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VODACOM LESOTHO LOSES CUSTOMERS BUT REVENUE GROWS

By Poloko Mokhele

Vodacom Lesotho has reported a 3.4 percent increase in Earnings Before Interest and Tax (EBIT) for 2018 after strong growth in data and M-Pesa revenue, despite losing over 100 000 customers.

It lost 123 000 customers from 1 587 000 it had in 2017 to 1 464 000 customers in 2018 – a 7.8 percent decline.

Vodacom Lesotho is a subsidiary of the Vodacom Group Limited, a South African mobile communications company, providing voice, messaging, data and converged services to over 55 million customers.

According to the Vodacom Group Limited’s integrated report for the year ended 31 March 2019, Vodacom Lesotho’s EBIT for 2018 was M491 million, compared with M475 million in 2017.

Revenue for the year rose by 4.2 percent to M1 308 000 000, compared with M1 255 000 000 in 2017 driven by strong growth in data and M-Pesa revenue.

Data revenue grew 18.4 percent, supported by a 49.6 percent increase in data usage per customer.

M-Pesa revenue grew 34.8 percent, supported by a 37.9 percent increase in M-Pesa customers.  Launched in July 2013, M-Pesa, a revolutionary financial service and driver of financial inclusion and economic empowerment.

Through M-Pesa, Basotho send and receive money, buy airtime, are able to pay for utility bills.

“We increased usage of our ecosystem products such as pay bill transactions and airtime purchases, and expanded transactions with merchants. We also successfully introduced M-Pesa point of sale facilities in large retail outlets.

“EBIT increased by 3.4% percent supported by strong revenue growth, slightly offset by an increase in the cost of international termination rates and higher network costs,” Vodacom said in its report.

The company said the total tax contribution it made to the Lesotho government in 2018 was M331 million.

It said it continued to deliver on its strategy despite the macroeconomic challenges in the country and the effects of the Value Added Tax (VAT) increase.

“The number of smartphone users increased 17.6 percent, as we facilitated access to better low-cost smart devices, growing smartphone penetration to 57.2 percent of our customer base. Average Revenue Per User (ARPU) declines are in line with our pricing transformation, as we continue to reduce out-of-bundle rates and introduce smart notifications,” it said.

In 2018, following spectrum allocation by the regulator – Lesotho Communications Authority (LCA), Vodacom Lesotho became the first company to commercially launch 5G on the African continent, and one of the first globally to achieve this significant milestone.

It said: “In the year ahead, we will be driving data monetisation by increasing in-bundle usage and smartphone penetration, and providing reasons to consume with the launch of video and music propositions.”

Vodacom also indicated that it will continue to focus on expanding the M-Pesa ecosystem and optimise M-Pesa distribution, with the launch of some “exciting new products planned”.

Its data customers increased from 673 000 in 2017 to 734 000 in 2018 while M-Pesa customers increased by 147 000 from 388 000 in 2017 to 535 000 in 2018.

It said it improved its Reputation index driven by increased trust in its brand.

This positive outlook, according to Vodacom, was evident in the ratings from the general public and employee stakeholder groups.

It however said more needs to be done to enhance the quality of engagement with the regulators and policymakers.

Vodacom Lesotho started operating in 1996 with the government of Lesotho as a shareholder through its stake in Lesotho Telecommunications Corporation (LTC).

When the government of Lesotho began its privatisation process in 1999, it invited bids for this share in Vodacom Lesotho. In July 2000, Sekha-Metsi Consortium, a group of local business people and public figures, was announced as the successful bidder.

Sekha-Metsi holds a 20 percent share in Vodacom Lesotho with the remaining share held by Vodacom Group. Vodacom Group operates as a subsidiary of Vodafone Group Plc. NW

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