Vodacom talks up adoption of its super-app, VodaPay

Vodacom Group has reported group service revenue growth of 5.3% to R20.7 billion in a trading update for the quarter ended December 2021, supported by the sustained demand for connectivity and growth in new services such as financial services.

South Africa service revenue grew 4.5% with “excellent” growth in Vodacom Business, it said, while international service revenue increased by 6.7%, underpinned by data and M-Pesa revenue growth.

Financial services revenue increased 12.5% to R2 billion, with strong adoption of the group’s South African super-app, VodaPay.

“The app reached 1.4 million downloads and 1.0 million registered users by 31 December 2021. The strong consumer adoption accelerated the merchant on-boarding pipeline, which is set to add further depth and breadth to the app’s digital mall,” said Shameel Joosub, Vodacom Group chief executive.

“We see VodaPay as a precursor to M-Pesa’s evolution, supporting accelerated growth across our financial services businesses and assisting us in connecting the next 100 million African customers so that no one is left behind.”

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In November 2021, Vodacom announced a major step forward in scaling its fibre offering in South Africa. Through the acquisition of a 30% stake in CIVH fibre assets, with an option to increase the stake to 40%, Vodacom said it will gain exposure to highly attractive and fast–growing businesses including Vumatel and Dark Fibre Africa (DFA).

“Vodacom’s capital injection and strategic support will further accelerate the growth trajectory of these fibre assets. Also, the contribution of Vodacom SA’s wholesale FTTH, FTTB and Business–to–Business transmission access fibre network infrastructure will add further scale and enhance CIVH’s fibre footprint,” it said.

Vodacom has submitted regulatory filings in respect of the transaction to the Competition Commission and ICASA, initiating a process to obtain regulatory approval, said Joosub.

South Africa results

Mobile contract customer revenue increased 7.6% to R5.6 billion. The growth, Vodacom said, was supported by contract customer net additions of over 81,000 in the quarter and ARPU growth of 3.1% to R302.

For its prepaid segment, the group said it delivered a resilient performance underpinned by the summer campaign and net customer additions of 263,000. “Mobile prepaid customer revenue was flat, despite economic headwinds and a strong prior year comparative period (3Q21: 9.4%).”

In the prior-year period, prepaid ARPU reached R59 as customers increased usage during the more stringent lockdown restrictions. As these restrictions eased, prepaid ARPU normalised and in the current period was R57.

“Our data traffic growth rate accelerated to 25.9%, supported by work-from-home solutions and stimulated by the summer campaign. We added 0.5 million data customers in the quarter to reach 23.4 million data customers, representing 64.4% of our one-
month customer base. Smart devices on our network were up by 11.3% to 25.9 million.

“The number of 4G devices on our network increased 14.7% to 17.3 million while the average usage per smart device increased 24.4% to 2.5GB per month. Service revenue from financial services was up 11.8% to R692 million, with customers up 5.6% to 13.9 million,” said Joosub.

Connected fibre customers increased 51% to over 165,000 homes and businesses, highlighting strong demand for the service, the chief executive said. “We have passed over 152,000 homes and businesses with our own fibre roll-out.”

Joosub said that Vodacom invested R2.3 billion in the quarter, with a focus on adding capacity to manage increased demand and improve the customer experience. “For the financial year to date we have invested R7.9 billion and expect to invest around R10.5 billion in the financial year.”

“Looking ahead, we are encouraged by the post-Covid-19 recovery taking place in many of the markets in which we operate and look forward to making meaningful contributions to foster economic development,” Joosub said.

Read: Vodacom considers South Africa financial services unit IPO

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