Vodacom’s latest trading statement shows a resilient performance, in the face of what the company called a “challenging environment”. Group revenue rose 6% for the quarter ending in December 2009, but the overall picture is mixed, with stable growth and a relatively positive outlook contrasted with some weakness in its international operations. Over the past four quarters, Vodacom’s revenue has grown by less than 2%, with slower, if solid growth in the mature South African market not compensated by international operations, where revenues have declined by about 10% over the same period. A few highlights:

In South Africa, year-on-year revenue growth was solid at 7.5%, with subscriber growth stable and revenue now largely driven by strong performance on the broadband front, where the company has emerged as the largest broadband retail provider. Overall ARPU is at the same level year-on-year at ZAR140, but 12% higher than over the previous two quarters.

International operations are a pressing concern.   Revenue declined 7% for the quarter and has been on a 10% downward trend over the past four quarters. The key factors of decline are a combine drop in subscriber growth and overall subscriber revenue.

• In DRC, Vodacom’s subscriber base fell from 4.4 to 3.5m, the result of tough economic conditions, competition and a clean-up of its subscriber base. The company’s subscriber share has declined from 52% in 2006 to an estimated 38% at the end of 2009.
• In Tanzania and Mozambique, Vodacom’s leading position is also under threat. Despite a good product portfolio, the operator has seen a decline in subscriber gross adds and the gap with rivals Zain and Tigo is narrowing. The differential between Vodacom and Zain’s subscriber base stood at 59% at Q22008. It dropped to 35% at Q42009. Nonetheless, Vodacom should keep its first place over the coming years with a market share around 37%.
• ARPU across international operations has declined by an average of 15% over the past four quarters, a trend the company attributes to competitive promotions and economic pressures, and one that complicates matters when subscriber growth seems to be contracting.
• Revenue from international wholesale business Gateway has been largely flat, an evolution not entirely surprising, as the company expands and has to face sharp declines in bandwidth prices in many of its markets. The business retains substantial upside.