While Vodacom saw a surge in data traffic during lockdown, it also lost nearly 2.5 million pre-paid customers.
Data traffic on the Vodacom network nearly doubled over the past quarter – as South Africans scrambled to stay connected during lockdown.
But the group lost 2.5 million prepaid customers.
This is due to customers not being able to buy new SIM cards during lockdown.
On Thursday, the company released a trading update for the quarter ended 30 June, presenting the first solid look at the effects of lockdown on the company.
According to Vodacom, the company’s customers declined by 9.9% from 43.7 million in the same period last year to 41.3 million at the end of March. The decline was predominantly due to a fall in prepaid customers, from 37.8 million in 2019 to 35.2 million this year.
However, according to Arthur Goldstuck, technology analyst at World Wide Worx, this should not be alarming. Pre-paid customers typically don’t stick around very long, and this is in line with normal levels of churn.
“People activate new SIM cards to take advantage of new offers, or to get promotional data,” Goldstuck says.
But what was different during lockdown was that customers weren’t able to go into stores to activate new prepaid Vodacom accounts, which is why the net number declined so much.
And the remaining customers were the big spenders: average revenue per prepaid user jumped by 21% to R64 a month.
Data traffic nearly doubled over the quarter. “Demand for connectivity services was key in keeping the economy going and learners educated,” the company says. People are so much more dependent on data during the lockdown, says Goldstuck.
According to Vodacom CEO Shameel Joosub, the company pumped R500 million into its network during the period to cater for the surge in demand. The company says 13.2 million of its subscribers are now using 4G.
Taken as a whole Vodacom’s service revenue increased by 6.4% in South Africa to R13.3 billion. Service revenue for its international operations decreased by 5.3% on a normalised basis to R5.6 billion.
“Vodacom’s results look positive,” says Goldstuck. “At a time when so many organisations are still adapting to the new business environment, these results show stability and efficiency.”
But the market may have been expecting more: Vodacom’s share price ended almost 2% down at R126.01.