Vodacom still pleased with Gateway

Six months after rebranding, Vodafone’s South African affiliate, Vodacom, has turned in what Frost & Sullivan described as “a solid set” of financial results for the six months to the end of September, with total group revenue rising to R31.7bn (€2.9bn) from R29.5bn. Mobile data revenue was up 31.1 per cent year on year and EBITDA 7.6 per cent higher to R10.5bn on the back of a 38 per cent growth in data customers.

Yet subsidiary Gateway Communications has continued to drag on the company’s operating profit with an R318m impairment charge over the period. Telecoms.com spoke with Vodacom CEO Johan Dennelind, who said that he was “very happy” with the carrier part of the business. “It’s competing well but competition is difficult if you are sub-scale. So we need to scale the business and there are many different ways of doing that, which is where these various reports have come from.”

Vodacom South Africa has cut data prices by up to 42 per cent, as competition intensified, following similar moves by industry rivals, Cell C and MTN, which cut their data prices to obtain a foothold in the market.

“Vodacom is clearly intent on protecting its position as the leading provider of mobile services in South Africa in what is shaping up to be an important strategic battle between mobile service providers”, said Frost & Sullivan ICT research analyst Lehlohonolo Mokenela. “The price wars are, however, likely to put a squeeze on margins until some form of normalisation is established. It is also an indication of the contribution operators expect data to have on future revenue.”