South African mobile operator Vodacom Group Limited has reported a 7.6% rise in Q1 revenue for the period ended 30th, June 2020. Group Revenues rose from US$1,045.98 Million in Q1, 2019 to US$ 1,125 Million at the end of June 30th, 2020.
According to the firm’s trading update, service revenue increased for the South African business. The firm attributes this rise in revenue in the South Africa business to customer demand increasing during the lock down period.
Vodacom’s international business was, however, negatively impacted by lower economic activity from the effects of COVID-19.
South Africa service revenue growth was solid at 6.4% for the quarter, supported by strong demand for data and connectivity services in the period. International service revenue grew by 10.7% benefiting from the rand devaluation.
The firm, however, said the underlying performance was subdued with a 5.3% decline, as a result of lower economic trading activity, free M-Pesa services and customer registration requirements in these businesses.
Vodacom owns 35 per cent of Safaricom, Kenya’s leading mobile services operator.
In the face of a global pandemic, Vodacom Group said it has responded rapidly to assist governments where it operates in curbing the spread of COVID-19 while also adapting to significant changes in customer demands and behaviour patterns.
“We also reduced pricing on a temporary basis on a number of M-Pesa transactions to assist customers in contactless payment in light of social distancing initiatives,” said Vodacom in its results update.
In South Africa, the combination of increased demand for data following significant tariffs reductions of up to 40% effected on 1 April and more people working and being educated remotely, resulted in a significant increase in mobile and fixed traffic in the first quarter.
As a result, mobile operator accelerated network infrastructure spend by R500 Million to R 2.7 Billion in Q1, 2020. This is happening as South Africa prepares to launch its first mobile 5G network and a fixed 5G commercial service.
While Vodacom is satisfied with its South African business, it remains cautious about the impact of COVID-19 on its operations and uncertainty about the pace of economic recovery in each of the countries where it operates.
