Vodacom Tanzania half-year profits double

Tuesday November 27 2018

vodacom

A Vodacom retail store. The firm saw its revenues grew by 3.1 per cent to $217.22 million, driven by data and M-Pesa — despite a continuation of the market pricing pressure seen from the final quarter of the previous financial year. PHOTO FILE | NATION 

ALLAN OLINGO
By ALLAN OLINGO
More by this Author

Vodacom Tanzania's net profit for the six months to September doubled from $8.02 million in the same period last year to $16.79 million due to cost optimisation measures and the growth of M-Pesa and data business.

The Dar es Salaam Stock Exchange-listed firm also saw its operating profit grow 29.7 per cent to $21.37 million.

The firm, saw a flat growth on its operating profits in 2017 after a $2.86 million share-based payment charge was applied, relating to an underwriting arrangement between the Public Investment Corporation (SOC) Ltd, Vodacom Tanzania and Vodacom Group Ltd, as part of the initial public offering of 25 per cent of Vodacom Tanzania’s ordinary shares.

Vodacom Tanzania acting managing director Hirshim Hendi said that the telco’s business continues to deliver solid results despite challenging trading conditions.

“Our second set of interim results, following our listing on the DSE, reflect pleasing service revenue growth of 3.9 per cent and earnings before tax growth of 10.5 per cent even though mobile termination rates declined significantly and pricing pressure has intensified.

“We have delivered commercial momentum and robust customer growth by executing on our strategy and maintaining resolute focus on data and M-Pesa, our primary strategic growth drivers,” Mr Hendi said.

Advertisement

Tanzania’s biggest telco now says it is aiming to maintain the encouraging momentum of the first half of this financial year by providing an enhanced data user experience across the country and expanding its mobile money ecosystem through new partnerships and further investment in youth segments.

“Having secured an additional 2x10 MHz of the 700 MHz spectrum, we also expect to provide a superior 4G data user experience to a greater number of regions, allowing for further improvement to the monetsation of data traffic country-wide. I am confident that this approach will continue to provide resilience in a tough market,” Mr Hendi said.

Pricing pressure

The firm saw its revenues grew by 3.1 per cent to $217.22 million, driven by data and M-Pesa — despite a continuation of the market pricing pressure seen from the final quarter of the previous financial year.

It also saw a lower equipment revenue as a result of implementing a new distributor-based device sales model aimed at widening distribution using third parties.

The firm saw its mobile voice revenue decrease 4.4 per cent to $85.74 million it continued to experience competitive pressure on effective on-net pricing. Its M-Pesa revenue grew 10.9 per cent to $68.1 million.

“Competitive pressure has intensified across mobile financial services, where agent and customer incentives to use competing platforms have increased. This resulted in M-Pesa revenue growth decelerating during the period,” the telco said.

Data revenue

Vodacom also saw its mobile data revenue increase 27.1 per cent, achieving revenue of $34.16 million during the period, as its focus on youth and high value customer segments, coupled with partnership-led smartphone campaigns resulted in a continuation of strong demand for its mobile data services.

It saw its active smartphone users increase by 18.1 per cent, reaching a penetration of 29.6 per cent of its customer base. Active data customers reached 8.1 million, up 14 per cent.
The company saw the mobile incoming revenue decline by 23.8 per cent to $14.83 million, adversely impacted by the 42.1 per cent mobile termination rate and partially offset by an 16.7 per cent increase in the number of incoming minutes as operators increased all-net bundles in their offers.

Messaging revenue increased by 41.8 per cent to $8.3 million with the number of short message service messages transmitted declining by 9.5 per cent to $7.36 million.

This is a result of the introduction of SMS-only bundles in the prior year and a significant improvement in monetising these same bundles during the period.

Advertisement