Group service revenue was up 7.6% (2.6%*) and Group revenue grew by 5.6% (1.3%*), benefitting from strong growth in South Africa with customer demand increasing during the lock down period, while the International operations were negatively impacted by lower economic activity from the effects of COVID-19. South Africa service revenue growth was solid at 6.4% for the quarter, supported by strong demand for data and connectivity services in the period.
In the face of an unprecedented global pandemic, Vodacom Group has responded rapidly to assist governments where it operates in curbing the spread of COVID-19 while also adapting to significant changes in customer demands and behaviour patterns. In South Africa, the combination of increased demand for data following significant tariff reductions of up to 40% effected on 1 April and more people working and being educated remotely, resulted in a significant increase in mobile and fixed traffic in the first quarter.Shameel Joosub, Vodacom Group CEO
International service revenue grew by 10.7% benefiting from the rand devaluation. Underlying performance was subdued with a 5.3% decline, as a result of lower economic trading activity, free M-Pesa services and customer registration requirements in these businesses.
As a result, we accelerated network infrastructure spend by R500 million to R2.7 billion in Q1 and used the temporary assignment of spectrum by ICASA to rapidly increase network capacity to ensure that we continue to deliver a high quality experience to customers. The temporary spectrum assignment also allowed us to fast track the launch of South Africa’s first mobile 5G network and our fixed 5G commercial service.Shameel Joosub, Vodacom Group CEO
Strong demand for voice, data and financial services contributed to the 6.4% increase in service revenue growth in South Africa while Vodacom’s International portfolio benefited significantly from currency changes to grow service revenue by 10.7%. This resulted in a 7.6% increase in service revenue across the Vodacom Group despite tougher economic trading conditions in most of its markets.
Excluding currency gains, underlying growth in the company’s International portfolio declined by 5.3% as economic activity declined across these operations. Vodacom also reduced pricing on a temporary basis on a number of M-Pesa transactions to assist customers in contactless payment in light of social distancing initiatives.