Vodacom – South Africa’s biggest mobile phone operator – announced on Thursday that its customer base was down by 9.9%, mainly driven by reduced gross connections in the prepaid segment during the period of restricted movement.
The lockdown was imposed to curb the spread of the COVID-19 while giving the government time to prepare the healthcare system for the expected spike in virus infections.
Lockdown Level 5 was introduced in South Africa on 26 March 2020 and now the country is in Level 3.
Vodacom announced on Thursday announced its trading update for the quarter ended 30 June 2020.
The company said revenue for its South Africa operations grew by 4.2% impacted by lower equipment sales during the lockdown period, but showed recovery during the latter part of the quarter.
It added that service revenue increased 6.4% benefiting from increased demand for data and connectivity services as customers work, entertain and educate from home during the quarter.
“The significant growth in demand assisted in offsetting the effects from a price reduction Vodacom CEO Shameel Joosub on 30-day data bundles from 1 April 2020,” the company said.
The Vodafone-owned telco added that its customer base in South Africa was down by 9.9%, mainly driven by reduced gross connections in the prepaid segment during the period of restricted movement.
“We are however encouraged that our 30 day active prepaid customer base grew by 0.9%. The contract customer base increased, benefiting from Enterprise customers extending more data lines,” Vodacom said.
However, Vodacom saw a 97.7% increase in data traffic for the quarter, as demand for connectivity services was key in keeping the South African economy going and
“We also implemented price reductions of 34% on average from 1 April 2020 for 30-day data bundles. The increased demand more than offset these price reductions during the period,” the company said.
“We also note an increase in data customers of 6.5% during the period with 13.2 million using 4G, up 29.4%.”
Financial services grew by 10.9% during the period supported by Airtime Advance, which increased by 11.9%, as more customers were able to use the service – penetrating 28.0% of our prepaid base.
Insurance policies increased 22.8% to 1.9 million long and short term policies.
Vodacom Business benefitted from higher inflow of MBB contracts and APN access. Fixed-line was up 7.4% as a result of new connections over the period. “We also implemented highly discounted offers to enable education initiatives for universities and
schools of which we saw very good take up of services.”
Vodacom CEO Shameel Joosub said while he was particularly pleased with the performance of our South African business, the company remains cautious about the impact of
COVID-19 on its operations.
“Looking ahead, the long anticipated award of high-demand spectrum in South Africa remains instrumental in the data pricing dynamic in our largest market,” he said.
“Lengthy delays in completing the digital migration and allocating 4G spectrum continues to curb the pace at which data prices could have fallen. ICASA is expected to complete its spectrum allocation process by December 2020.”