Vodacom Customer Numbers Fall on African Regulator Scrutiny

  • Vodafone’s South Africa unit hurt by new registration process
  • First-quarter sales increased 5.8% on network investment

Vodacom Group Ltd. said customer numbers fell in the first quarter as authorities in international markets that include Tanzania and the Democratic Republic of Congo made changes to the way the company registers subscribers.

Group active customers declined 2.6 percent to 61.8 million in the three months through June, even as the number of South African subscribers rose, the Johannesburg-based company said in a statement on Thursday. International service-revenue growth of 14 percent was also impacted by the new regulations, the wireless operator said.

The shares declined 1.5 percent in Johannesburg, on track for the steepest drop in more than a month, to 167.32 rand as of 12:01 p.m. local time. That pared the increase for the year to 9.8 percent, compared with a 7.3 percent gain for cross-town rival MTN Group Ltd.

“As expected, our international operations have been impacted by new customer registration processes which was offset by currency gains,” Chief Executive Officer Shameel Joosub said in the statement, without providing detail of the changes. “We remain committed to actively bedding down new customer registration processes in the various markets in which we operate.”

Vodacom’s report of changing regulatory regimes in sub-Saharan markets is a reminder of MTN’s experience in Nigeria, where the continent’s biggest wireless operator was fined 330 billion naira ($1.1 billion) for missing a deadline to disconnect unregistered customers. More than 40 percent of Vodacom’s subscribers are outside its home market, as the company taps a rise in demand on the continent for data services such as mobile banking.

‘Encouraging’ Numbers

Vodacom first-quarter sales gained 5.8 percent to 19.9 billion rand as the wireless operator invested in its network and boosted data revenue by 19 percent. The company is about 65 percent owned by Newbury, England-based Vodafone.

“It is an encouraging set of numbers from Vodacom, and it shows that these businesses are anything but” fully grown, Byron Lotter, a money-manager at Vestact Ltd, which holds Vodacom stock, said by phone.

Vodacom has been striving to boost internet services in its home market as tough competition and stringent regulation eat into revenue from phone services. The company was forced to abandon a two-year pursuit of Neotel Pty Ltd. earlier this year, and is considering bids for broadband spectrum made available by the government this month after a delay of about five years.

“Data demand continues to grow exponentially while technology is advancing well beyond what we can viably deliver with the available spectrum,” Joosub said by e-mail. “There is no doubt that greater access to spectrum will give South Africans faster speeds and, inevitably, lower data pricing.”

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