Prepaid users, mobile data lift Vodacom Q3 sales

JOHANNESBURG, S.AFRICA: Vodacom, South Africa's largest mobile phone operator, overcame stiff competition to post a 6 per cent rise in third-quarter sales, boosted by a surge in mobile data and strong prepaid growth.

Vodacom, which operates mainly in South Africa, the DRC and Tanzania, is fighting to keep market share from competitors such as MTN Group and India's Bharti Airtel, both of which have a bigger presence across Africa.

"We are holding our market share, I think. We are competitive and our customers are growing strongly," Pieter Uys, Vodacom chief executive, said on a conference call.

The company said it added 2.2 million mobile users in the three months to end-December, bringing its total to 41.6 million customers.

Investors cheered Vodacom's continued growth, sending its shares up nearly 5 per cent. The stock has risen sharply since last May but has dropped around 4 per cent so far this year. "It was a good performance, but I have concerns that this rate can be sustained in the next year or two," said Irnest Kaplan at Kaplan Equity Analysts.

For Vodacom, its operations in the Democratic Republic of Congo (DRC) remain a worry, having been locked in a long-running dispute with its joint venture partner.

Uys reiterated the group's position that it may sell or buy out its partners, Congolese Wireless Network.

Satellite services

Another challenge for Vodacom is its satellite services firm Gateway, which it acquired in 2008 for $700 million.

Last year, Vodacom divided Gateway into two units in a bid to fix its underperformance. Uys said Vodacom could sell or reduce its stake in one of those units, Gateway Communications, which provides voice and data connection services.

 The company said revenue for the three months to end-December totalled 16.03 billion rand ($2.3 billion), compared with 15.4 billion in the same period a year earlier.

Reflecting a strategy to diversify its revenue, Vodacom continued to see growth from data. In South Africa, data revenue grew 34 per cent to 1.7 billion rand, while data users rose by nearly 1 million to 8.7 million.

Vodacom shares closed 4.5 per cent higher at 74.50 rand, outperforming a 2.3 per cent firmer JSE Top-40 index .JTOPI.