Competition intensifying for Vodacom

Vodacom warned that competition in markets where it operates "will no doubt intensify" but claimed it would achieve single digit growth through "delivery on our cost efficiency programmes".

Vodacom reported a 23% increase in headline earnings per share for the year to 872c as a result of strong operating profit growth and secondary tax on companies falling away.

Group revenue rose 4.5% to R69.9bn. The company‚ which also operates in Tanzania‚ Mozambique‚ Lesotho and the Democratic Republic of Congo‚ ended the year with 51.7m customers.

Services revenue grew 1.9% to R59.3bn.

The company said in SA‚ where it was competing "hard" to maintain and grow its share of a market that has reached saturation in mobile voice penetration that its focus is on clear differentiation through best network experience‚ best service and best value.

In its operations outside SA‚ where penetration rates remain low Vodacom says it is competing for customers and building scale. Its focus was on expanding coverage and driving penetration through network quality‚ distribution‚ products and value.

Over the past five years‚ Vodacom has spent R38bn on network investment‚ R28bn of which was in SA.

Last year it spent R9.5bn across the group and R7bn in SA.

"It's thanks to this intense investment that we've got the footprint‚ capacity and technology to capitalise on the smart device on the market. Crucially‚ it has also enabled us to operate more efficiently and expand our margins despite comprehensive price reductions‚" said chief executive Shameel Joosub.

In the medium term Vodacom expects capital expenditure to be between 11% and 13% of group revenue.

Joosub said Vodacom continued to invest in specific growth opportunities‚ chiefly in extending the benefits of high speed data access to more customers and growing the company while leveraging the success of services such as M-Pesa.

Source: Business Day via I-Net Bridge