Wrap Text
Trading update for the quarter ended 30 June 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)
News release
Vodacom Group Limited trading update for the quarter ended 30 June 2018
24 July 2018
Highlights
- Group service revenue growth, excluding currency translation effects, up 5.2%*, reported up 4.2%^.
- Added 2.5 million customers during the quarter, 1.5 million in South Africa and 1.0 million in our International operations, to reach 76.5 million customers across the Group, up
10.3% year on year.
- Group data revenue increased 9.9%*, reported up 9.6%^. International data revenue, excluding currency translation effects, up 14.7%* and 11.3%^ reported.
- South Africa service revenue grew 4.9%^ to R13.8 billion, supported by improved customer revenue growth trends and customer gains.
- International service revenue increased 4.1%^; adjusted growth was 12.4%** to R4.3 billion.
- M-Pesa revenue growth, excluding currency translation effects, was 23.8%*; reported 18.1%^.
Quarter ended Quarter ended YoY % change IAS 18
30 June 2018 30 June 2018
Rm IFRS 15 IAS 18 Reported^ Normalised*
Group service revenue 16 773 17 813 4.2 5.2
South Africa 12 736 13 760 4.9 4.9
International 4 275 4 292 4.1 8.3
Group revenue 20 653 21 553 4.2 5.0
South Africa 16 515 17 415 4.6 4.6
International 4 424 4 424 4.3 8.5
Following the prospective adoption of IFRS 15. Revenue from Contracts with Customers on 1 April 2018, the Group's results for the quarter ended 30 June 2018 are on an IFRS 15
basis, whereas the results for the quarter ended 30 June 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, revenue for the quarter ended 30 June 2018 has been disclosed on both an IFRS 15 and IAS 18
basis and 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 news release.
Results for Vodacom's associate investment in Safaricom are disclosed on a bi-annual basis and therefore are not included in this quarterly update.
Shameel Joosub, Vodacom Group CEO commented:
The strong momentum from our annual results has carried Vodacom into a pleasing first quarter. Group revenue and service revenue increased 5.0%* and 5.2%* respectively. We
were delighted to add 2.5 million customers over the quarter, reaching 76.5 million across the Group (excluding Safaricom).
In South Africa, despite a tougher economic environment, we grew service revenue by 4.9%^, supported by customer growth of 9.5% to reach 43.1 million customers. This was
driven by our 'Big Data' led innovations, which contributed to robust demand for personalised bundles, offering customers better value for money. We sold over 600 million bundles
this quarter resulting in an effective price reduction of 10% on voice minutes and 17% for data megabytes. This is evidence of our commitment to lowering the cost to
communicate. We have also launched some exciting consumer propositions, including our new Vodacom Ticket, which allows customers to save up to 50% on data for social
media, video, music and gaming. Data revenue grew close to 10%, a pleasing performance off a bigger base, contributing more than 44% to service revenue.
In our International operations, service revenue increased 12.4%** to R4.3 billion, driven largely by M-Pesa and data adoption. M-Pesa continues to grow strongly and we now have
12.7 million customers(1) (excluding Safaricom) using this service.
We remain focused on network investment as a key competitive differentiator, expanding our 4G coverage to 81.5% up from 75.9% a year ago.
Looking ahead, we expect the implementation of the ICASA End-user Subscriber Charter Regulations, in relation to out-of-bundle usage, to have a modest impact on data revenue
growth. We expect this to be mitigated in the short term by continued uptake of data bundles and strong elasticity in demand for these services. We are encouraged by the
improved performance in our International business. We will continue to strengthen our customer value proposition across all operations as a leading digital company.
* 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 quarter as the base). Refer below for a reconciliation of adjustments.
** Growth adjusted: During the 2nd quarter of the previous year, we reclassified the foreign exchange difference between USD and CDF sales to be netted off on the corresponding
revenue line. The adjustment was USD11.4 million for Q1 2017. Q1 2017 was not restated for this change. Refer below for a reconciliation of adjustments.
^ Reported growth is calculated on an IAS 18 basis, reflecting a like-for-like comparison between the current and comparative reporting period.
All growth rates quoted are year-on-year and refer to the quarter ended 30 June 2018 compared to the quarter ended 30 June 2017, which are based on the IAS 18 accounting
principles, unless stated otherwise.
The quarterly information has not been audited or reviewed by Vodacom's external auditors.
(1) 30 day active M-Pesa customers.
Operating review
South Africa
Service revenue increased 4.9%^ to R13.8 billion, supported by the improvement in customer revenue growth trends, despite a subdued macroeconomic and consumer spending
environment.
Customers increased 9.5% reaching 43.1 million, after adding 1.4 million prepaid customers and 75 000 net contract additions.
Prepaid customer revenue growth was good at 5.5%. This was supported by continued strong customer growth of 10.0%, which was slightly offset by lower ARPUs as we attract new
customers with lower spend levels, on average, than the current base.
Contract customer revenue growth has recovered from declines in previous quarters, to grow at 0.8%. The growth was supported by improved performance in the Enterprise
segment, reflecting customer and ARPU gains from recent contract sign ups and improved usage. Overall contract customers increased by 5.9%. Contract ARPU declined 2.3%, an
improvement in trend from the last two quarters, as customers continue to grow into their "more data" contracts and benefits from higher value ARPU customers in Enterprise.
Voice revenue decline remained low at 2.6%, reflecting the success of our personalised voice bundle strategy through our ‘Just 4 You' platform while reducing the effective price
per minute by 10.0%.
Data revenue grew 9.4% to R6.1 billion, contributing 44.1% (2018: 42.2%) of service revenue. We continue to drive bundle engagement aggressively to ensure a worry free
experience for our customers. The success of this pricing strategy, making data more affordable for our customers, has resulted in a 32.2% increase in data bundle sales and an
overall effective price per MB reduction of 17.1%. We continue to grow our current 4G data users, adding 739 000 4G customers in the quarter reaching 8.1 million customers.
Vodacom Ticket was launched during June, which provides customers with data bundles that have more inclusive value. This allows us to drive greater uptake on URL-specific
services with worry free usage.
Fixed-line revenue growth was 22.0% as we continue to grow connectivity revenue for business and homes. Internet of Things (IoT) connections increased 25.2% to 3.9 million.
We spent R2 billion on capital expenditure, focusing on new sites, upgrades and capacity to improve network quality and performance. These efforts have resulted in Vodacom
leading in data speed benchmarks . This also allowed us to expand our 4G coverage to 81.5%, up from 75.9% a year ago. We also expanded our rural coverage and made progress to
improve backhaul performance and capacity by increasing the proportion of self-provided high capacity sites from 90.1% a year ago to 92.4%.
International
Service revenue increased 12.4%**, reflecting continued strong execution in all markets. Reported growth was up 4.1%^.
Tanzania service revenue growth was in line with the previous quarter, despite continued pricing pressure. DRC, Mozambique and Lesotho have made solid progress on their M-Pesa
businesses, and data continues to perform well.
We added 987 000 customers in the quarter, reaching 33.4 million, up 11.4%. This was supported by good customer growth in the DRC and Mozambique.
Data revenue increased, excluding currency translation effects, by 14.7%*, reported up 11.3%, supported by a 17.3% increase in data customers to 17.5 million. The demand for
data remains strong with data traffic up 53.3%. We launched 4G in the DRC during the period, following the award of a 4G licence. We now offer 4G services in all our markets except
Mozambique.
Our mobile money service continues to grow across all operations. M-Pesa revenue was up 23.8%*, excluding currency translation effects, to R634 million, reported up 18.1%.
Customers increased by 26.0% to 12.7 million. Tanzania celebrated 10 years of M-Pesa with 6.8 million customers, up 14.7%. We continue to improve the eco-system, stimulating
activity on the platform. In Tanzania, the 'Lipa kwa' our merchant payment solution has over 7 900 merchants now actively trading on the platform; the service has also recently
been added in Mozambique. M-Pesa revenue now contributes 14.8% to International service revenue.
Capital expenditure increased 8.2% to R552 million, which enabled us to continue to invest in all our markets to strengthen network and service differentiation and to support data
growth and wider voice coverage.
We were awarded a 4G licence in the DRC during the period and there are currently 80 sites live in three major cities. During June, Tanzania held a 4G spectrum auction, where we
secured 2x10MHz of 700MHz. This spectrum is key in enabling us to extend and improve coverage and capacity, and thereby improve the customer experience. The combined cost
of the 4G licence in the DRC and 4G spectrum in Tanzania was USD32 million.
Results for Vodacom's associate investment in Safaricom are disclosed on a bi-annual basis and therefore are not included in this quarterly update.
(1) As measured by independent third-parties, Atio and Ookla, for the period ending 30 June 2018.
Regulatory matters
Electronic Communications Amendment Bill (ECA Bill) - South Africa
The Ministry of Telecommunications and Postal Services (Ministry) published a White Paper, as approved by cabinet, on 2 October 2016. On 17 November 2017, the Department of
Telecommunications and Postal Services (DTPS) gazetted amendments to the Electronic Communications Act as a Bill. As part of a public participation process, we reiterated our
support for a hybrid model, establishing a competitive wholesale open access network (WOAN) alongside the assignment of spectrum to the current players. On the basis of an
independent economic impact assessment, we also noted the negative impacts the draft legislation could have on investment in the sector, GDP growth and job creation. The
Ministry will consider all submissions before submitting a revised Bill to cabinet for approval to be tabled in Parliament for further consultation and debate.
Amendment to End-user and Subscriber Service Charter Regulations - South Africa
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 main objective to address consumer concerns on out-of-bundle charges and expiry rules.
These final amendments followed a consultation process between ICASA and industry stakeholders. The regulations require the following:
- Voice, SMS and data bundle depletion notices are to be sent to customers at 50%, 80% and 100% depletion thresholds;
- Operators are not allowed to default customers to out-of-bundle charges on depletion of data bundles, unless specific opt-in instructions have been received from the customer;
and
- Operators should allow customers the option to roll over unused data before expiry and also provide customers with an option to transfer data to other customers
on the same network.
The effective date has been suspended pending the final determination of an urgent application launched by other operators in the High Court.
ICASA priority market review - South Africa
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 regulations, and to determine from these markets and market
segments those that the Authority intends to prioritise for market reviews and potential regulation. These studies are in line with similar processes in other markets around the
world. The final phase of the inquiry would be the publication of a findings document, which is expected in the second half of FY19.
Competition Commission investigation into complaint on the National Treasury government transversal contract for mobile communication services - South Africa
On 14 March 2016, National Treasury issued a tender for the supply and delivery of mobile communication services to national and provincial government departments for the
period 15 September 2016 to 31 August 2020. Vodacom was selected as the preferred supplier on a non-exclusive basis after the other bidders were eliminated at different phases
of the competitive bidding process. The Competition Commission has initiated an investigation against Vodacom Group for alleged abuse of dominance in terms of section 8 of the
Competition Act. The tender process was initiated and controlled by National Treasury through strict governance procedures, and we are confident that we followed due process in
a fiercely contested and transparent bidding process.
Positive conclusion of ICASA and competition commission investigation of Rain agreements - South Africa
In 2016, Vodacom and Rain (formerly WBS) announced agreements for facilities leasing, services and Vodacom roaming on Rain's network. Rain signed separate facilities leasing
and services agreements with Vodacom, in order to lease passive network infrastructure from Vodacom, which they require to roll out a 4G network. Vodacom signed a roaming
agreement with Rain, whereby Vodacom customers will be able to roam on Rain's 4G network.
The main benefit of the agreements for Vodacom is to improve the experience for its customers by offloading data traffic onto Rain's network. This is an important mechanism to
manage future demand for data services, which would have otherwise been challenging in a potentially spectrum constrained environment.
The agreements have been subject to review by both the Competition Commission and ICASA, both these authorities have now confirmed and communicated that their respective
investigations have not indicated anything of concern, and that they have therefore approved the agreements between Vodacom and Rain.
Financial review
Revenue for the quarter ended
30 June 2018 IAS 18 IAS 18 YoY % change IAS 18
31 March 30 June
IFRS 15 IAS 18 2018 2017 Reported^ Normalised*
Rm
South Africa 16 515 17 415 17 875 16 654 4.6 4.6
International 4 424 4 424 4 167 4 240 4.3 8.5
Corporate and eliminations (286) (286) (314) (209) (36.8) (36.8)
Revenue 20 653 21 553 21 728 20 685 4.2 5.0
Service revenue for the quarter ended
30 June 2018 IAS 18 IAS 18 YoY % change IAS 18
31 March 30 June
Rm IFRS 15 IAS 18 2018 2017 Reported^ Normalised*
South Africa 12 736 13 760 13 891 13 123 4.9 4.9
International 4 275 4 292 3 946 4 122 4.1 8.3
Corporate and eliminations (238) (239) (261) (147) (62.6) (62.6)
Service revenue 16 773 17 813 17 576 17 098 4.2 5.2
Revenue for the quarter ended 30 June 2018
IAS 18 basis YoY % YoY % Corporate/ YoY %
Rm South Africa Change International Change Eliminations Group change
Mobile contract revenue 5 939 0.8 269 5.1 (2) 6 206 1.0
Mobile prepaid revenue 5 843 5.5 3 322 6.7 1 9 166 6.0
Customer service revenue 11 782 3.1 3 591 6.6 (1) 15 372 3.9
Mobile interconnect 491 34.9 294 (4.9) (146) 639 10.8
Fixed service revenue 622 22.0 373 (8.8) (85) 910 4.1
Other service revenue 865 5.0 34 (5.6) (7) 892 4.3
Service revenue 13 760 4.9 4 292 4.1 (239) 17 813 4.2
Equipment revenue 3 067 (4.0) 68 (11.7) (4) 3 131 (3.6)
Non-service revenue 588 75.5 64 56.1 (43) 609 79.6
Revenue 17 415 4.6 4 424 4.3 (286) 21 553 4.2
Included in service revenue
(IAS 18 basis)
Mobile voice 5 386 (2.6) 2 196 2.3 (1) 7 581 (1.3)
Mobile data 6 064 9.4 648 11.3 - 6 713 9.6
Mobile messaging 498 (15.6) 122 14.0 - 620 (11.0)
M-Pesa revenue - - 634 18.1 - 634 18.1
IFRS 15 basis
Rm
Service revenue 12 736 5.0 4 275 4.1 (238) 16 773 4.2
Equipment revenue 3 160 (4.6) 85 (7.6) (3) 3 242 (4.1)
Non-service revenue 619 81.5 64 56.1 (45) 638 85.5
Revenue 16 515 4.6 4 424 4.3 (286) 20 653 4.2
Revenue for the quarter ended 30 June 2017
IAS 18 basis Corporate/
Rm South Africa International Eliminations Group
Mobile contract revenue 5 889 256 (2) 6 143
Mobile prepaid revenue 5 536 3 112 1 8 649
Customer service revenue 11 425 3 368 (1) 14 792
Mobile interconnect 364 309 (96) 577
Fixed service revenue 510 409 (45) 874
Other service revenue 824 36 (5) 855
Service revenue 13 123 4 122 (147) 17 098
Equipment revenue 3 196 77 (25) 3 248
Non-service revenue 335 41 (37) 339
Revenue 16 654 4 240 (209) 20 685
Included in service revenue
(IAS 18 basis)
Mobile voice 5 532 2 147 (1) 7 678
Mobile data 5 542 582 - 6 124
Mobile messaging 590 107 - 697
M-Pesa revenue - 537 - 537
IFRS 15 basis
Rm
Service revenue 12 133 4 107 (146) 16 094
Equipment revenue 3 311 92 (24) 3 379
Non-service revenue 341 41 (38) 344
Revenue 15 785 4 240 (208) 19 817
Key indicators
South Africa
30 June 31 March 30 June YoY Quarterly
2018 2018 2017 % change % change
Customers(1) (thousand) 43 107 41 635 39 381 9.5 3.5
Prepaid 37 671 36 275 34 248 10.0 3.8
Contract 5 436 5 360 5 133 5.9 1.4
Data customers(2) (thousand) 20 434 20 347 19 167 6.6 0.4
Internet of Things connections(3) (thousand) 3 881 3 628 3 100 25.2 7.0
MOU per month(4) 123 124 125 (1.6) (0.8)
Prepaid 111 113 115 (3.5) (1.8)
Contract 201 199 190 5.8 1.0
Traffic(5) (millions of minutes) 15 628 15 385 14 426 8.3 1.6
Outgoing 13 333 13 101 12 109 10.1 1.8
Incoming 2 295 2 284 2 317 (0.9) 0.5
Total ARPU(6) (rand per month) - IAS18 basis 96 99 103 (6.8) (3.0)
Prepaid 55 57 58 (5.2) (3.5)
Contract 384 381 393 (2.3) 0.8
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
30 June 31 March 30 June YoY Quarterly
2018 2018 2017 % change % change
Customers(1) (thousand) 33 403 32 415 29 986 11.4 3.0
Tanzania 13 277 12 899 12 611 5.3 2.9
DRC 12 279 11 821 10 792 13.8 3.9
Mozambique 6 255 6 108 5 147 21.5 2.4
Lesotho 1 590 1 587 1 436 10.7 (0.2)
Data customers(2) (thousand) 17 472 16 573 13 807 26.5 5.4
Tanzania 7 682 7 345 6 767 13.5 4.6
DRC 5 150 4 825 3 982 29.3 6.7
Mozambique 3 952 3 730 2 470 60.0 6.0
Lesotho 688 673 588 17.0 2.2
30-day active M-Pesa customers(3) (thousand) 12 711 11 757 10 089 26.0 8.1
Tanzania 6 805 6 369 5 934 14.7 6.8
DRC 2 127 1 891 1 494 42.4 12.4
Mozambique 3 367 3 109 2 343 43.7 8.3
Lesotho 412 388 318 29.6 6.2
MOU per month(4)
Tanzania 177 161 153 15.7 9.9
DRC 38 36 44 (13.6) 5.6
Mozambique 129 144 130 (0.8) (10.4)
Lesotho 68 71 79 (13.9) (4.2)
Total ARPU(5) (rand per month) - IAS 18 basis
Tanzania (TZS) 33 31 35 (5.7) 6.5
DRC (USD) 37 34 42 (11.9) 8.8
Mozambique (MZN) 51 47 48 6.3 8.5
Lesotho 63 61 62 1.6 3.3
Total ARPU(5) (local currency per month) -
IAS 18 basis
Tanzania (TZS) 5 984 5 734 5 946 0.6 4.4
DRC (USD) 3.0 2.9 3.2 (6.3) 3.4
Mozambique (MZN) 242 238 228 6.1 1.7
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
Revenue
IFRS 15
Rm 30 June
2018
South Africa 16 515
International 4 424
Corporate and eliminations (286)
Group revenue 20 653
IAS 18 30 June 31 March 31 December 30 September 30 June 31 March 31 December
Rm 2018 2018 2017 2017 2017 2017 2016
South Africa 17 415 17 875 18 211 17 227 16 654 16 141 17 142
International 4 424 4 167 4 719 4 334 4 240 3 985 4 316
Corporate and eliminations (286) (314) (283) (251) (209) (221) (236)
Group revenue 21 553 21 728 22 647 21 310 20 685 19 905 21 222
Revenue YoY % change for the quarter ended
Reported^ Normalised*
IAS 18 30 June 31 March 31 December 30 September 30 June
% 2018 2018 2017 2017 2018
South Africa 4.6 10.7 6.2 7.6 4.6
International 4.3 4.6 9.3 (2.1) 8.5
Corporate and eliminations (36.8) (42.1) (19.9) (37.2) (36.8)
Group revenue 4.2 9.2 6.7 5.2 5.0
Service revenue
IFRS 15 30 June
Rm 2018
South Africa 12 736
International 4 275
Corporate and eliminations (238)
Group service revenue 16 773
IAS 18 30 June 31 March 31 December 30 September 30 June 31 March 31 December
Rm 2018 2018 2017 2017 2017 2017 2016
South Africa 13 760 13 891 14 061 13 547 13 123 13 198 13 410
International 4 292 3 946 4 574 4 186 4 122 3 844 4 206
Corporate and eliminations (239) (261) (233) (177) (147) (167) (173)
Group service revenue 17 813 17 576 18 402 17 556 17 098 16 875 17 443
Service revenue YoY % change for the quarter ended
Reported^ Normalised*
IAS 18 30 June 31 March 31 December 30 September 30 June
% 2018 2018 2017 2017 2018
South Africa 4.9 5.3 4.9 3.9 4.9
International 4.1 2.7 8.7 (1.4) 8.3
Corporate and eliminations (62.6) (56.3) (34.7) (46.3) (62.6)
Group service revenue 4.2 4.2 5.5 2.3 5.2
Historical key indicators
South Africa
30 June 31 December 30 September 30 June 31 March 31 December
2018 31 March 2018 2017 2017 2017 2017 2016
Customers(1) (thousand) 43 107 41 635 41 602 40 000 39 381 37 131 36 375
Prepaid 37 671 36 275 36 283 34 762 34 248 32 000 31 188
Contract 5 436 5 360 5 319 5 238 5 133 5 131 5 187
Data customers(2) (thousand) 20 434 20 347 20 503 19 905 19 167 19 549 19 261
Internet of Things connections(3) (thousand) 3 881 3 628 3 495 3 271 3 100 2 979 2 810
MOU per month(4) 123 124 131 128 125 131 145
Prepaid 111 113 120 118 115 122 138
Contract 201 199 202 199 190 190 187
Traffic(5) (millions of minutes) 15 628 15 385 16 013 15 331 14 426 14 462 15 550
Outgoing 13 333 13 101 13 612 12 976 12 109 12 105 13 158
Incoming 2 295 2 284 2 401 2 355 2 317 2 357 2 392
Total ARPU(6) (rand per month) IAS 18 basis 96 99 102 101 103 109 114
Prepaid 55 57 59 58 58 61 64
Contract 384 381 393 391 393 401 414
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 during the period by the average monthly active customers. Prepaid and contract ARPU only include
service revenue generated from Vodacom mobile customers.
International
30 June 31 March 31 December 30 September 30 June 31 March 31 December
2018 2018 2017 2017 2017 2017 2016
Customers(1) (thousand) 33 401 32 415 32 184 31 170 29 986 29 688 28 811
Tanzania 13 277 12 899 12 901 12 857 12 611 12 653 12 419
DRC 12 279 11 821 11 982 11 453 10 792 10 388 9 702
Mozambique 6 255 6 108 5 712 5 421 5 147 5 146 5 208
Lesotho 1 590 1 587 1 589 1 439 1 436 1 501 1 482
Data customers(2) (thousand) 17 472 16 573 16 013 14 755 13 807 12 997 12 620
Tanzania 7 682 7 345 7 317 7 072 6 767 6 463 6 484
DRC 5 150 4 825 4 470 4 175 3 982 3 705 3 354
Mozambique 3 952 3 730 3 501 2 904 2 470 2 280 2 196
Lesotho 688 673 725 604 588 549 586
MOU per month(3)
Tanzania 177 161 171 167 153 146 162
DRC 38 36 36 42 44 44 48
Mozambique 129 144 152 144 130 130 122
Lesotho 68 71 85 82 79 78 91
30-day active M-Pesa customers(4) (thousand) 12 711 11 757 11 117 10 755 10 089 9 963 8 848
Tanzania 6 805 6 369 6 266 6 189 5 934 6 198 5 555
DRC 2 127 1 891 1 600 1 613 1 494 1 423 1 203
Mozambique 3 367 3 109 2 908 2 625 2 343 2 029 1 804
Lesotho 412 388 343 238 318 313 286
Total ARPU(5) (rand per month)
IAS 18 basis
Tanzania 33 31 39 37 35 34 40
DRC 37 34 39 37 42 37 48
Mozambique 51 47 57 53 48 40 41
Lesotho 63 61 71 66 62 53 67
Total ARPU(5) (local currency per month) IAS 18 basis
Tanzania (TZS) 5 984 5 734 6 369 6 295 5 946 5 674 6 279
DRC (USD) 3.0 2.9 2.9 2.8 3.2 2.8 3.4
Mozambique (MZN) 242 238 253 244 228 209 223
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. 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 the with restated customer numbers. (Refer to note 1)
4. M-Pesa customers are based on the number of unique customers who have generated revenue related to M-Pesa during the last month.
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 the restated customer numbers. (Refer to note 1)
Average quarterly exchange rates
30 June 31 March 30 June YoY Quarterly
2018 2018 2017 % change % change
USD/ZAR 12.65 11.95 13.21 (4.2) 5.9
ZAR/MZN 4.74 5.10 4.74 - (7.1)
ZAR/TZS 179.60 187.90 169.33 6.1 (4.4)
EUR/ZAR 15.08 14.69 14.52 3.9 2.7
ZAR/KES 7.98 8.52 7.83 1.9 (6.3)
Reconciliation of normalised and adjusted growth
The reconciliation represents normalised growth at a constant currency (using the current period as the base) from on-going operations. The presentation of the pro-forma
constant currency information from on-going operations is the responsibility of the directors of Vodacom Group Limited. The purpose of presenting this information is to assist the
user in understanding the underlying growth trends in these segments. It has been prepared for illustrative purposes only and may not fairly present the financial position, changes
in equity, and results of operations or cash flows of Vodacom Group Limited. This information has not been reviewed nor reported on by the Group's auditors being
PriceWaterhouseCoopers Inc.
Reconciliation of normalised and adjusted growth for the quarter ended
30 June 2018
Translation
IAS 18 foreign International
Reported(1) exchange(2) Normalised* One-off(3) Adjusted**
IAS 18 basis
% % change ppt % change ppt % change
Revenue
Group 4.2 0.8 5.0 - -
International 4.3 4.2 8.5 - -
Service revenue
Group 4.2 1.0 5.2 0.9 6.1
International 4.1 4.2 8.3 4.1 12.4
Data revenue
Group 9.6 0.3 9.9 - -
International 11.3 3.4 14.7 - -
M-Pesa revenue
International 18.1 5.7 23.8 - -
Reconciliation of normalised values for the quarter ended
30 June 2018
Impact Translation
IAS 18 basis of adoption foreign
Rm IFRS 15 of IFRS 15 IAS 18 Reported exchange(2) Normalised*
Revenue
Group 20 653 900 21 553 - 21 553
South Africa 16 515 900 17 415 - 17 415
International 4 424 - 4 424 - 4 424
Service revenue
Group 16 773 1 040 17 813 - 17 813
South Africa 12 736 1 024 13 760 - 13 760
International 4 275 17 4 292 - 4 292
Data revenue
Group - - 6 713 - 6 713
International - - 648 - 648
M-Pesa revenue - -
International - - 634 - 634
Reconciliation of normalised values for the quarter ended
30 June 2017
Translation
IAS 18 basis foreign International
Rm Reported exchange(2) Normalised* One-off(3) Adjusted**
Revenue
Group 20 685 (164) 20 521 - 20 521
International 4 240 (164) 4 076 - 4 076
Service revenue
Group 17 098 (159) 16 939 (144) 16 795
International 4 122 (159) 3 963 (144) 3 819
Data revenue
Group 6 124 (17) 6 107 - 6 107
International 582 (17) 565 - 565
M-Pesa revenue
International 537 (25) 512 - 512
Notes:
1. The reported percentage change relates to the quarter to date year-on-year percentage growth between 30 June 2017 and 30 June 2018 on an IAS 18 basis. 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.
2. Translation foreign exchange 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 quarter 30 June 2018 average rate (which is derived by dividing the individual subsidiary's translated rand value with the
functional currency for the quarter) to 30 June 2017 quarter numbers, thereby giving a user a view of the performance which excludes exchange rate variances. The prevailing
exchange rates for the current and comparative quarters are disclosed above.
3. During the 2nd quarter of the previous year, we reclassified the foreign exchange difference between USD and CDF sales to be netted off on the corresponding revenue line.
The adjustment was USD11.4 million for Q1 2017. Q1 2017 was not restated for this change.
Reconciliation of IAS 18 to IFRS 15 values for the quarter ended
30 June 2017
Impact
of adoption
Rm IAS 18 of IFRS 15 IFRS 15
Service revenue
Group 17 098 (1 004) 16 094
South Africa 13 123 (990) 12 133
International 4 122 (15) 4 107
Equipment revenue
Group 3 248 131 3 379
South Africa 3 196 115 3 311
International 77 15 92
Non-service revenue
Group 339 5 344
South Africa 335 6 341
International 41 - 41
Revenue
Group 20 685 (868) 19 817
South Africa 16 654 (869) 15 785
International 4 240 - 4 240
The quarterly information has not been audited or reviewed by Vodacom's external auditors.
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 update which sets out the quarterly results for Vodacom Group Limited for the three months ended 30 June 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 EBIT, 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.
Sponsor: UBS South Africa (Pty) Limited
ADR depository bank: Deutsche Bank Trust Company Americas
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