553 million prepaid and contract bundles, up 68.3%, with the number of
bundle users increasing by 25.7% to 17.8 million. Prepaid customers increased by 2.2 million to 34.2 million, driven largely
by our successful personalised offers. Prepaid ARPU was down 3.3%, as we continue to attract more customers in the value
segment. Contract customers increased by two thousand in the quarter, to 5.1 million. Migration to our new "more data" contracts, 
which have a larger data allocation, accelerated during this period, as customer demand for data continued to increase. Contract ARPU 
declined by 2.0% to R393, due to a higher rollover of unused bundle allocations, as customers grow into fully utilising these larger bundles.

Voice revenue decline was low at 4.2%, reflecting the success of our personalised voice bundle strategy through our 'Just 4
You' platform, reducing the blended effective price per minute by 9.1%.

Data revenue grew 18.1% to R5.5 billion, contributing 42.2% (2017: 37.8%) of service revenue. We added 463 thousand
4G customers in the quarter, reaching a total of 5.5 million customers as devices became more affordable as a result of
improvements in exchange rates. Active smart devices on the network increased by 18.4% to 16.6 million, with the average
monthly data used on these devices increasing to 734MB per device. We have continued to introduce new initiatives to
reduce the out-of-bundle-data spend by our customers and to give customers more control, resulting in an improved
customer experience. Together with our successful data pricing strategy of making data more affordable, this has resulted in
a 56.1% increase in data bundle sales and an 18.9% reduction in the overall effective price per MB.

Enterprise continues to grow, with revenue up 9.4% to R3.3 billion, contributing 25.3% (2017: 24.4%) of service revenue. Our
fixed-line services revenue grew by 12.0%, while our cloud and hosting services delivered robust revenue growth of 27.5%.
We started the migration of customers from the mobile voice and data communications contract that we secured last year
with South Africa's national and provincial government departments. Internet of Things (IoT) revenue was up 28.9%
to R192 million.

Our capital expenditure of R1.8 billion was focused on maintaining our network lead; with widest coverage and fastest
internet, as well as enhancing our IT systems. This enables us to provide truly segmented
and personalised experiences for our customers, which is critical to delivering our strategic ambition of becoming a leading
digital company. Our continued investment in infrastructure resulted in 75.9% 4G and 99.2% 3G population coverage.

International

Underlying growth trends in our International operations have improved, with a better performance in Tanzania and
sustained growth in Mozambique and Lesotho through strong commercial execution. In the DRC economic weakness and
decoupling of the Congolese Franc from the US dollar continues to impact consumer spending. Exchange rate volatility
continues to negatively impact reported growth. Service revenue declined by 8.0% to R4.1 billion in the quarter; normalised
for currency translation effects, underlying growth was 8.0%*.

We added 281 thousand customers in the quarter, reaching 29.9 million, up 12.0%. We are continuing to improve our
customer registration processes, working closely with regulators to ensure full compliance in all our operations.

Data revenue grew by 2.2%, with normalised growth of 18.9%*, supported by an increase of 810 thousand active data
customers, up to 13.8 million. Data traffic grew 87.0%, reflecting strong demand for mobile data services as we drive the
adoption of data bundles through our 'Just 4 You' personalised offerings. We continue to ensure that our customers have
access to better low cost smart devices, especially Vodacom-branded devices, as we increase data network speeds and
improve data coverage. Data revenue comprised 27.1% (2017: 24.4%) of International operations' service revenue.

M-Pesa revenue continued to grow strongly at 7.4%, with normalised growth of 24.9%*. The new M-Pesa platform with
enhanced technology has significantly improved stability, resulting in increased trust with customers. We added 350
thousand customers in the quarter, reaching 13.3 million(1). We continue to enhance our service and product eco-systems and
develop innovative products to improve customer experience. In Tanzania, 1.0 million customers are using our successful
M-Pawa savings and loans product, developed in partnership with the Commercial Bank of Africa. There has also been a
steady uptake of our International Money Transfer (IMT) services. During the quarter, on average, R22 billion was processed
monthly through the M-Pesa system.

Capital expenditure of R510 million enabled us to continue investing in all our markets to strengthen network and service
differentiation and to support data growth and wider voice coverage. 2G and 3G sites increased 7.5% and 15.4% respectively.

1. Number of unique customers who have generated revenue related to M-Pesa in the past 90 days, of these 10.1 million
have been active in the past 30 days.

Regulatory matters

South Africa Integrated information and communication technology ICT Policy White Paper

In October 2016, the Minister of Telecommunications and Postal Services published the cabinet-approved National
Integrated ICT Policy White Paper (White Paper). The White Paper sets out a framework on how the government seeks to
provide access to modern communications infrastructure and services to facilitate the entry of new players and ensure
the meaningful participation of all citizens, including those in rural areas. Its adoption will require various amendments to
existing laws and regulations flowing from the Electronic Communications Act. The Invitation to Apply (ITA) for high demand
spectrum issued by ICASA remains subject to legal challenge from the Ministry, the outcome of which is still pending.

During May 2017, a high level agreement was reached between the Ministry and industry stakeholders that provides for:
- Not returning assigned spectrum, as originally contemplated in the White Paper;
- Licensees committing to buy a set minimum capacity from the Wholesale Open Access Network (WOAN) to ensure
  its viability;
- The Ministry conducting a study to determine the appropriate quantity of high demand spectrum that will be necessary
  for the WOAN to roll out a 4G/LTE network; and
- The remaining high-demand spectrum, after allocation to the WOAN, to be assigned to existing licensees through
  an allocation process yet to be determined, with a possible inclusion of rural coverage obligations.

Subsequently, the Ministry appointed the Council for Scientific and Industrial Research (CSIR) to conduct a study on the
spectrum requirements for the WOAN.

Listing of Vodacom Tanzania

In June 2016, the Parliament of Tanzania introduced mandatory listing requirements, requiring licensed telecommunications
operators to list at least 25% of their authorised share capital through an initial public offering (IPO) on the Dar es Salaam
stock exchange (DSE). Vodacom Tanzania opened its initial public offer in compliance with the legislation on 9 March 2017.
Following changes to the Electronic and Postal Communications Act 2010 (EPOCA) and directives received from the Capital
Markets and Securities Authority (CMSA), Vodacom Tanzania Plc extended the offer period by three weeks from Monday 10
July 2017 to Friday 28 July 2017 with the listing expected to take place on Tuesday 15 August 2017. This extension is to
facilitate participation by international investors, following recent changes approved by Parliament allowing international
investors to participate in the IPOs of EPOCA licensees.

Safaricom

Shareholders are referred to the circular released on 19 June 2017 detailing the proposed transaction between Vodacom
Group and Vodafone. In accordance with the terms of this proposed transaction, Vodacom Group will acquire a 34.94%
indirect interest in Safaricom from Vodafone by acquiring 87.5% of the issued share capital of Vodafone Kenya. The total
purchase consideration payable by Vodacom Group for the acquisition of 87.5% of the issued share capital of Vodafone
Kenya equates to 233 459 781 shares in Vodacom issued to Vodafone. At the general meeting on 18 July 2017,
shareholders resolved to approve this transaction, which we expect to be effective on or about 1 August 2017.

Financial review
Revenue for the quarter ended

                        30 June    31 March        30 June            Yoy % change            Quarterly % change
Rm                         2017        2017           2016       Reported  Normalised*       Reported  Normalised*

South Africa             16 654      16 141         15 443            7.8          7.8            3.2          3.2
International             4 240       3 985          4 620           (8.2)         8.0            6.4          4.5
Corporate and
eliminations               (209)       (221)          (161)         (29.8)       (29.8)          (5.4)        (5.4)
Revenue                  20 685      19 905         19 902            3.9          7.7            3.9          3.5


Service revenue for the quarter ended

                        30 June    31 March        30 June            Yoy % change             Quarterly % change
Rm                         2017        2017           2016       Reported  Normalised*       Reported  Normalised*

South Africa             13 123      13 198         12 426            5.6          5.6           (0.6)        (0.6)
International             4 122       3 844          4 479           (8.0)         8.0            7.2          5.3
Corporate and
eliminations               (147)       (167)           (99)         (48.5)       (48.5)         (12.0)       (12.0)
Service revenue          17 098      16 875         16 806            1.7          5.9            1.3          0.9


Revenue for the quarter ended 30 June 2017

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

Mobile contract
revenue                   5 889         2.6            256          (25.8)          (2)         6 143          1.0
  In bundle(1,2)          4 286         3.8             65           18.2            -          4 351          4.0
  Out of
  bundle(4)               1 603        (0.4)           191          (34.1)          (2)         1 792         (5.6)

Mobile prepaid
revenue                   5 536         7.5          3 112           (5.1)           1          8 649          2.6
  In bundle(1,3)          1 383        16.3            371          (20.9)           -          1 754          5.8
  Out of
  bundle(4)               4 153         4.9          2 741           (2.5)           1          6 895          1.8

Mobile customer
revenue                  11 425         4.9          3 368           (7.1)          (1)        14 792          1.9
Mobile
interconnect                364       (20.0)           309          (18.7)         (96)           577        (27.8)
Other service
revenue                   1 334        23.1            445           (6.1)         (50)         1 729         15.7

Service revenue          13 123         5.6          4 122           (8.0)        (147)        17 098          1.7
Equipment
revenue                   3 196        17.0             77           (9.4)         (25)         3 248         16.0
Non-service
revenue                     335        17.5             41          (26.8)         (37)           339         14.5

Revenue                  16 654         7.8          4 240           (8.2)        (209)        20 685          3.9

Included in service revenue
Mobile voice              5 532        (4.2)         2 147          (11.4)          (1)         7 678         (6.3)
Mobile data               5 542        18.1          1 119            2.2            -          6 661         15.1
Mobile

messaging                   590        (2.8)           107           (4.5)           -            697         (3.1)

Notes:
1. 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.
2. Mobile in bundle revenue - Contract: Revenue from all bundles and add-ons lasting 30 days or more.
3. Mobile in bundle revenue - Prepaid: Revenue from bundles lasting seven days or more.
4. 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 2016

                                                                                         Corporate/
Rm                                               South Africa      International       Eliminations             Group

Mobile contract revenue                                 5 738                345                 (1)            6 082
 In bundle                                              4 129                 55                  -             4 184
 Out of bundle                                          1 609                290                 (1)            1 898

Mobile prepaid revenue                                  5 149              3 280                  1             8 430
 In bundle                                              1 189                469                  -             1 658
 Out of bundle                                          3 960              2 811                  1             6 772

Mobile customer revenue                                10 887              3 625                  -            14 512
Mobile interconnect                                       455                380                (36)              799
Other service revenue                                   1 084                474                (63)            1 495

Service revenue                                        12 426              4 479                (99)           16 806
Equipment revenue                                       2 732                 85                (17)            2 800
Non-service revenue                                       285                 56                (45)              296

Revenue                                                15 443              4 620               (161)           19 902

Included in service revenue
Mobile voice                                            5 774              2 424                  -             8 198
Mobile data                                             4 691              1 095                  -             5 786
Mobile messaging                                          607                112                  -               719

Key indicators
South Africa
                                                      30 June           31 March            30 June               Yoy          Quarterly
                                                         2017               2017               2016          % change           % change
Customers(1)(thousand)                                 39 381             37 131             35 112              12.2                6.1
Prepaid                                                34 248             32 000             30 148              13.6                7.0
Contract                                                5 133              5 131              4 964               3.4                  -

Data customers(2)(thousand)                            19 167             19 549             18 054               6.2               (2.0)

Internet of Things connections(3)
(thousand)                                              3 100              2 979              2 515              23.3                4.1

MOU per month(4)                                          125                131                134              (6.7)              (4.6)
Prepaid                                                   115                122                124              (7.3)              (5.7)
Contract                                                  190                190                190                 -                  -

Total ARPU(5) (rand per month)                            103                109                109              (5.5)              (5.5)
Prepaid                                                    58                 61                 60              (3.3)              (4.9)
Contract                                                  393                401                401              (2.0)              (2.0)

Traffic(6) (millions of minutes)                       14 426             14 462             13 939               3.5               (0.2)
Outgoing                                               12 109             12 105             11 575               4.6                  -
Incoming                                                2 317              2 357              2 364              (2.0)              (1.7)

Notes:
1. 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. 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
                                                 30 June       31 March        30 June             Yoy       Quarterly
                                                    2017           2017           2016        % change        % change

Customers(1) (thousand)                           29 936         29 655         26 722            12.0             0.9
Tanzania                                          12 611         12 653         12 060             4.6            (0.3)
DRC                                               10 792         10 388          8 486            27.2             3.9
Mozambique                                         5 147          5 146          4 817             6.9               -
Lesotho                                            1 386          1 468          1 359             2.0            (5.6)

Data customers(2) (thousand)                      13 807         12 997         10 919            26.4             6.2
Tanzania                                           6 767          6 463          5 440            24.4             4.7
DRC                                                3 982          3 705          2 885            38.0             7.5
Mozambique                                         2 470          2 280          2 112            17.0             8.3
Lesotho                                              588            549            482            22.0             7.1

M-Pesa customers(3) (thousand)                    13 272         12 922         10 559            25.7             2.7
Tanzania                                           7 698          7 966          7 467             3.1            (3.4)
DRC                                                2 412          2 086          1 357            77.7            15.6
Mozambique                                         2 745          2 474          1 478            85.7            11.0
Lesotho                                              417            396            257            62.3             5.3

MOU per month(4)
Tanzania                                             153            146            158            (3.2)            4.8
DRC                                                   44             44             50           (12.0)              -
Mozambique                                           130            130            109            19.3               -
Lesotho                                               81             79             79             2.5             2.5

Total ARPU(5) (rand per month)
Tanzania                                              35             34             40           (12.5)            2.9
DRC                                                   42             37             58           (27.6)           13.5
Mozambique                                            48             40             56           (14.3)           20.0
Lesotho                                               64             54             62             3.2            18.5

Total ARPU(5) (local currency per month)
Tanzania (TZS)                                     5 946          5 674          5 876             1.2             4.8
DRC (USD)                                            3.2            2.8            3.9           (17.9)           14.3
Mozambique (MZN)                                     228            209            207            10.1             9.1

Notes:
1. 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. Data customers are based on the number of unique users generating billable data traffic during the month. 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. M-Pesa customers are based on the number of unique customers who have generated revenue related to M-Pesa
   during the last three months.
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 customer
   during the period.

Historical financial review
Revenue

                     30 June    31 March  31 December 30 September     30 June     31 March  31 December
Rm                      2017        2017         2016         2016        2016         2016         2015

South Africa          16 654      16 141       17 142       16 003      15 443       15 640       16 347
International          4 240       3 985        4 316        4 429       4 620        5 086        4 740
Corporate and
eliminations            (209)       (221)        (236)        (183)       (161)        (173)        (115)

Group revenue         20 685      19 905       21 222       20 249      19 902       20 553       20 972


Revenue yoy % change for the quarter ended
                                                               Reported                        Normalised*
%                                             30 June 30 September 31 December      31 March       30 June
                                                 2017         2016        2016          2017          2017

South Africa                                      7.8          3.2         4.9           3.6           7.8
International                                    (8.2)       (21.6)       (8.9)         (0.1)          8.0
Corporate and eliminations                      (29.8)       (27.7)     (105.2)        (34.6)        (29.8)

Group revenue                                     3.9         (3.1)        1.2           2.5           7.7

Service revenue


                     30 June    31 March  31 December 30 September     30 June    31 March  31 December
Rm                      2017        2017         2016         2016        2016        2016         2015

South Africa          13 123     13 198        13 410       13 037      12 426      12 503       12 707
International          4 122      3 844         4 206        4 246       4 479       4 903        4 581
Corporate and           (147)      (167)         (173)        (121)        (99)       (111)         (64)
eliminations
Group service         17 098     16 875        17 443       17 162      16 806      17 295       17 224
revenue


Service revenue yoy % change for the quarter ended
                                                                  Reported                     Normalised*
%                                             30 June 30 September 31 December     31 March        30 June
                                                 2017        2016         2016         2017           2017

South Africa                                      5.6         5.6          5.5          5.6            5.6
International                                    (8.0)      (21.6)        (8.2)        (2.0)           8.0
Corporate and eliminations                      (48.5)      (50.5)      (170.3)       (23.5)         (48.5)
Group service revenue                             1.7        (2.4)         1.3          3.5            5.9


Historical key indicators
South Africa

                     30 June     31 March    31 December    30 September       30 June       31 March      31 December
                        2017         2017           2016            2016          2016           2016             2015

Customers(1)          39 381       37 131         36 375          35 685        35 112         34 178           34 103
(thousand)
Prepaid               34 248       32 000         31 188          30 641        30 148         29 265           29 206
Contract               5 133        5 131          5 187           5 044         4 964          4 913            4 897

Data                  19 167       19 549         19 261          18 158        18 054         18 056           18 353
customers(2)
(thousand)

Internet               3 100        2 979          2 810           2 626          2 515         2 264            2 174
of Things
connections(3)
(thousand)

MOU per                  125          131            145             136           134            134              138
month(4)
Prepaid                  115          122            138             127           124            125              129
Contract                 190          190            187             192           190            191              192

Total ARPU(5)            103          109            114             112           109            112              116
(rand per
month)
Prepaid                   58           61             64              63            60             62               66
Contract                 393          401            414             415           401            404              409

Traffic(6)            14 426       14 462         15 550          14 458        13 939         13 699           13 964
(millions of
minutes)
Outgoing              12 109       12 105         13 158          12 062        11 575         11 352           11 516
Incoming               2 317        2 357          2 392           2 396         2 364          2 347            2 448

Notes:
1. 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. 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

                   30 June       31 March     31 December    30 September        30 June       31 March     31 December
                      2017           2017            2016            2016           2016           2016            2015
Customers(1)        29 936         29 655          28 794          27 918         26 722         27 127          31 130
(thousand)
Tanzania            12 611         12 653          12 419          12 354         12 060         12 375          12 714
DRC                 10 792         10 388           9 702           9 204          8 486          8 527          11 814
Mozambique           5 147          5 146           5 208           4 987          4 817          4 826           5 240
Lesotho              1 386          1 468           1 465           1 373          1 359          1 399           1 362

Data                13 807         12 997          12 620          11 965         10 919         10 055          11 231
customers(2)
(thousand)
Tanzania             6 767          6 463           6 484           6 021          5 440          5 415           5 727
DRC                  3 982          3 705           3 354           3 191          2 885          1 996           2 806
Mozambique           2 470          2 280           2 196           2 236          2 112          2 112           2 178
Lesotho                588            549             586             517            482            532             520

M-Pesa              13 272         12 922          12 032          10 994         10 559          9 224           9 735
customers(3)
(thousand)
Tanzania             7 698          7 966           7 488           7 035          7 467          7 030           7 964
DRC                  2 412          2 086           1 969           1 662          1 357            866             825
Mozambique           2 745          2 474           2 220           1 916          1 478          1 104             745
Lesotho                417            396             355             321            257            224             201

MOU per
month(4)
Tanzania               153            146             162             162            158            124             130
DRC                     44             44              48              56             50             40              39
Mozambique             130            130             122             123            109            111             105
Lesotho                 81             79              90              81             79             78              83

Total ARPU(5)
(rand per
month)
Tanzania                35             34              40              40             40             41              39
DRC                     42             37              48              56             58             52              41
Mozambique              48             40              41              44             56             61              54
Lesotho                 64             54              66              63             62             59              65

Total ARPU(5)
(local currency
per month)
Tanzania (TZS)       5 946          5 674           6 279           6 187          5 876          5 631           5 957
DRC (USD)              3.2            2.8             3.4             3.9            3.9            3.3             2.9
Mozambique             228            209             223             223            207            185             180
(MZN)

Notes:
1. 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. Data customers are based on the number of unique users generating billable data traffic during the month. 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. M-Pesa customers are based on the number of unique customers who have generated revenue related to M-Pesa
   during the last three months.
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 customer
    during the period.

Average quarterly exchange rates
                                                30 June      31 March         30 June           Yoy      Quarterly
                                                   2017          2017            2016      % change       % change

USD/ZAR                                           13.21         13.23           15.00         (11.9)          (0.2)
ZAR/MZN                                            4.74          5.28            3.71         (27.8)          10.2
ZAR/TZS                                          169.33        168.63          146.11         (15.9)           0.4
EUR/ZAR                                           14.52         14.09           16.94         (14.3)           3.1


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 nor reported on by the Group's auditors being PriceWaterhouseCoopers Inc.


Year-on-year reconciliation
                                                                          Translation
                                                    Reported(1)   foreign exchange(2)      Normalised*
                                                       % change                   ppt         % change
Revenue
Group                                                       3.9                   3.8              7.7
International                                              (8.2)                 16.2              8.0

Service revenue
Group                                                       1.7                   4.2              5.9
International                                              (8.0)                 16.0              8.0

Data revenue
Group                                                      15.1                   3.2             18.3
International                                               2.2                  16.7             18.9

M-Pesa revenue
International                                               7.4                  17.5             24.9


Quarter-on-quarter reconciliation
                                                                          Translation
                                                    Reported(3)   foreign exchange(4)      Normalised*
                                                       % change                   ppt         % change
Revenue
Group                                                       3.9                  (0.4)             3.5
International                                               6.4                  (1.9)             4.5
Service revenue
Group                                                       1.3                  (0.4)             0.9
International                                               7.2                  (1.9)             5.3

Notes:
1. The reported percentage change relates to the quarter to date year-on-year percentage growth
    between 30 June 2016 and 30 June 2017. 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 above.
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 2017 average rate (which is derived by dividing the individual
   subsidiary's translated rand value with the functional currency for the quarter) to 30 June 2016 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 above.
3. The reported percentage change relates to the quarter to date quarter on quarter percentage growth
    between 31 March 2017 and 30 June 2017. 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 above.
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 30 June 2017 average rate (which is derived by dividing the individual
   subsidiary's translated rand value with the functional currency for the quarter) to 31 March 2017 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 above.

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 announcement which sets out the annual results for Vodacom Group Limited for the three months ended 30 June 2017,
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, but are not limited to, statements with respect to: expectations
regarding the Group's financial condition or results of operations including the confirmation of the Group's targets,
expectations for the Group's future performance generally; expectations regarding the operating environment and market
conditions and trends; intentions and expectations regarding the development, launch and expansion of products, services
and technologies; growth in customers and usage; expectations regarding spectrum licence acquisitions; expectations
regarding EBIT, capital additions, free cash flow, and foreign exchange rate movements; and expectations regarding the
integration or performance of current and future investments, associates, joint ventures, non-controlled interests and newly
acquired businesses.
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" (including in their
negative form). 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 may or may not occur in the future. There are
a number of factors that could cause actual results and developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are not limited to, the following: changes in economic or
political conditions in markets served by operations of the Group; greater than anticipated competitive activity; higher than
expected costs or capital expenditures; slower than expected customer growth and reduced customer retention; changes in
the spending patterns of new and existing customers; the Group's ability to expand its spectrum position or renew or obtain
necessary licences; the Group's ability to achieve cost savings; the Group's ability to execute its strategy in fibre deployment,
network expansion, new product and service roll-outs, mobile data, Enterprise and broadband; changes in foreign exchange
rates, as well as changes in interest rates; the Group's ability to realise benefits from entering into partnerships or joint
ventures and entering into service franchising and brand licensing; unfavourable consequences to the Group of making
and integrating acquisitions or disposals; changes to the regulatory framework in which the Group operates; the impact of
legal or other proceedings; loss of suppliers or disruption of supply chains; developments in the Group's financial condition,
earnings and distributable funds and other factors that the Board takes into account when determining levels of dividends;
the Group's ability to satisfy working capital and other requirements; changes in statutory tax rates or profit mix; and/or
changes in tax legislation or final resolution of open tax issues.
All subsequent written or oral forward-looking statements attributable to the Company, to any member of the Group or to
any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances
can be given that the forward-looking statements in this document will be realised. Subject to compliance with applicable
law and regulations, Vodacom does not intend to update these forward-looking statements and does not undertake any
obligation to do so.

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

Date: 20/07/2017 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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