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VODACOM GROUP LIMITED - Vodacom Group Limited trading update for the quarter ended 31 December 2018

Release Date: 24/01/2019 07:05
Code(s): VOD     PDF:  
Wrap Text
Vodacom Group Limited trading update for the quarter ended 31 December 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)

Vodacom Group Limited trading update for the quarter ended 31 December 2018

24 January 2019

Salient features

- Group revenue up 1.5% (0.7%*) to R23.0 billion# and service revenue up 2.4% (1.6%*) to R18.9 billion#
- Group customers increased 7.1% to 79 million, up 5.4% in South Africa and 9.3% in our International operations
- Group data revenue increased 2.2% to R6.8 billion#; International data revenue grew 25.4% (21.3%*)
- South Africa service revenue declined 0.9% to R13.9 billion#, impacted by pricing transformation and customers optimising
  promotional data bundle allocations
- International service revenue increased 13.2% (9.4%*) to R5.2 billion#, driven by strong commercial execution

                                                                      Quarter ended 31 December                          % change

                                                                      2018            2018            2017                            IAS 18
Rm                                                                 IFRS 15          IAS 18#         IAS 18           IAS 18       Normalised*

Group service revenue                                               17 874          18 850          18 402              2.4              1.6
 South Africa                                                       12 975          13 932          14 061             (0.9)            (0.9)
 International                                                       5 160           5 179           4 574             13.2              9.4
Group revenue                                                       22 172          22 977          22 647              1.5              0.7
 South Africa                                                       17 172          17 974          18 211             (1.3)            (1.3)
 International                                                       5 312           5 315           4 719             12.6              8.8

Following the prospective adoption of IFRS 15: Revenue from Contracts with Customers on 1 April 2018, the Group's results for the quarter
ended 31 December 2018 are on an IFRS 15 basis, whereas the results for the quarter ended 31 December 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, results for the quarter ended 31 December 2018 have been disclosed on both an IFRS 15 and
IAS 18 basis. 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 trading update.

Shameel Joosub, Vodacom Group CEO commented:

A strong performance in our International operations helped to offset the slowdown in South Africa during the quarter. Growth in revenue
and service revenue at a Group level increased by 1.5% and 2.4% respectively. Excluding Safaricom, we added 198 000 customers in the
three-month period and now serve 79 million across the Group, having added a healthy 5.2 million customers to the Vodacom network in
the past year.

In South Africa, service revenue declined 0.9%, impacted by the effects of our pricing transformation strategy in order to reduce the cost to
communicate, as well as the transitioning of traffic between our roaming partners. We implemented a number of generous promotions in
the quarter, including our SummerGigs campaign, in addition to the introduction of lower-priced bundled offers during the course of 2018.
These efforts have impacted data revenue growth, as it did not yield the expected elasticity given a tougher than anticipated consumer
spending environment. However, our proactive efforts to keep customers in-bundle have reduced our future exposure to out of bundle
revenues.

In our International operations, service revenue increased by 13.2% on the back of sustained data revenue growth and M-Pesa's continued
success. Our International portfolio (excluding Safaricom) now contributes 27.5% to overall Group service revenue. The significant increase
in customers in the quarter and strong commercial execution contributed to data revenue growth of 25.4% and to the 30.3% growth
produced by M-Pesa.

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

All growth rates quoted are year-on-year and refer to the quarter ended 31 December 2018 compared to the quarter ended 
31 December 2017, which are based on IAS 18 accounting principles, unless stated otherwise.

Certain financial information presented in this results announcement constitutes pro-forma financial information in terms of the JSE
Listings Requirements. The applicable criteria on the basis of which this pro-forma financial information has been prepared is set out in the
supplementary information below. The pro-forma financial information includes:

- Financial information, on a comparable IAS 18 basis, for the quarter ended 31 December 2018, marked as '#' in this document.
- 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 reporting period as base).

The pro-forma financial information has not been audited or reviewed or otherwise reported on by external auditors.

Looking ahead, we will be implementing the End-User Subscriber Service Charter Regulations on 1 March, which will drag on data revenue
growth in the near-term. However, we are particularly encouraged by the positive momentum on the regulatory front in South Africa
following firm commitments by Government and the regulator to stage an auction of '4G spectrum' in the early part of this calendar year,
which together with the success of our pricing transformation strategy support the medium term outlook for data revenue growth. With
an enhanced M-Pesa platform and high speed 4G now available in all our International markets, we expect the solid performance in these
operations to continue gaining momentum.

Operating review

South Africa (IAS 18 commentary)

Service revenue declined by 0.9% (flat adjusting for the transition between national roaming partners and the change in call termination
rates), impacted by customers optimising promotional data as part of our Summer campaign and a subdued consumer spending
environment. Revenue fell by 1.3% following lower growth in equipment revenue, with device sales negatively impacted by the weaker rand
against the US dollar.

Customer numbers were up 5.4%. Prepaid customer growth was resilient, while efforts to reduce once-off use of SIM cards started to take
effect, resulting in lower gross additions in the quarter. During the period, we gained 86 000 contract customers to 5.6 million, up 5.7% yoy,
supported by gains in both the Consumer and Enterprise segments.

Contract customer service revenue was down 2.7%, impacted by reduced out-of-bundle data spend, as well as customers continuing to
migrate to more inclusive value contracts as part of our pricing transformation strategy. In the period we have also seen more customers
selecting from our lower value packages in order to control their spend, in the context of the weaker economic environment.

Prepaid customer service revenue grew 0.8%, lower than the previous quarters, with increased number of customer opting for lower priced
bundles with shorter validity periods, especially in data.

Voice revenue remained resilient, declining by only 0.5%, stimulated by strong demand supported by our Airtime Advance product, which
makes it easier to buy airtime when a customer is not close to traditional channels.

Data revenue was flat on the prior year, as customers used data rewards from our Summer campaign to offset their usual spend. Utilisation
remains encouragingly strong, with data traffic up 41.4%. Active smart devices on the network were up 13.3% to 20.2 million, with average
gigabytes per smart device increasing by 31.9% to 1.1GB. 4G customers increased 40.5% to 9.2 million. We sold 209 million data bundles
this quarter, as we continue to migrate customers to more in-bundle usage. We are managing out-of-bundle spend, with more inclusive
value contracts and affordable data bundles with shorter validity periods, both of which are increasing in popularity with customers. The
long-term benefit from this pricing transformation, is expected to offset the short-term growth impacts as customers migrate to offers with
lower effective rates, despite lower elasticity currently being experienced in the market.

Our platform strategy, designed to stimulate reasons to consume data, is gaining momentum. Our Videoplay platform now has over 
700 000 active users paying for services, and our recently launched music platform, Muze, is steadily gaining customers.

Fixed line service revenue grew 11.3% with strong growth in wholesale transit revenue. Internet of Things (IoT) connections increased
24.0% to 4.3 million. We have started the process of migration between Cell C and Telkom roaming on our network and are expecting
increased traffic from Telkom to start offsetting the reduced Cell C traffic within the next couple of quarters.

During this quarter, our capital expenditure spend of R2.6 billion was focused on increasing our network coverage and enhancing our IT
systems. Our data network reaches 99.5% of the population on 3G and 90% on 4G.

We maintained our lead on Net Promoter Score to our nearest competitor by 7ppts, based on best network performance, service and value.

International (IAS 18 commentary)

Overall, our International operations performed well, with, improved trends in Tanzania and strong growth in Mozambique and the DRC.

Service revenue growth in our International operations, which accounts for 27.5% of Group service revenue, remained robust at 13.2%
(9.4%*), underpinned by our strategic drivers of M-Pesa and data growth. Our mobile network operations, excluding Vodacom Business
Africa, grew 15.2% (11.1%*).

We added 449 000 customers in the quarter, reaching 35.2 million, up 9.3% yoy. We continue with our efforts to improve customer
registration processes in all our markets.

With high speed 4G now available in all markets, data revenue grew 25.4% (21.3%*) driven by a 15.7% increase in data customers to 
18.5 million, representing 52.7% of the customer base. Data traffic grew 40.3%, reflecting strong demand for mobile data services in all our
markets. Mobile data revenue comprised 16.5% (2018: 14.9%) of International service revenue.

We generated M-Pesa revenue of R851 million, with growth accelerating to 30.3% (26.4%*), contributing 16.4% of service revenue, as
we grow the ecosystem in all markets. We added 227 000 customers in the quarter, reaching 13.4 million. In Mozambique, we expanded
interoperability to a third bank, Mozambique's biggest retail bank, widening and enhancing the M-Pesa ecosystem for all our customers. On
average for the quarter, 237 million transactions were processed monthly through the M-Pesa system, growing at 24.2% yoy. Our merchant
payment platform has also been very successful across our markets as we expand our ecosystem.

In November, a spectrum auction for 800MHz spectrum in Mozambique was conducted and we were awarded with two blocks of 10MHz
bands at a cost of US$33 million. Capital expenditure in the quarter increased 41.9% to R894 million, mainly as a result of Mozambique
receiving their 4G spectrum and increasing their 4G rollout. During the quarter, 2G and 3G sites increased 4.2% and 6.6% respectively and
we closed the quarter with 1 584 4G sites.

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

Regulatory matters

Electronic Communications Amendment Bill (ECA Bill)

On 17 November 2017, the Ministry published an invitation to provide comments on the ECA bill, having its origins in the Integrated
Information and Communication Technology ICT Policy White Paper of 2 October 2016. In December 2018 Parliament invited stakeholders
to submit written comments on the ECA Bill and to participate in public hearings. Prior to Parliament considering and passing the ECA
Bill into law, the Ministry has also issued a draft Policy Direction for public comment, which aims to enable the licensing of High Demand
Spectrum under the existing EC Act legislation. The Ministry and the Regulator have both indicated their intention to assign High Demand
Spectrum under the existing regulatory framework during the first half of this calendar year and to give more certainty with regard to policy.

Amendment to End-User and Subscriber Service Charter Regulations

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 objective of addressing consumer concerns on out-of-bundle charges and data bundle
expiry rules. The implementation date has been set for 28 February 2019.

ICASA priority market review

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 regulation, and to determine from these markets and market segments those that the Authority intends to prioritise for
market reviews and potential regulation. On 17 August 2018, ICASA published a findings document in which it listed broad markets that will
be prioritised for potential market review:

- Wholesale fixed access, which includes wholesale supply of asymmetric broadband origination, fixed access services and
  relevant facilities;
- Upstream infrastructure markets incorporating national transmission services, metropolitan connectivity and relevant facilities; and
- Mobile services, which includes the retail market for mobile services and the wholesale supply of mobile network services, including
  relevant facilities.

On 16 November ICASA published a notice of intention to conduct an inquiry into mobile broadband services. The inquiry will comprise
four phases, with the final phase being the publication of a Findings Document and Draft Regulations (if required), which is expected in the
second half of this calendar year.

DRC elections - Internet and SMS ban

The national elections in the DRC took place on 30 December 2018. Congo's electoral commission announced the provisional winner of
the presidential election on 10 January 2019.
On 31 December 2018, the Ministry of Communications directed a full internet and SMS ban for national security reasons. The ban was
lifted following the confirmation of the final presidential election results on 19 January 2019 by the Constitutional Court.

DRC proposed traffic monitoring system

On 11 December 2018, a Decree to implement a new traffic monitoring system levying additional charges on operators was signed off by
all relevant government authorities. The Decree has not yet been gazetted. The Industry is challenging the matter through the Federation
of Enterprises of Congo.


Financial review


Service revenue for the quarter ended
                                                                           IAS 18            IAS 18

                                                31 December 2018     30 September       31 December            YoY % change IAS 18
Rm                                           IFRS 15       IAS 18#           2018              2017          Reported     Normalised*

South Africa                                  12 975       13 932          14 138            14 061              (0.9)          (0.9)
International                                  5 160        5 179           5 076             4 574              13.2            9.4
Corporate and eliminations                      (261)        (261)           (262)             (233)            (12.0)         (12.0)

Service revenue                               17 874       18 850          18 952            18 402               2.4            1.6

Revenue for the quarter ended

                                                                           IAS 18            IAS 18
                                                31 December 2018     30 September       31 December            YoY % change IAS 18
Rm                                           IFRS 15       IAS 18#           2018              2017           Reported    Normalised*

South Africa                                  17 172       17 974          17 909            18 211              (1.3)          (1.3)
International                                  5 312        5 315           5 213             4 719              12.6            8.8
Corporate and eliminations                      (312)        (312)           (311)             (283)            (10.2)         (10.2)

Revenue                                       22 172       22 977          22 811            22 647               1.5            0.7


Revenue for the quarter ended 31 December 2018

IFRS 15 basis                                             YoY %                     YoY %      Corporate/                     YoY %
Rm                                     South Africa      change   International    change    Eliminations         Group      change

Service revenue                              12 975                       5 160                      (261)       17 874
Equipment revenue                             3 503                          97                        (5)        3 595
Non-service revenue                             694                          55                       (46)          703

Revenue                                      17 172                       5 312                      (312)       22 172


IAS 18# basis
Rm

Mobile contract revenue                       5 787        (2.7)            341      16.8              (2)        6 126        (1.8)
Mobile prepaid revenue                        6 092         0.8           4 089      17.4               -        10 181         6.9

Customer service revenue                     11 879        (0.9)          4 430      17.4              (2)       16 307         3.5

Mobile interconnect                             490        (5.6)            317     (11.5)           (164)          643       (11.4)
Fixed service revenue                           746        11.3             392      (3.0)            (91)        1 047         5.0
Other service revenue                           817        (7.7)             40       5.3              (4)          853        (6.9)

Service revenue                              13 932        (0.9)          5 179      13.2            (261)       18 850         2.4

Equipment revenue                             3 365        (5.3)             82     (11.8)             (5)        3 442        (5.5)
Non-service revenue                             677        13.6              54       3.8             (46)          685        13.8

Revenue                                      17 974        (1.3)          5 315      12.6            (312)       22 977         1.5

Included in service revenue
(IAS 18# basis)
Mobile voice                                  5 660        (0.5)          2 587      11.5              (1)        8 246         2.9
Mobile data                                   5 926        (0.4)            853      25.4              (1)        6 778         2.2
Mobile messaging                                489       (10.9)            151      18.0               -           640        (5.5)
M-Pesa revenue                                    -           -             851      30.3               -           851        30.3


Revenue for the quarter ended 31 December 2017

IAS 18# basis                                                                                     Corporate/
Rm                                                       South Africa      International        Eliminations            Group

Mobile contract revenue                                         5 946                292                   3            6 241
Mobile prepaid revenue                                          6 041              3 482                  (1)           9 522

Customer service revenue                                       11 987              3 774                   2           15 763

Mobile interconnect                                               519                358                (151)             726
Fixed service revenue                                             670                404                 (77)             997
Other service revenue                                             885                 38                  (7)             916

Service revenue                                                14 061              4 574                (233)          18 402
Equipment revenue                                               3 554                 93                  (4)           3 643
Non-service revenue                                               596                 52                 (46)             602

Revenue                                                        18 211              4 719                (283)          22 647


Included in service revenue
(IAS 18 basis)
Mobile voice                                                    5 688              2 321                   2            8 011
Mobile data                                                     5 950                680                  (1)           6 629
Mobile messaging                                                  549                128                   -              677
M-Pesa revenue                                                      -                653                   -              653

Key indicators

South Africa

                                                          31 December       30 September         31 December              YoY
                                                                 2018               2018                2017         % change

Customers(1) (thousand)                                        43 838             44 089              41 602              5.4
Prepaid                                                        38 215             38 552              36 283              5.3
Contract                                                        5 623              5 537               5 319              5.7

Data customers(2) (thousand)                                   20 345             20 538              20 503             (0.8)

Internet of Things connections(3) (thousand)                    4 335              4 004               3 495             24.0
MOU per month(4)                                                  121                123                 131             (7.6)
Prepaid                                                           110                112                 120             (8.3)
Contract                                                          197                201                 202             (2.5)

Traffic(5) (millions of minutes)                               15 987             16 128              16 013             (0.2)
Outgoing                                                       13 595             13 768              13 612             (0.1)
Incoming                                                        2 392              2 360               2 401             (0.4)

Total ARPU(6) (rand per month) -IFRS15 basis                       86                 88
Prepaid                                                            55                 54
Contract                                                          307                325

Total ARPU(6) (rand per month) - IAS18# basis                      93                 95                 102             (8.8)
Prepaid                                                            55                 54                  59             (6.8)
Contract                                                          362                385                 393             (7.9)

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
                                                         31 December       30 September       31 December                 YoY
                                                                2018               2018              2017            % change

Customers(1) (thousand)                                       35 164             34 715            32 184                 9.3
Tanzania                                                      14 070             13 991            12 901                 9.1
DRC                                                           12 830             12 801            11 982                 7.1
Mozambique                                                     6 689              6 405             5 712                17.1
Lesotho                                                        1 575              1 518             1 589                (0.9)

Data customers(2) (thousand)                                  18 522             17 964            16 013                15.7
Tanzania                                                       8 132              8 064             7 317                11.1
DRC                                                            5 021              5 042             4 470                12.3
Mozambique                                                     4 577              4 161             3 501                30.7
Lesotho                                                          792                697               725                 9.2

30-day active M-Pesa customers(3) (thousand)                  13 409             13 182            11 117                20.6
Tanzania                                                       6 892              6 818             6 266                10.0
DRC                                                            2 240              2 324             1 600                40.0
Mozambique                                                     3 775              3 579             2 908                29.8
Lesotho                                                          502                461               343                46.4

MOU per month(4)
Tanzania                                                         168                186               171                (1.8)
DRC                                                               36                 39                36                   -
Mozambique                                                       146                134               152                (3.9)
Lesotho                                                           82                 73                85                (3.5)

Total ARPU(5) (rand per month) - IFRS15
Tanzania (TZS)                                                    39                 38
DRC (USD)                                                         41                 43
Mozambique (MZN)                                                  60                 59
Lesotho                                                           72                 64

Total ARPU(5) (rand per month) - IAS 18#
Tanzania (TZS)                                                    39                 38                39                   -
DRC (USD)                                                         41                 43                39                 5.1
Mozambique (MZN)                                                  60                 59                57                 5.3
Lesotho                                                           72                 65                71                 1.4

Total ARPU(5) (local currency per month) - IFRS15
Tanzania (TZS)                                                 6 205              6 116
DRC (USD)                                                        2.9                3.0
Mozambique (MZN)                                                 255                248

Total ARPU(5) (local currency per month) - IAS 18#
Tanzania (TZS)                                                 6 222              6 132             6 369                (2.3)
DRC (USD)                                                        2.9                3.0               2.9                   -
Mozambique (MZN)                                                 257                250               253                 1.6

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

Service revenue for the quarter ended

IFRS 15                       31 December    30 September       30 June
Rm                                   2018            2018          2018

South Africa                       12 975          12 985        12 736
International                       5 160           5 057         4 275
Corporate and eliminations           (261)           (263)         (238)

Group service revenue              17 874          17 779        16 773


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

South Africa                       13 932          14 138        13 760      13 891          14 061          13 547      13 123
International                       5 179           5 076         4 292       3 946           4 574           4 186       4 122
Corporate and eliminations           (261)           (262)         (239)       (261)           (233)           (177)       (147)

Group service revenue              18 850          18 952        17 813      17 576          18 402          17 556      17 098


Service revenue yoy % change for the quarter ended

                                    % change IAS 18                                  Normalised*

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

South Africa                           (0.9)           4.4         4.9         5.3         (0.9)
International                          13.2           21.3         4.1         2.7          9.4
Corporate and eliminations            (12.0)         (48.0)      (62.6)      (56.3)       (12.0)

Group service revenue                   2.4            8.0         4.2         4.2          1.6


Revenue for the quarter ended

IFRS 15                         31 December   30 September     30 June
Rm                                     2018           2018        2018

South Africa                         17 172         17 147      16 515
International                         5 312          5 218       4 424
Corporate and eliminations             (312)          (311)       (286)

Group revenue                        22 172         22 054      20 653


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

South Africa                         17 974         17 909      17 415      17 875       18 211          17 227      16 654
International                         5 315          5 213       4 424       4 167        4 719           4 334       4 240
Corporate and eliminations             (312)          (311)       (286)       (314)        (283)           (251)       (209)

Group revenue                        22 977         22 811      21 553      21 728       22 647          21 310      20 685


Revenue yoy % change for the quarter ended

                                    % change IAS 18                                Normalised*

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

South Africa                          (1.3)          4.0         4.6        10.7         (1.3)
International                         12.6          20.3         4.3         4.6          8.8
Corporate and eliminations           (10.2)        (23.9)     (36.8)       (42.1)       (10.2)

Group revenue                          1.5           7.0         4.2         9.2          0.7


Historical key indicators

South Africa

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

Customers(1) (thousand)                43 838          44 089           43 107         41 635           41 602          40 000        39 381
Prepaid                                38 215          38 552           37 671         36 275           36 283          34 762        34 248
Contract                                5 623           5 537            5 436          5 360            5 319           5 238         5 133

Data customers(2) (thousand)           20 345          20 538           20 434         20 347           20 503          19 905        19 167

Internet of Things
connections(3) (thousand)               4 335           4 004            3 881          3 628            3 495           3 271         3 100

MOU per month(4)                          121             123              123            124              131             128           125
Prepaid                                   110             112              111            113              120             118           115
Contract                                  197             201              201            199              202             199           190

Traffic(5) (millions of minutes)       15 987          16 128           15 628         15 385           16 013          15 331        14 426
Outgoing                               13 595          13 768           13 333         13 101           13 612          12 976        12 109
Incoming                                2 392           2 360            2 295          2 284            2 401           2 355         2 317

Total ARPU(6) IFRS 15
(rand per month)                           86              88               89
Prepaid                                    55              54               55
Contract                                  307             325              326

Total ARPU(6) IAS 18#
(rand per month)                           93              95               96             99              102             101           103
Prepaid                                    55              54               55             57               59              58            58
Contract                                  362             385              384            381              393             391           393

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 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. Internet of Things connections (IoT), 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 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 customers during the period. Prepaid
   and contract ARPU only include service revenue generated from Vodacom mobile customers.


International

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

Customers(1) (thousand)            35 164           34 715          33 401        32 415           32 184           31 170        29 986
Tanzania                           14 070           13 991          13 277        12 899           12 901           12 857        12 611
DRC                                12 830           12 801          12 279        11 821           11 982           11 453        10 792
Mozambique                          6 689            6 405           6 255         6 108            5 712            5 421         5 147
Lesotho                             1 575            1 518           1 590         1 587            1 589            1 439         1 436

Data customers(2) (thousand)       18 522           17 964          17 472        16 573           16 013           14 755        13 807
Tanzania                            8 132            8 064           7 682         7 345            7 317            7 072         6 767
DRC                                 5 021            5 042           5 150         4 825            4 470            4 175         3 982
Mozambique                          4 577            4 161           3 952         3 730            3 501            2 904         2 470
Lesotho                               792              697             688           673              725              604           588

30-day active M-Pesa
customers(3) (thousand)            13 409           13 182          12 711        11 757           11 117           10 755        10 089
Tanzania                            6 892            6 818           6 805         6 369            6 266            6 189         5 934
DRC                                 2 240            2 324           2 127         1 891            1 600            1 613         1 494
Mozambique                          3 775            3 579           3 367         3 109            2 908            2 625         2 343
Lesotho                               502              461             412           388              343              328           318

MOU per month(4)
Tanzania                              168              186             177           161              171              167           153
DRC                                    36               39              38            36               36               42            44
Mozambique                            146              134             129           144              152              144           130
Lesotho                                82               73              68            71               85               82            79

Total ARPU(5) (IFRS 15)
(rand per month)
Tanzania                               39               38              33
DRC                                    41               43              37
Mozambique                             60               59              51
Lesotho                                72               64              61

Total ARPU(5) (IAS 18#)
(rand per month)
Tanzania                               39               38              33            31               39               37            35
DRC                                    41               43              37            34               39               37            42
Mozambique                             60               59              51            47               57               53            48
Lesotho                                72               65              63            61               71               66            62

Total ARPU(5) IFRS 15
(local currency per month)
Tanzania (TZS)                      6 205            6 116           5 969
DRC (USD)                             2.9              3.0             3.0
Mozambique (MZN)                      255              248             239

Total ARPU(5) (IAS 18#)
(local currency per month)
Tanzania (TZS)                      6 222            6 132           5 984         5 734            6 369            6 295         5 946
DRC (USD)                             2.9              3.0             3.0           2.9              2.9              2.8           3.2
Mozambique (MZN)                      257              250             242           238              253              244           228

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 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 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.


Average quarterly exchange rates

                                        31 December       30 September       31 December        YoY             Quarterly
                                               2018               2018              2017   % change              % change

USD/ZAR                                       14.30              14.08             13.61        5.1                   1.6
ZAR/MZN                                        4.27               4.22              4.45       (4.0)                  1.2
ZAR/TZS                                      160.27             162.00            164.71       (2.7)                 (1.1)
EUR/ZAR                                       16.31              16.38             16.04        1.7                  (0.4)
ZAR/KES                                        7.13               7.16              7.60       (6.2)                 (0.4)

Reconciliation of normalised and adjusted growth

Pro-forma financial information

The presentation of the pro-forma financial information and related reconciliations as detailed below, is the responsibility
of the directors of Vodacom Group Limited. The purpose of presenting financial information on a comparable IAS 18 basis and normalised
growth on an IAS 18 constant currency basis is to assist the user in understanding the underlying growth trends on a comparable basis. This
pro-forma information has not been reviewed and reported on by the Group auditors.

Reconciliation of normalised values for the quarter ended 31 December 2018

                                             IFRS 15       Adoption of
Rm                                          Reported           IFRS 15(1)     IAS 18#      Translation FX     Normalised*

Revenue
Group                                         22 172               805        22 977                    -         22 977
International                                  5 312                 3         5 315                    -          5 315

Service revenue
Group                                         17 874               976        18 850                    -         18 850
International                                  5 160                19         5 179                    -          5 179

Data revenue
International                                    853                 -           853                    -            853

M-Pesa revenue
International                                    851                 -           851                    -            851


Reconciliation of normalised values for the quarter ended 31 December 2017

                                              IAS 18       Translation
Rm                                          Reported                FX(2)     Normalised*

Revenue
Group                                         22 647               168            22 815
International                                  4 719               168             4 887

Service revenue
Group                                         18 402               160            18 562
International                                  4 574               160             4 734

Data revenue
International                                    680                23               703

M-Pesa revenue
International                                    653                20               674


Reconciliation of normalised growth for the quarter ended 31 December 2018
The reconciliation below presents normalised growth adjusted at a constant currency (using current period as base).

Year-on-year reconciliation

31 December 2018                                  IAS       Translation        Normalised*
%                                       18(3) %change        FX(2) ppts          % change
Revenue
Group                                             1.5              (0.8)              0.7
International                                    12.6              (3.8)              8.8
Service revenue
Group                                             2.4              (0.8)              1.6

International                                    13.2              (3.8)              9.4
Data revenue
International                                    25.4              (4.1)             21.3
M-Pesa revenue
International                                    30.3              (4.0)             26.4

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

Notes:
1. This column and related adjustment represents the reconciliation of IFRS 15 to IAS 18.
2. 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. Translation foreign exchange (FX) 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 average rate for the quarter ended 31 December 2018 (which is derived by dividing the
   individual subsidiary's translated rand value with the functional currency for the period) to 31 December 2017 numbers, thereby giving a
   user a view of the performance which excludes exchange variances.
3. The percentage change relates to the year-on-year percentage growth on a comparable IAS 18 basis calculated as the percentage
   change between the quarter ended 31 December 2018 and quarter ended 31 December 2017 IAS 18 values.


Additional financial and operational measures

This announcement contains certain financial (i.e. service revenue, enterprise service revenue) and operational (i.e. customers, ARPUs)
measures. The Group's management believes these measures provide valuable additional information in understanding the performance
of the Group or the Group's businesses because they provide measures used by the Group to assess performance. However, this additional
information presented is not uniformly defined by all companies, including those in the Group's industry. Accordingly, it may not be
comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the
management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary.

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 announcement which sets out the quarterly results for Vodacom Group Limited for the quarter ended 31 December 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 adjusted EBITDA, 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.
Corporate information

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)

Directors

PJ Moleketi (Chairman), MS Aziz Joosub (CEO),
T Streichert (CFO)(1), V Badrinath(2), F Bianco(3), DH Brown,
M Joseph(4), BP Mabelane, SJ Macozoma,
P Mahanyele-Dabengwa, JWL Otty(5), T Reisten1, S Sood(6)

1. German     2. French   3. Italian - alternative to M. Joseph   4. American   5. British   6. Indian

Registered office

Vodacom Corporate Park,
082 Vodacom Boulevard,
Midrand 1685
(Private Bag X9904, Sandton 2146)

Transfer secretary

Computershare Investor Services (Proprietary) Limited
(Registration number 2004/003647/07)
Rosebank Towers
15 Biermann Avenue
Rosebank 2196
South Africa
(PO Box 61051, Marshalltown 2107, South Africa)

Sponsor

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

Company secretary
SF Linford

Investor relations
Shaun van Biljon

Media relations
Byron Kennedy

Date: 24/01/2019 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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