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Vodacom Q3 Revenues Up 6% Year-on-Year

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South Africa based Vodacom has reported a 6% rise in group revenues for the last three months of 2009, to R15.43 billion (USD2 billion), with continued robust performance in South Africa offsetting revenue declines in Tanzania and the Democratic Republic of Congo (DRC).

Group mobile customers increased 7.1% from 31 December 2008 to 40.5 million at 31 December 2009. During the quarter the Group customer base declined by 1.1 million, primarily as a result of RICA in South Africa and a change in the disconnection policy in the DRC, offset by growth in the other operations. The South African mobile operations contributed 67.0% (30 September 2009: 69.5%) of normalised Group total mobile customers.

Pieter Uys, Chief Executive Officer, commented "This has been a positive quarter for Vodacom, featuring solid overall revenue growth and continued progress in building our data business. Despite a challenging economic environment and the continued impact from RICA, our South African business posted a 7.5% increase in revenue. The actions we have taken in our international businesses have shown positive results in the form of improved market positioning. Cost management programmes are also gaining momentum and should provide the basis for improved margin management in the year ahead. Careful allocation of capital to investment projects has resulted in continued strong growth in cash flows."

South Africa

Revenue growth in South Africa remained robust at 7.5% to R13.4 billion, reflecting customer growth of 2.5% to 27.1 million and the increasing contribution of data revenue. Data revenue growth accelerated in the quarter to 35.2% due to increased penetration of mobile PC connectivity and mobile internet usage, with broadband customers increasing 48.8%.

Contract service revenue growth improved in the quarter due to a 12.5% increase in the contract customer base to 4.3 million.

Prepaid service revenue growth slowed as a result of a 1.3 million reduction in prepaid customers in the quarter to 22.6 million following the implementation of RICA, coupled with December price promotions. Gross connections have improved steadily from approximately 260 000 in August 2009 to approximately 760 000 in December 2009 supported by increasing consumer and channel awareness. While churn increased 2.1 percentage points on the prior year quarter largely due to RICA, it is expected to trend downwards in 2010.

It is expected that mobile termination rates will be reduced from as early as 1 March 2010.

International

Revenue growth in the international mobile operations declined 33.4% to R1.4 billion, with unfavourable foreign exchange translation contributing 23.7 percentage points of the reduction. Excluding the foreign currency translation impact and excise duties, normalised revenue declined 6.3%. The decline was largely due to promotions aimed at improving competitiveness in the key markets, coupled with continued economic pressures. In local currencies, the Tanzania and DRC service revenue decline stabilised, while growth in Mozambique and Lesotho remained strong. Assertive steps taken during the quarter have improved the relative market performance, particularly in Tanzania and the DRC.

Reported international customer growth of 17.9% understates the actual growth of 27.2% due to the change in the DRC disconnection policy from 215 to 90 inactive days. This policy change resulted in approximately one million disconnections in the DRC. Tanzania customer growth of 28.4% was fuelled by new promotional activity and Mozambique and Lesotho posted strong customer growth of 61.1% and 30.9%, respectively.

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Tags: vodacom  africa  rica  termination  South Africa  Tanzania  Congo