S.Africa connection rate cut hits Vodacom's Q3 revenue

Feb 04, 2015

South African telecoms operator Vodacom on Wednesday posted third-quarter revenue of 19.99 billion rand ($1.76 billion), down 1.1 percent from a year earlier, partly due to a drop in the charge customers pay to call other networks.

The unit of Britain's Vodafone Plc did, however, add 9 percent more customers to 61.1 million users, in the three months to end December 2014, the company said.

South African regulators asked telephone companies last year to lower the amount they charge one another to connect calls onto their networks, called termination rates, saying they were keeping tariffs high and hindering competition. "There was a significant impact from the 50 percent decline in mobile termination rates in South Africa, increased competition and we're seeing increased pressure on consumer spending," chief Executive Shameel Joosub said in a statement.

Without the reduction in the connection rates in South Africa, revenue would have risen 1.5 percent, the operator said. Vodacom shares have risen 4.4 percent this year. Those of its main competitor, MTN, are down 5 percent.

Vodacom also offers telecommunications services in Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.

 

Source: Reuters 

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