A good call
Price wars and subscriber competition are challenges of the past for mobile operators in South Africa. With prices plateauing, the quality, availability and speed of network has become a more pressing matter. According to MyBroadband, Vodacom currently has the best voice and data network in SA, based on network coverage, call quality and mobile data network performance.
The group reported strong growth in data revenue, which was up 33.5% in the six months to end September, with data users increasing to 28.3m across the group.
In SA, LTE/4G coverage has increased from 32.2% to 46.8% of the country, CEO Shameel Joosub said at the release of the group’s results on 9 November.
“Our LTE/4G customers in SA, now approaching 2m, consume almost three times more data as compared with 3G customers,” Joosub said. Overall, Vodacom managed to increase group revenue by 6.4% to R39.96bn in the interim period, while headline earnings per share increased 6% to 440c. Outside SA, Vodacom has operations in Lesotho, Mozambique, Tanzania and the Democratic Republic of Congo.
Vodacom is focused on investing more into fibre and other new growth areas in the second half of the financial year. Data will be a big focus area, with only 66% of its monthly active South African customers currently using data, Joosub said.
The group also sees opportunity to grow its market share in the fixed services business. Its proposed purchase of Neotel, which is awaiting approval from the Competition Tribunal, will enhance its ability to provide fixedline services, broadband and fibre to customers in SA, he said.
The company continues to outperform MTN this year - Vodacom shares are up 17.8% over the past year, compared with MTN’s decline of 31.1%, according to INET BFA data. On a performance basis, investors’ bets are placed on Vodacom.
Upside above 15 200c/share presents a good buying opportunity, which should extend the current uptrend to the 16 875c/ share target in the near to short term (one month). The secondary target is situated at 18 155c/share.
Shameel Joosub CEO of Vodacom Group