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Vodacom plans video-on-demand as Africa data sales boost profit

‘We need to play more in the content space,’ Joosub says.
Vodacom CEO Shameel Joosub

Vodacom Group, the South African unit of Vodafone Group, announced plans to enter the increasingly competitive African video-on-demand market as data-revenue sales helped boost first-half profit by 6%.

“We’re becoming more of an internet company,” chief executive officer Shameel Joosub said by phone. “We need to play more in the content space. We will have video-on-demand offerings.”

Earnings per share excluding one-time items rose to R4.40 in the six months through September, the Johannesburg-based company said in a statement on Monday. That compared with R4.15 rand a year earlier. Data revenue increased 34% as active customers grew 6.8% to 65.1 million people.

Vodacom, which is 65% owned by Newbury, England- based Vodafone, is expanding in sub-Saharan Africa to counter tough competition and regulatory pressure on sales growth in South Africa, where it’s the market leader in terms of subscriber numbers. The company got antitrust approval to acquire internet provider Neotel earlier this year as it seeks to offer new services in the country, while adding small-to-medium sized business customers.

Shares Gain

The company shares gained 1.5% to R150.67 as of 11:07am in Johannesburg, increasing the year’s advance to 17%. That compares with a 30% fall for cross-town rival MTN Group, which said on Monday that CEO Sifiso Dabengwa resigned after the company was fined a record $5.2 billion by regulators in Nigeria.

South Africa, Vodacom’s largest market, added 1.6 million customers to 33.7 million people. The company also has subscribers in the Democratic Republic of Congo, Lesotho, Mozambique and Tanzania.

Vodacom will expand its music-streaming partnership with Paris-based Deezer into new markets and is in discussions with local and international content providers about delivering video-on-demand products across Africa, Joosub said. Naspers, Africa’s biggest company by market value, started its ShowMax video offering in August, while PCCW, controlled by Hong Kong billionaire Richard Li, is also seeking to enter the market.

The expansion of Vodacom’s content services comes as fixed-line operator Telkom confirmed talks to acquire South Africa’s third-largest wireless company Cell C. A deal “could be a credible tie-up,” according to Joosub.

©2015 Bloomberg News

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