VODACOM GROUP LIMITED - Trading update for the quarter ended 30 June 2018

Release Date: 24/07/2018 07:05
Code(s): VOD
 
Wrap Text
Trading update for the quarter ended 30 June 2018

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 2018

24 July 2018

Highlights

- Group service revenue growth, excluding currency translation effects, up 5.2%*, reported up 4.2%^.
- Added 2.5 million customers during the quarter, 1.5 million in South Africa and 1.0 million in our International operations, to reach 76.5 million customers across the Group, up
  10.3% year on year.
- Group data revenue increased 9.9%*, reported up 9.6%^. International data revenue, excluding currency translation effects, up 14.7%* and 11.3%^ reported.
- South Africa service revenue grew 4.9%^ to R13.8 billion, supported by improved customer revenue growth trends and customer gains.
- International service revenue increased 4.1%^; adjusted growth was 12.4%** to R4.3 billion.
- M-Pesa revenue growth, excluding currency translation effects, was 23.8%*; reported 18.1%^.

                                                             Quarter ended       Quarter ended                 YoY % change IAS 18
                                                              30 June 2018        30 June 2018
Rm                                                                 IFRS 15              IAS 18            Reported^         Normalised*

Group service revenue                                               16 773              17 813                 4.2                 5.2
 South Africa                                                       12 736              13 760                 4.9                 4.9
 International                                                       4 275               4 292                 4.1                 8.3
Group revenue                                                       20 653              21 553                 4.2                 5.0
 South Africa                                                       16 515              17 415                 4.6                 4.6
 International                                                       4 424               4 424                 4.3                 8.5

Following the prospective adoption of IFRS 15. Revenue from Contracts with Customers on 1 April 2018, the Group's results for the quarter ended 30 June 2018 are on an IFRS 15
basis, whereas the results for the quarter ended 30 June 2017 are (as previously reported) on an IAS 18 basis. Comparisons between the two bases of reporting are not meaningful
and to ensure appropriate disclosure during the period of transition onto IFRS 15, revenue for the quarter ended 30 June 2018 has been disclosed on both an IFRS 15 and IAS 18
basis and our commentary describing our operating performance in the Operating Review has been provided solely on an IAS 18 basis. The accounting standard applied is clearly
marked in the heading of relevant columns in the news release.

Results for Vodacom's associate investment in Safaricom are disclosed on a bi-annual basis and therefore are not included in this quarterly update.

Shameel Joosub, Vodacom Group CEO commented:
The strong momentum from our annual results has carried Vodacom into a pleasing first quarter. Group revenue and service revenue increased 5.0%* and 5.2%* respectively. We
were delighted to add 2.5 million customers over the quarter, reaching 76.5 million across the Group (excluding Safaricom).

In South Africa, despite a tougher economic environment, we grew service revenue by 4.9%^, supported by customer growth of 9.5% to reach 43.1 million customers. This was
driven by our 'Big Data' led innovations, which contributed to robust demand for personalised bundles, offering customers better value for money. We sold over 600 million bundles
this quarter resulting in an effective price reduction of 10% on voice minutes and 17% for data megabytes. This is evidence of our commitment to lowering the cost to
communicate. We have also launched some exciting consumer propositions, including our new Vodacom Ticket, which allows customers to save up to 50% on data for social
media, video, music and gaming. Data revenue grew close to 10%, a pleasing performance off a bigger base, contributing more than 44% to service revenue.

In our International operations, service revenue increased 12.4%** to R4.3 billion, driven largely by M-Pesa and data adoption. M-Pesa continues to grow strongly and we now have
12.7 million customers(1) (excluding Safaricom) using this service.

We remain focused on network investment as a key competitive differentiator, expanding our 4G coverage to 81.5% up from 75.9% a year ago.

Looking ahead, we expect the implementation of the ICASA End-user Subscriber Charter Regulations, in relation to out-of-bundle usage, to have a modest impact on data revenue
growth. We expect this to be mitigated in the short term by continued uptake of data bundles and strong elasticity in demand for these services. We are encouraged by the
improved performance in our International business. We will continue to strengthen our customer value proposition across all operations as a leading digital company.

*  Amounts marked with an * in this document represent normalised growth which presents performance on a comparable IAS 18 basis. This excludes foreign currency fluctuation
   on a constant currency basis (using the current quarter as the base). Refer below for a reconciliation of adjustments.
** Growth adjusted: During the 2nd quarter of the previous year, we reclassified the foreign exchange difference between USD and CDF sales to be netted off on the corresponding
   revenue line. The adjustment was USD11.4 million for Q1 2017. Q1 2017 was not restated for this change. Refer below for a reconciliation of adjustments.
^  Reported growth is calculated on an IAS 18 basis, reflecting a like-for-like comparison between the current and comparative reporting period.

   All growth rates quoted are year-on-year and refer to the quarter ended 30 June 2018 compared to the quarter ended 30 June 2017, which are based on the IAS 18 accounting
   principles, unless stated otherwise.

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

(1) 30 day active M-Pesa customers.


Operating review

South Africa

Service revenue increased 4.9%^ to R13.8 billion, supported by the improvement in customer revenue growth trends, despite a subdued macroeconomic and consumer spending
environment.

Customers increased 9.5% reaching 43.1 million, after adding 1.4 million prepaid customers and 75 000 net contract additions.

Prepaid customer revenue growth was good at 5.5%. This was supported by continued strong customer growth of 10.0%, which was slightly offset by lower ARPUs as we attract new
customers with lower spend levels, on average, than the current base.

Contract customer revenue growth has recovered from declines in previous quarters, to grow at 0.8%. The growth was supported by improved performance in the Enterprise
segment, reflecting customer and ARPU gains from recent contract sign ups and improved usage. Overall contract customers increased by 5.9%. Contract ARPU declined 2.3%, an
improvement in trend from the last two quarters, as customers continue to grow into their "more data" contracts and benefits from higher value ARPU customers in Enterprise.

Voice revenue decline remained low at 2.6%, reflecting the success of our personalised voice bundle strategy through our ‘Just 4 You' platform while reducing the effective price
per minute by 10.0%.

Data revenue grew 9.4% to R6.1 billion, contributing 44.1% (2018: 42.2%) of service revenue. We continue to drive bundle engagement aggressively to ensure a worry free
experience for our customers. The success of this pricing strategy, making data more affordable for our customers, has resulted in a 32.2% increase in data bundle sales and an
overall effective price per MB reduction of 17.1%. We continue to grow our current 4G data users, adding 739 000 4G customers in the quarter reaching 8.1 million customers.
Vodacom Ticket was launched during June, which provides customers with data bundles that have more inclusive value. This allows us to drive greater uptake on URL-specific
services with worry free usage.

Fixed-line revenue growth was 22.0% as we continue to grow connectivity revenue for business and homes. Internet of Things (IoT) connections increased 25.2% to 3.9 million.
We spent R2 billion on capital expenditure, focusing on new sites, upgrades and capacity to improve network quality and performance. These efforts have resulted in Vodacom
leading in data speed benchmarks . This also allowed us to expand our 4G coverage to 81.5%, up from 75.9% a year ago. We also expanded our rural coverage and made progress to
improve backhaul performance and capacity by increasing the proportion of self-provided high capacity sites from 90.1% a year ago to 92.4%.

International

Service revenue increased 12.4%**, reflecting continued strong execution in all markets. Reported growth was up 4.1%^.

Tanzania service revenue growth was in line with the previous quarter, despite continued pricing pressure. DRC, Mozambique and Lesotho have made solid progress on their M-Pesa
businesses, and data continues to perform well.

We added 987 000 customers in the quarter, reaching 33.4 million, up 11.4%. This was supported by good customer growth in the DRC and Mozambique.

Data revenue increased, excluding currency translation effects, by 14.7%*, reported up 11.3%, supported by a 17.3% increase in data customers to 17.5 million. The demand for
data remains strong with data traffic up 53.3%. We launched 4G in the DRC during the period, following the award of a 4G licence. We now offer 4G services in all our markets except
Mozambique.

Our mobile money service continues to grow across all operations. M-Pesa revenue was up 23.8%*, excluding currency translation effects, to R634 million, reported up 18.1%.
Customers increased by 26.0% to 12.7 million. Tanzania celebrated 10 years of M-Pesa with 6.8 million customers, up 14.7%. We continue to improve the eco-system, stimulating
activity on the platform. In Tanzania, the 'Lipa kwa' our merchant payment solution has over 7 900 merchants now actively trading on the platform; the service has also recently
been added in Mozambique. M-Pesa revenue now contributes 14.8% to International service revenue.

Capital expenditure increased 8.2% to R552 million, which 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.

We were awarded a 4G licence in the DRC during the period and there are currently 80 sites live in three major cities. During June, Tanzania held a 4G spectrum auction, where we
secured 2x10MHz of 700MHz. This spectrum is key in enabling us to extend and improve coverage and capacity, and thereby improve the customer experience. The combined cost
of the 4G licence in the DRC and 4G spectrum in Tanzania was USD32 million.

Results for Vodacom's associate investment in Safaricom are disclosed on a bi-annual basis and therefore are not included in this quarterly update.

(1) As measured by independent third-parties, Atio and Ookla, for the period ending 30 June 2018.

Regulatory matters

Electronic Communications Amendment Bill (ECA Bill) - South Africa

The Ministry of Telecommunications and Postal Services (Ministry) published a White Paper, as approved by cabinet, on 2 October 2016. On 17 November 2017, the Department of
Telecommunications and Postal Services (DTPS) gazetted amendments to the Electronic Communications Act as a Bill. As part of a public participation process, we reiterated our
support for a hybrid model, establishing a competitive wholesale open access network (WOAN) alongside the assignment of spectrum to the current players. On the basis of an
independent economic impact assessment, we also noted the negative impacts the draft legislation could have on investment in the sector, GDP growth and job creation. The
Ministry will consider all submissions before submitting a revised Bill to cabinet for approval to be tabled in Parliament for further consultation and debate.

Amendment to End-user and Subscriber Service Charter Regulations - South Africa

On 30 April 2018, the Independent Communications Authority of South Africa (ICASA) published final amendments to the End-User and Subscriber Service Charter Regulations
with the main objective to address consumer concerns on out-of-bundle charges and expiry rules.

These final amendments followed a consultation process between ICASA and industry stakeholders. The regulations require the following:
- Voice, SMS and data bundle depletion notices are to be sent to customers at 50%, 80% and 100% depletion thresholds;
- Operators are not allowed to default customers to out-of-bundle charges on depletion of data bundles, unless specific opt-in instructions have been received from the customer;
  and
- Operators should allow customers the option to roll over unused data before expiry and also provide customers with an option to transfer data to other customers
  on the same network.

The effective date has been suspended pending the final determination of an urgent application launched by other operators in the High Court.

ICASA priority market review - South Africa

In June 2017, ICASA gave notice of its intention to conduct an inquiry to identify priority markets in the Electronic Communications Sector (ECS). The purpose of the enquiry is to
identify relevant wholesale and retail markets or market segments in the ECS that are generally prone to ex ante regulations, and to determine from these markets and market
segments those that the Authority intends to prioritise for market reviews and potential regulation. These studies are in line with similar processes in other markets around the
world. The final phase of the inquiry would be the publication of a findings document, which is expected in the second half of FY19.


Competition Commission investigation into complaint on the National Treasury government transversal contract for mobile communication services - South Africa

On 14 March 2016, National Treasury issued a tender for the supply and delivery of mobile communication services to national and provincial government departments for the
period 15 September 2016 to 31 August 2020. Vodacom was selected as the preferred supplier on a non-exclusive basis after the other bidders were eliminated at different phases
of the competitive bidding process. The Competition Commission has initiated an investigation against Vodacom Group for alleged abuse of dominance in terms of section 8 of the
Competition Act. The tender process was initiated and controlled by National Treasury through strict governance procedures, and we are confident that we followed due process in
a fiercely contested and transparent bidding process.

Positive conclusion of ICASA and competition commission investigation of Rain agreements - South Africa

In 2016, Vodacom and Rain (formerly WBS) announced agreements for facilities leasing, services and Vodacom roaming on Rain's network. Rain signed separate facilities leasing
and services agreements with Vodacom, in order to lease passive network infrastructure from Vodacom, which they require to roll out a 4G network. Vodacom signed a roaming
agreement with Rain, whereby Vodacom customers will be able to roam on Rain's 4G network.

The main benefit of the agreements for Vodacom is to improve the experience for its customers by offloading data traffic onto Rain's network. This is an important mechanism to
manage future demand for data services, which would have otherwise been challenging in a potentially spectrum constrained environment.

The agreements have been subject to review by both the Competition Commission and ICASA, both these authorities have now confirmed and communicated that their respective
investigations have not indicated anything of concern, and that they have therefore approved the agreements between Vodacom and Rain.

Financial review

Revenue for the quarter ended

                                                            30 June 2018                   IAS 18            IAS 18           YoY % change IAS 18
                                                                                         31 March           30 June
                                                       IFRS 15           IAS 18              2018              2017         Reported^      Normalised*
Rm                                                                                                        

South Africa                                            16 515           17 415            17 875            16 654              4.6              4.6
International                                            4 424            4 424             4 167             4 240              4.3              8.5
Corporate and eliminations                                (286)            (286)             (314)             (209)           (36.8)           (36.8)

Revenue                                                 20 653           21 553            21 728            20 685              4.2              5.0

Service revenue for the quarter ended

                                                            30 June 2018                   IAS 18            IAS 18           YoY % change IAS 18
                                                                                         31 March           30 June
Rm                                                     IFRS 15           IAS 18              2018              2017         Reported^      Normalised*
                                                                                                          
South Africa                                            12 736           13 760            13 891            13 123              4.9              4.9
International                                            4 275            4 292             3 946             4 122              4.1              8.3
Corporate and eliminations                                (238)            (239)             (261)             (147)           (62.6)           (62.6)

Service revenue                                         16 773           17 813            17 576            17 098              4.2              5.2

Revenue for the quarter ended 30 June 2018

IAS 18 basis                                                               YoY %                             YoY %      Corporate/                              YoY %
Rm                                                South Africa            Change    International           Change    Eliminations            Group            change

Mobile contract revenue                                  5 939               0.8              269              5.1              (2)           6 206               1.0
Mobile prepaid revenue                                   5 843               5.5            3 322              6.7               1            9 166               6.0

Customer service revenue                                11 782               3.1            3 591              6.6              (1)          15 372               3.9

Mobile interconnect                                        491              34.9              294             (4.9)           (146)             639              10.8
Fixed service revenue                                      622              22.0              373             (8.8)            (85)             910               4.1
Other service revenue                                      865               5.0               34             (5.6)             (7)             892               4.3

Service revenue                                         13 760               4.9            4 292              4.1            (239)          17 813               4.2
Equipment revenue                                        3 067              (4.0)              68            (11.7)             (4)           3 131              (3.6)
Non-service revenue                                        588              75.5               64             56.1             (43)             609              79.6

Revenue                                                 17 415               4.6            4 424              4.3            (286)          21 553               4.2

Included in service revenue
(IAS 18 basis)
Mobile voice                                             5 386              (2.6)           2 196              2.3              (1)           7 581              (1.3)
Mobile data                                              6 064               9.4              648             11.3               -            6 713               9.6
Mobile messaging                                           498             (15.6)             122             14.0               -              620             (11.0)
M-Pesa revenue                                               -                 -              634             18.1               -              634              18.1

IFRS 15 basis
Rm

Service revenue                                         12 736               5.0            4 275              4.1            (238)          16 773               4.2
Equipment revenue                                        3 160              (4.6)              85             (7.6)             (3)           3 242              (4.1)
Non-service revenue                                        619              81.5               64             56.1             (45)             638              85.5

Revenue                                                 16 515               4.6            4 424              4.3            (286)          20 653               4.2


Revenue for the quarter ended 30 June 2017

IAS 18 basis                                                                           Corporate/
Rm                                                South Africa     International     Eliminations            Group

Mobile contract revenue                                  5 889               256               (2)           6 143
Mobile prepaid revenue                                   5 536             3 112                1            8 649

Customer service revenue                                11 425             3 368               (1)          14 792

Mobile interconnect                                        364               309              (96)             577
Fixed service revenue                                      510               409              (45)             874
Other service revenue                                      824                36               (5)             855
Service revenue                                         13 123             4 122             (147)          17 098

Equipment revenue                                        3 196                77              (25)           3 248
Non-service revenue                                        335                41              (37)             339

Revenue                                                 16 654             4 240             (209)          20 685

Included in service revenue
(IAS 18 basis)
Mobile voice                                             5 532             2 147               (1)           7 678
Mobile data                                              5 542               582                -            6 124
Mobile messaging                                           590               107                -              697
M-Pesa revenue                                               -               537                -              537

IFRS 15 basis
Rm

Service revenue                                         12 133             4 107             (146)          16 094
Equipment revenue                                        3 311                92              (24)           3 379
Non-service revenue                                        341                41              (38)             344

Revenue                                                 15 785             4 240             (208)          19 817

Key indicators

South Africa

                                                       30 June         31 March           30 June                YoY         Quarterly
                                                          2018             2018              2017           % change          % change

Customers(1) (thousand)                                 43 107           41 635            39 381                9.5               3.5
Prepaid                                                 37 671           36 275            34 248               10.0               3.8
Contract                                                 5 436            5 360             5 133                5.9               1.4

Data customers(2) (thousand)                            20 434           20 347            19 167                6.6               0.4

Internet of Things connections(3) (thousand)             3 881            3 628             3 100               25.2               7.0

MOU per month(4)                                           123              124               125               (1.6)             (0.8)
Prepaid                                                    111              113               115               (3.5)             (1.8)
Contract                                                   201              199               190                5.8               1.0

Traffic(5) (millions of minutes)                        15 628           15 385            14 426                8.3               1.6
Outgoing                                                13 333           13 101            12 109               10.1               1.8
Incoming                                                 2 295            2 284             2 317               (0.9)              0.5

Total ARPU(6) (rand per month) - IAS18 basis                96               99               103               (6.8)             (3.0)
Prepaid                                                     55               57                58               (5.2)             (3.5)
Contract                                                   384              381               393               (2.3)              0.8

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. 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.
6. 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.


International

                                                      30 June         31 March          30 June              YoY        Quarterly
                                                         2018             2018             2017         % change         % change

Customers(1) (thousand)                                33 403           32 415           29 986             11.4              3.0
Tanzania                                               13 277           12 899           12 611              5.3              2.9
DRC                                                    12 279           11 821           10 792             13.8              3.9
Mozambique                                              6 255            6 108            5 147             21.5              2.4
Lesotho                                                 1 590            1 587            1 436             10.7             (0.2)

Data customers(2) (thousand)                           17 472           16 573           13 807             26.5              5.4
Tanzania                                                7 682            7 345            6 767             13.5              4.6
DRC                                                     5 150            4 825            3 982             29.3              6.7
Mozambique                                              3 952            3 730            2 470             60.0              6.0
Lesotho                                                   688              673              588             17.0              2.2

30-day active M-Pesa customers(3) (thousand)           12 711           11 757           10 089             26.0              8.1
Tanzania                                                6 805            6 369            5 934             14.7              6.8
DRC                                                     2 127            1 891            1 494             42.4             12.4
Mozambique                                              3 367            3 109            2 343             43.7              8.3
Lesotho                                                   412              388              318             29.6              6.2

MOU per month(4)
Tanzania                                                  177              161              153             15.7              9.9
DRC                                                        38               36               44            (13.6)             5.6
Mozambique                                                129              144              130             (0.8)           (10.4)
Lesotho                                                    68               71               79            (13.9)            (4.2)

Total ARPU(5) (rand per month) - IAS 18 basis
Tanzania (TZS)                                             33               31               35             (5.7)             6.5
DRC (USD)                                                  37               34               42            (11.9)             8.8
Mozambique (MZN)                                           51               47               48              6.3              8.5
Lesotho                                                    63               61               62              1.6              3.3

Total ARPU(5) (local currency per month) - 
IAS 18 basis
Tanzania (TZS)                                          5 984            5 734            5 946              0.6              4.4
DRC (USD)                                                 3.0              2.9              3.2             (6.3)             3.4
Mozambique (MZN)                                          242              238              228              6.1              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. The Lesotho customer numbers have been restated to align
   with Group policy.
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 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 month.
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.
   The Lesotho MOU's have been restated in line with the restated customer numbers. (Refer to note 1)
5. Total ARPU is calculated by dividing the average monthly service revenue by the average monthly active customer during the period. The Lesotho ARPU's have been restated in
   line with restated customer numbers. (Refer to note 1)


Historical financial review

Revenue

IFRS 15
Rm                                                  30 June

2018
South Africa                                         16 515
International                                         4 424
Corporate and eliminations                             (286)

Group revenue                                        20 653

IAS 18                                              30 June    31 March     31 December    30 September       30 June    31 March    31 December
Rm                                                     2018        2018            2017            2017          2017        2017           2016

South Africa                                         17 415      17 875          18 211          17 227        16 654      16 141         17 142
International                                         4 424       4 167           4 719           4 334         4 240       3 985          4 316
Corporate and eliminations                             (286)       (314)           (283)           (251)         (209)       (221)          (236)

Group revenue                                        21 553      21 728          22 647          21 310        20 685      19 905         21 222

Revenue YoY % change for the quarter ended
                                                                          Reported^                         Normalised*

IAS 18                                               30 June    31 March    31 December    30 September        30 June
%                                                       2018        2018           2017            2017           2018

South Africa                                             4.6        10.7            6.2             7.6            4.6
International                                            4.3         4.6            9.3            (2.1)           8.5
Corporate and eliminations                             (36.8)      (42.1)         (19.9)          (37.2)         (36.8)

Group revenue                                            4.2         9.2            6.7             5.2            5.0

Service revenue

IFRS 15                                             30 June
Rm                                                     2018

South Africa                                         12 736
International                                         4 275
Corporate and eliminations                             (238)

Group service revenue                                16 773

IAS 18                                              30 June    31 March     31 December    30 September       30 June    31 March    31 December
Rm                                                     2018        2018            2017            2017          2017        2017           2016

South Africa                                         13 760      13 891          14 061          13 547        13 123      13 198         13 410
International                                         4 292       3 946           4 574           4 186         4 122       3 844          4 206
Corporate and eliminations                             (239)       (261)           (233)           (177)         (147)       (167)          (173)

Group service revenue                                17 813      17 576          18 402          17 556        17 098      16 875         17 443

Service revenue YoY % change for the quarter ended

                                                                        Reported^                           Normalised*

IAS 18                                               30 June    31 March    31 December    30 September        30 June
%                                                       2018        2018           2017            2017           2018

South Africa                                             4.9         5.3            4.9             3.9            4.9
International                                            4.1         2.7            8.7            (1.4)           8.3
Corporate and eliminations                             (62.6)      (56.3)         (34.7)          (46.3)         (62.6)

Group service revenue                                    4.2         4.2            5.5             2.3            5.2


Historical key indicators

South Africa

                                                       30 June                        31 December      30 September          30 June          31 March      31 December
                                                          2018     31 March 2018             2017              2017             2017              2017             2016

Customers(1) (thousand)                                 43 107            41 635           41 602            40 000           39 381            37 131           36 375
Prepaid                                                 37 671            36 275           36 283            34 762           34 248            32 000           31 188
Contract                                                 5 436             5 360            5 319             5 238            5 133             5 131            5 187

Data customers(2) (thousand)                            20 434            20 347           20 503            19 905           19 167            19 549           19 261

Internet of Things connections(3) (thousand)             3 881             3 628            3 495             3 271            3 100             2 979            2 810

MOU per month(4)                                           123               124              131               128              125               131              145
Prepaid                                                    111               113              120               118              115               122              138
Contract                                                   201               199              202               199              190               190              187

Traffic(5) (millions of minutes)                        15 628            15 385           16 013            15 331           14 426            14 462           15 550
Outgoing                                                13 333            13 101           13 612            12 976           12 109            12 105           13 158
Incoming                                                 2 295             2 284            2 401             2 355            2 317             2 357            2 392

Total ARPU(6) (rand per month) IAS 18 basis                 96                99              102               101              103               109              114
Prepaid                                                     55                57               59                58               58                61               64
Contract                                                   384               381              393               391              393               401              414

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. 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.
6. 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.

International

                                                       30 June          31 March      31 December      30 September          30 June          31 March      31 December
                                                          2018              2018             2017              2017             2017              2017             2016

Customers(1) (thousand)                                 33 401            32 415           32 184            31 170           29 986            29 688           28 811
Tanzania                                                13 277            12 899           12 901            12 857           12 611            12 653           12 419
DRC                                                     12 279            11 821           11 982            11 453           10 792            10 388            9 702
Mozambique                                               6 255             6 108            5 712             5 421            5 147             5 146            5 208
Lesotho                                                  1 590             1 587            1 589             1 439            1 436             1 501            1 482

Data customers(2) (thousand)                            17 472            16 573           16 013            14 755           13 807            12 997           12 620
Tanzania                                                 7 682             7 345            7 317             7 072            6 767             6 463            6 484
DRC                                                      5 150             4 825            4 470             4 175            3 982             3 705            3 354
Mozambique                                               3 952             3 730            3 501             2 904            2 470             2 280            2 196
Lesotho                                                    688               673              725               604              588               549              586

MOU per month(3)
Tanzania                                                   177               161              171               167              153               146              162
DRC                                                         38                36               36                42               44                44               48
Mozambique                                                 129               144              152               144              130               130              122
Lesotho                                                     68                71               85                82               79                78               91

30-day active M-Pesa customers(4) (thousand)            12 711            11 757           11 117            10 755           10 089             9 963            8 848
Tanzania                                                 6 805             6 369            6 266             6 189            5 934             6 198            5 555
DRC                                                      2 127             1 891            1 600             1 613            1 494             1 423            1 203
Mozambique                                               3 367             3 109            2 908             2 625            2 343             2 029            1 804
Lesotho                                                    412               388              343               238              318               313              286

Total ARPU(5) (rand per month)
IAS 18 basis
Tanzania                                                    33                31               39                37               35                34               40
DRC                                                         37                34               39                37               42                37               48
Mozambique                                                  51                47               57                53               48                40               41
Lesotho                                                     63                61               71                66               62                53               67

Total ARPU(5) (local currency per month) IAS 18 basis
Tanzania (TZS)                                           5 984             5 734            6 369             6 295            5 946             5 674            6 279
DRC (USD)                                                  3.0               2.9              2.9               2.8              3.2               2.8              3.4
Mozambique (MZN)                                           242               238              253               244              228               209              223

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. The Lesotho customer numbers have been restated to align
   with Group policy.
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 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.
   The Lesotho MOU's have been restated in line the with restated customer numbers. (Refer to note 1)
4. M-Pesa customers are based on the number of unique customers who have generated revenue related to M-Pesa during the last month.
5. Total ARPU is calculated by dividing the average monthly service revenue by the average monthly active customer during the period. The Lesotho ARPU's have been restated in
   line with the restated customer numbers. (Refer to note 1)


Average quarterly exchange rates

                                                         30 June          31 March           30 June                YoY         Quarterly
                                                            2018              2018              2017           % change          % change

USD/ZAR                                                    12.65             11.95             13.21               (4.2)              5.9
ZAR/MZN                                                     4.74              5.10              4.74                  -              (7.1)
ZAR/TZS                                                   179.60            187.90            169.33                6.1              (4.4)
EUR/ZAR                                                    15.08             14.69             14.52                3.9               2.7
ZAR/KES                                                     7.98              8.52              7.83                1.9              (6.3)

Reconciliation of normalised and adjusted 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.

Reconciliation of normalised and adjusted growth for the quarter ended
30 June 2018

                                                                        Translation
                                                           IAS 18           foreign                       International
                                                         Reported(1)       exchange(2)     Normalised*          One-off(3)       Adjusted**
IAS 18 basis
%                                                        % change               ppt          % change               ppt          % change

Revenue
Group                                                         4.2               0.8               5.0                 -                 -
International                                                 4.3               4.2               8.5                 -                 -

Service revenue
Group                                                         4.2               1.0               5.2               0.9               6.1
International                                                 4.1               4.2               8.3               4.1              12.4

Data revenue
Group                                                         9.6               0.3               9.9                 -                 -
International                                                11.3               3.4              14.7                 -                 -

M-Pesa revenue
International                                                18.1               5.7              23.8                 -                 -

Reconciliation of normalised values for the quarter ended
30 June 2018

                                                                             Impact                         Translation
IAS 18 basis                                                            of adoption                             foreign
Rm                                                        IFRS 15        of IFRS 15  IAS 18 Reported           exchange(2)    Normalised*

Revenue
Group                                                      20 653               900           21 553                  -           21 553
South Africa                                               16 515               900           17 415                  -           17 415
International                                               4 424                 -            4 424                  -            4 424

Service revenue
Group                                                      16 773             1 040           17 813                  -           17 813
South Africa                                               12 736             1 024           13 760                  -           13 760
International                                               4 275                17            4 292                  -            4 292

Data revenue
Group                                                           -                 -            6 713                  -            6 713
International                                                   -                 -              648                  -              648

M-Pesa revenue                                                  -                 -
International                                                   -                 -              634                  -              634

Reconciliation of normalised values for the quarter ended
30 June 2017

                                                                       Translation
IAS 18 basis                                                               foreign                       International
Rm                                                      Reported          exchange(2)    Normalised*           One-off(3)      Adjusted**

Revenue
Group                                                     20 685              (164)          20 521                  -           20 521
International                                              4 240              (164)           4 076                  -            4 076

Service revenue
Group                                                     17 098              (159)          16 939               (144)          16 795
International                                              4 122              (159)           3 963               (144)           3 819

Data revenue
Group                                                      6 124               (17)           6 107                  -            6 107
International                                                582               (17)             565                  -              565

M-Pesa revenue
International                                                537               (25)             512                  -              512

Notes:
1. The reported percentage change relates to the quarter to date year-on-year percentage growth between 30 June 2017 and 30 June 2018 on an IAS 18 basis. 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 2018 average rate (which is derived by dividing the individual subsidiary's translated rand value with the
   functional currency for the quarter) to 30 June 2017 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. During the 2nd quarter of the previous year, we reclassified the foreign exchange difference between USD and CDF sales to be netted off on the corresponding revenue line. 
   The adjustment was USD11.4 million for Q1 2017. Q1 2017 was not restated for this change.

Reconciliation of IAS 18 to IFRS 15 values for the quarter ended
30 June 2017

                                                                            Impact
                                                                       of adoption
Rm                                                        IAS 18        of IFRS 15           IFRS 15

Service revenue
Group                                                     17 098            (1 004)           16 094
South Africa                                              13 123              (990)           12 133
International                                              4 122               (15)            4 107

Equipment revenue
Group                                                      3 248               131             3 379
South Africa                                               3 196               115             3 311
International                                                 77                15                92

Non-service revenue
Group                                                        339                 5               344
South Africa                                                 335                 6               341
International                                                 41                 -                41

Revenue
Group                                                     20 685              (868)           19 817
South Africa                                              16 654              (869)           15 785
International                                              4 240                 -             4 240

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

Trademarks

Vodafone, the Vodafone logo, M-Pesa, Connected Farmer, Vodafone Supernet, Vodafone Mobile Broadband, Vodafone WebBox, Vodafone Passport, Vodafone live!, Power to You,
Vodacom, 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 30 June 2018, 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: 24/07/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story