January 24, 2019 / 9:31 AM / a month ago

South Africa's Vodacom reports quarterly slowdown, shares fall

JOHANNESBURG (Reuters) - South Africa’s Vodacom (VODJ.J) on Thursday reported a slowdown in quarterly group and service revenue growth sending shares in the mobile phone operator down 8.6 percent at the market open.

FILE PHOTO: A branch South African mobile communications provider Vodacom in Cape Town is shown, November 10, 2015. REUTERS/Mike Hutchings/File Photo

Vodacom, which competes with MTN Group (MTNJ.J), implemented a number of “generous” promotions in the quarter and introduced lower-priced bundle offers through the year.

These efforts dented data revenue growth in South Africa.

“In South Africa, service revenue declined 0.9 percent, affected by the effects of our pricing transformation strategy ...as well as the transitioning of traffic between our roaming partners,” Chief Executive Shameel Joosub said in a statement.

Group revenue for the quarter to Dec. 31 rose 1.5 percent to 23 billion rand (1.28 billion pounds) under the previous IAS 18 accounting standard, slowing from growth of 6.7 percent a year earlier.

Service revenue rose 2.4 percent to 18.9 billion rand, slowing from 5.5 percent growth a year earlier.

Using the new IFRS 15 accounting system, group revenue fell 2.1 percent and service revenue fell 2.9 percent.

Vodacom’s shares fell 8.6 percent at the open before paring loses to trade down 6.84 percent at 0850 GMT.

The unit of Britain’s Vodafone (VOD.L) said service revenue from its international operations jumped 13.2 percent buoyed by data revenue growth and its mobile financial services platform, M-Pesa.

Group customers increased 7.1 percent to 79 million, growing 5.4 percent in South Africa and 9.3 percent in its international operations.

Vodacom will be implementing the End-User Subscriber Charter Regulations on March 1, which will drag on data revenue growth in the near term, it said.

The regulations will allow consumers to carry over their unused data and operators are no longer allowed to charge consumers out-of-bundle rates.

Reporting by Nqobile Dludla; editing by Sherry Jacob-Phillips and Jason Neely

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