Day, ladies and gentlemen, and welcome to the Vodacom Group Limited Results Conference Call for the 3 months ended 31 December 2020. Before I hand the call over to Chaunil, I would ask that you refer to and familiarize yourself with Vodacom's forward looking disclaimer. This is set out on Page 15 of the trading update and can be located on www.vodacom.com. Alternatively, if you would like to a copy of the trading update sent to you, please e mail Investor Relations at vodacom atvodacom. Ca.
Za. All participants are currently in listen only mode and there will be an opportunity to ask questions later during the conference. Please also note that this event is being recorded. I would now like to turn the conference over to Shmuel. Please go ahead, sir.
Thank you, Chris. Good afternoon, everyone, and good morning to those joining the call The U. S, I'm joined by Rasebe Morati, our Group CFO Mariam Kassim, our Group Chief of Financial and Digital Services and JP Davids from our Investor Relations team. As this is our quarterly trading update, we will focus on revenue and key performance indicators only. As with prior year quarterly results, Safaricom does not report on its performance, so we will not focus on our consolidated operations.
Against an evolving economic and pandemic backdrop, our 3rd quarter results confirm the importance of our core services Now accelerated evolution from metallic communications to a technology company. We continue to expand our ecosystem of products across connectivity, Digital and Financial Services to deliver a 360 degree customer experience. We believe this ecosystem approach sets us up for long term value creation. Also, we remain committed to assisting governments curb the spread of the pandemic whilst at the same time focusing on the economic recovery in each of the markets where we operate. In the quarter, we delivered revenue growth of 6.4% And service revenue growth of 3.9%.
Normalized growth, which adjusts for foreign exchange and M and A, was slightly higher at 6.7% for revenue 4.2% for service revenue. This performance reflects improved growth from our international operations and sustained Strong growth in the South Africa in South Africa. Pleasingly, the South African result is a function of multiple growth drivers, including our prepaid segment, Vodacom Business, Financial Services and IoT. It's also important to note that our international markets, including Safaricom, are again charging for peer to peer and peso transactions. Looking at South Africa in a bit more detail.
Service revenue increased 5.4%, Underpinned by strong mobile customer revenue growth of 5.8%, the standout performance in mobile customer revenue was prepaid. Prepaid ARPU increased 9.3 percent to ZAR59 supported by increased usage of our connectivity, financial and digital services. The performance is also supported by the accessibility of airtime by our airtime advanced product. In the quarter, we advanced Airtime amounting to 40.2 percent of total prepaid charges. Our contract segment posted a resilient performance with revenue growing at 1.6% and customers up 1.9 percent to $6,200,000 The growth we reported in both mobile customer revenue and service revenue reflects our strategy to introduce one more service to customers.
New revenue streams, which comprise Financial and Digital Services, Fixed and IoT revenues were up 20.3% year on year. These revenue streams contributed 14.4% to service revenue from 12% a year ago. Financial Services delivered another strong quarter. Recorded ZAR 619,000,000 in revenue in the period, growing by 24.3%. This business Now delivering an annual revenue run rate of ZAR 2,500,000,000 From a product perspective, we advanced ZAR 3,100,000,000 in Airtime via the Airtime Advanced platform to 10,700,000 customers.
Growth in the insurance base continues with revenue increasing 13.5% And policy is up 11.2 percent to almost 2,100,000. To provide some color on our Financial Services business and in particular our partnership with Alipay, Madame Kassam, our Chief of Financial and Digital Services, will provide an update later on this call. Switching to Vodacom Business, the segment now accounts for 27.5 percent of service revenue and grew 6.1%. This performance was supported by fixed line, Cloud and hosting and IoT revenue all producing double digit growth. Also, we finalized an extended roaming agreement with Cell C related to its contract and mobile broadband customers.
We expect this deal to be revenue accretive and that will carry around and that we will be carrying around 40% of Southeast total traffic. On the connectivity side, we increased Home and Business Fiber customers to 110,000, up 113% year on year. The demand for mobile data continued in the quarter, although the growth is strong, The trend normalizes lockdown restrictions were eased for most of the quarter. Data increased by increased 43.2%, while usage per smart device grew 35% year on year to 2.1 gigabytes per user. There are now 15,100,000 4 gs devices connected onto our network, an increase of 24% year on year.
Our international operations delivered a notable sequential improvement in the quarter. Normalized service revenue declined 0.3% compared with the 5.2% decline in the first half of the financial year. This trend reflects some progress in economic and commercial activity levels and improved EMEA growth. Data revenue growth was 6.6%, supported by network investment and targeted campaigns. Data customers net additions were $302,000 in the quarter to end on $20,700,000 This means that 52.6 percent of our international customers make use of data services.
Data traffic in our internationals was up 52.2%, supported by focused data campaigns and our investment in Engine Networks and our strong CBM platform. APACER revenue growth improved meaningfully in the quarter as we sustained strong platform growth and improved monetization. Mozambique reinstated person to person fees from October with the DRC and Safaricom following in January. Active M Pesa customers increased by 7.7 percent to $16,000,000 representing 47% of our international customer base. APESAR revenue grew 10.1%.
On a normalized basis, APESAR revenue was 7.8%, comparing favorably with the decline of 1.4% in the first half of the year as a result of the free person to person money transfers. APACER now represents 21.1 percent of our international service revenue. Including Sifydecom, APACER now processes $24,200,000,000 And value per month, up 57.8 percent year on year. To give this value some context, Miner in Philippines processed $20,000,000,000 over 12 months and recently raised funding at $1,000,000,000 valuation. Overall, our international operations contributed 28.2 percent to group service revenue.
Before I conclude with comments on regulation, will hand over to Miriam for an update on Financial Services and Alipay.
Thanks, Jamil. Hello, everyone, and thank you for the opportunity My name is Miriam Katam, and I look after the group's financial and digital services. Before I jump into the Alipay partnership, I thought it would be useful to provide some context around our South African Financial Services business. 1st and foremost, it's important to note that our financial services business is a fully independent company and a wholly owned subsidiary of Vodacom South Africa. We have our own Board of Directors, own dedicated resources and own capping.
This is very important for high growth companies such Ours as a separate standalone structure allows us to be incredibly nimble in what we do and has contributed to us being quick to market With the delivery of new and often disruptive products and services contributing to our ZAR1.2 billion bottom line, We operate across 4 product lines, which includes payment, lending, insurance and trade. The last of these is probably the least familiar to you. Our trading business consists of all of South Africa's major FMCG players with over 4,500 small merchants And processes over ZAR200 1,000,000,000 of transaction value per annum. Connectivity with merchants is an important part of our payment ecosystem approach And our trading platform will form the basis for these interactions. We are also proud to share that we have officially launched our own physical point of Android devices into the market a few years ago.
This represents the execution of the first part of our payment strategy, which was created just over 2 years ago and is a significant milestone for Vodacom as it starts to create a whole new revenue stream We have signed just over 1200 active merchants in the last few months since launch And currently process approximately ZAR100 1,000,000 of transaction value per month. Our Android point of sale device is amongst the first of its kind in the South African market And allow small merchants to do so much more than just processing card payments. Merchants can apply for a loan through the device, Connect directly with FMCG suppliers and soon we'll be able to vent prepaid airtime, electricity and other products through the point of sale device. Our ETime Advanced product continues to grow as we continually enhance the credit scoring algorithm and ensure that it is available to customers at every single pain point of not having per month, which equates to 40% of total prepaid airtime to approximately 11,000,000 active customers. Our insurance business has also continued to grow despite the challenging COVID year as we've seen a rise in our funeral insurance and Medi Assist products.
We still continue to enhance the product base by creating new and innovative products in this space. And then, of course, we have the landmark Alipay partnership. Our partnership with Alipay will add new dimensions to our financial services proposition and in particular Vodafay, which will become a single lifestyle super app. We are actively working on 3 streams to get this done, namely the customer journey, merchant sign ups and our financial services infrastructure. To deliver on each of these elements, we've hired more than 100 software engineers into Vodacom Financial Services.
And critically, our Alipay partnership provides us The wealth of insight and precedent on how to get this development done successfully. We look forward to taking you through more of the detail closer to our launch date. I will be on the call to handle any further questions which you may have in this regard. Thanks. Back to you, Chanel.
Thank you, Madam. To conclude our quarterly update, I would like to give a brief update on the spectrum process in South Africa. In December, subsequent to Akasa's invitations to apply for Spectrum, the regulator received a court application filed by Telkom. The Telkom filing comprised 3 parts with Part B seeking to stop ICASA from assessing or adjudicating applications received for both The high demand spectrum and the worn ITAs. Telkom has requested a yearning, which is expected for the 9th February 2021, so in a couple of weeks' time.
In addition to Telkom's filing MTN and Free to air broadcaster, ETV, have also lodged court filings in respect of the option. We see the assignment of the spectrum instrumental in extending coverage, improving quality of service and lowering the cost to communicate in South Africa. To this end, in December, Vodacom submitted an application in response to the exclusive use ITA. 5 other local telcos, including Telkom and MTN also submitted our applications. We believe that any further delays to the auction process will likely have a negative impact on consumers.
Tesla actually remained supportive of the auction proceeding by the 31st March 2021. In addition to participating in ICASA's high demand spectrum auction, our ongoing COVID-nineteen response and ensuring that we continue to invest significantly in our network To accommodate rapid shifts in the customer behavior is a key strategic priority for the group in the next quarter. To further enhance customer experience, we invested ZAR3.5 ZAR3.4 billion in our network across the group in the quarter, including expansion of 4 gs coverage, speed and capacity. In South Africa alone, we invested ZAR2.6 billion to support data demand and shifts in customer patterns. This concludes my comments and ICP, Miriam and I are now ready for any questions.
Thank you, Our first question is from Prashendran Udaya of Nedbank. Please go ahead.
Hi, everyone. Firstly, congratulations on the Trading update. I've got 2 quick questions, if I may. Firstly, I just want to know on South Africa, the active data customers went down in the period. I'm just trying to if you can give me some details or color on why that happened.
It Wasn't much, I think 1.8% down. The second question is around Cell C, I remember at your interim results, you mentioned to us that the Cell C was mainly for 2 gs and that was Coming to an end, I think around ZAR40 1,000,000 that you were getting from Celsius on that roaming agreement. Can you give us any indication Of how this new roaming agreement on its contract involves their subscribers are going to affect your it fits in your other service revenue line. I know you mentioned just earlier that you're going to plan to cover about 40% of Celsius traffic.
So I just wanted to know if you
can give us some numbers on or some color on What that impact will be? And just the last one, please, if I can, on Tanzania. Can you give us an update on the unregistered SIMs over there? How many are still impacted? Thanks very much.
Okay. Let me start off with the That's a active data customer. So I think what is important this year just to understand is that we've been trying And you'll know we've had this conversation for a while now. But effectively, what we've been trying to do is step down the amount of gross adds on prepaid. And so that we could ensure that we could stop the washing machine effect.
Now obviously, when you add customers At the same time, you're also adding more data customers. So just to give you a sense of what was happening and what's happening now. So last year this quarter, just as a comparison, we added $13,500,000 new gross adds on prepaid, Yes. Of which $500,000 was the real number of net adds during the quarter. So what we've done is taken a deliberate move to reduce the amount of And we've reduced the gross adds this year for the same quarter is 11,500,000 customers that we've added.
And that's because we've improved the quality around the and brought down the gross adds on purpose. But the net adds have gone up to 1,400,000 or 5000000 net adds during the quarter. So I think what's important is The factor of these higher gross adds would have given rise to a basically a bigger number of Active data customers because you especially during the December period and then they always fall off January, February, March. Now we have a more robust piece. So am I worried about it?
No, because I think it's a factor of the reduction or 15% reduction in the number of inflow on prepaid, which is resulting in a better net add quality. On Cell C Enrolling, so what's interesting is that the Cell C Enrolling agreement came to an end in November. And so they continued to use post November, But that was more on a month to month basis. On the current roaming agreement, from 1st February, the full New roaming arrangement kicks in. And without giving exact numbers, let's just say it's in excess of ZAR1 1,000,000,000 Net.
So that's the benefit of the new CELSI roaming agreement. So it's quite big for us. And so we're quite pleased it's a new long term arrangement. And effectively, we'll see Us providing both, evolving to them, but also services to them. So services in the form of where we have a separate entity that will look after things like basically some of the services On the postpaid base for the like credit rating.
Thanks, Jason.
And then on the Tanzania meta, so We indicated in our half year that 2,900,000 customers were legally deactivated. And we still expect that a further roughly around 1,800,000 customers could be deactivated. So that number is now roughly around EUR 1,100,000. So we expected or we notified that those deactivations will take place in December, Unfortunately, that did not happen. However, it is still likely that somewhere during the course of quarter 4, we could see this deactivation of the 1 point
And Raisima, can you give a revenue impact of the €1,100,000 that still Could be disconnected.
It's about Ksh
3,000,000,000 a month.
Thanks, JP. Thanks, Vasyla. Thanks very much, Sameer. Appreciate it.
Thank you. The next question is from John Kim of UBS. Please go ahead.
Hi, everyone. I'd like to ask a couple of questions about
the South African business. Can you give
us some color on price elasticity post Comp comp price cuts. From memory, I believe Vodacom proactively cut prices 15% for the 30% mandated. I'm just trying to pin down the timing of that? Thank you.
Okay. So remember your the price cuts The first price cuts were 1st April 2020, okay? And to be honest, You saw the results that came through in the first half. And so the let's say COVID helped to achieve the Very, very quickly. So though we had something like a 34% price drop On some of the monthly data bundles, basically all of it was offset by volume growth during COVID.
So we had No issues and still delivered a strong result. I always said that we should have had a negative first half, But essentially, you saw the numbers more than 5.5% growth For the first half, so very strong results in the first half. So I think it was nicely offset by COVID by the COVID results. And then we have a further price drop of 15% On the same monthly bundles that will take effect from 1st April 2021. And there again, we Quite comfortable that we will more than likely more we will be able to offset it with enough elasticity To more than cover for that price decrease.
Okay, helpful. Is there any updates Or traction on development of the wealth have been submitted or due to get it? 1,
Okay. So remember, this is all now brought up in this debacle of Telkom, right? So effectively, remember, what's supposed to happen is there's supposed to be an auction of the Spectrum, that's supposed to take place or that's planned to take place in the 31st March. Then following that, there will be a process to allocate Spectrum to the 1. I think where we are currently is a good position, which has come out in the ITA, which is equal amount of spectrum And envisage for the larger operators and the 1.
So I think that's a good place to land. Of course, we're not happy with all the Requirements of the ITA, but I think all in all on balance, if the option goes ahead, It will be okay. There is certain things that are confusing still in the ITA. And that's why you're seeing the MTN challenge coming through. I think Iqasa hasn't managed to respond properly to some of the questions or have been vague in their responses.
We took the view that it will be sorted out in the auction once the auction year has been appointed and the rules will be clearer. But I think MTN decided to take a more To take a more stronger view and actually challenge specifically the opt in rounds of the option. The one will take Once it's licensed, of course, there's a separate licensing process and then we have its obligations and so on and so on. So, I mean, we're comfortable that the balance between us and the 1 will be fine. And if the 1 Once we really create a use case that will be successful, it will provide the operators remember, the one doesn't sell directly to the market.
It will provide the operators with a rural coverage piece where there will be much bigger uptake of services that they would be in the cities. Okay, helpful. Thank you.
Thank you. The next question is from Jonathan Kennedy Good of JPMorgan. Please go ahead.
Afternoon. Perhaps a question for Miriam on Airtime Advance. Just Wanted to get a sense of where exactly those figures are recorded. Are they recorded in The prepaid customer revenue line boosting that growth there. And also in terms of 40% of airtime being driven through airtime advance.
Is it still the case that You lose some of the commission through the physical distribution channels or are you seeing Increased take up of electronic top up to pay back the airtime advance. And then secondly, just a follow-up on prepaid growth. Can you give us some color As to what revenue growth is looking like now in the Q4, I mean, obviously, you had a very strong Q3. And just trying to understand exactly how COVID grants, etcetera, and the increased Economic activity, transportation or coal share may affect in this kind of growth rate going forward?
Thanks, Jonathan. Just to your first question, yes, it is reflected in the Line item prepaid customer revenue. So that's where the Airtime Advanced revenue is reflected. To your second question in terms of the saving of the distribution costs, There isn't an exact saving as customers would still need to recharge through their normal channels. And so there is still a distribution fee payable for that.
But what we do have is we have a platform admin fee that is charged to customers to take an advance, which equates to about 9% to 10% of the The value of the advance. So we're actually a lot more profitable in the distribution fee that's paid.
So regarding hi, Jonathan. So regarding the output for Q4, obviously, We're not at liberty to be able to give you full details on that. But the alcohol then has been helpful from here until yesterday Those 2 things have changed a bit. And there's still uncertainty around whether the social grant of 3.50 will be extended or not. At this stage, the official consent of government was that it will end in January and there are obviously some No, this
is relating to what transpired in the A and C conference, but that has
not been validated by government In terms of extending the ZAR 350 per month. So for that, we think the outlook for 4th quarter It's looking positive, but obviously, it had some boosted with the Alcohol ban, which has now ended.
Thank you. If I may just ask, Shamil, one question on the spectrum licensing process. Is it feasible or is it likely that these various challenges by telecom MTN, etcetera Would delay the spectrum auction process? Or do you have any views on that or not in particular?
So look, I think there's always at risk, right? And I think the reality is I mean, I think the Chairman of Icasa put it quite nicely today, where he said that Telkom essentially is Looking at its own self interest, right? And basically trying to scupper the auction process to its own benefit. And I think that's the truth, Right. And I think Telkom's told you guys often enough that they want to delay a spectrum allocation.
So one would have thought that it would have been better this time around because I think what they're doing by delaying it is actually creating a rod for their own back Because they do need access to the lower band spectrum and so on. So It's not surprising that they're trying to delay the auction process. I think MTN has been clear that their intention is not to delay it, but rather to for clarity on this one particular Area, which is the opt in lounge. So yes, there's a risk that it gets delayed. It depends when it goes into core process, But it's a little bit more unpredictable.
It depends how the court sees it. Of course, from a public interest perspective, any further delays It's a problem and government, of course, are not happy with any delays also On the spectrum option because it's one of their priorities. And frankly speaking, they need the money as well. So I think It will be very disappointing, but yesterday it gets delayed.
Great. Thank you.
Thank you. The next question is from Mohan Rajaratnam of Midpah. Please go ahead.
Hi, guys. Thanks for the opportunity to ask questions. My first one is about is for Miriam actually. Thank you for the additional color on the Airtime Advanced product. I mean, it seems like a very useful and profitable of the prepaid segment.
My question is twofold there. You've got about 10,000,000 Which bearer I'm trying to understand the behaviors of this particular group of customers. So which bearer do they use to access Atm Advance predominantly, is it SMS? Is it USSD? Or is it actually the data bearer?
I'm sorry, I don't use it myself. So I don't know. So I'm asking that. And the second bit is, is the churn of this 10,000,000 group of people different to the general In the prepaid segment, I've got the follow-up as well.
Thanks, Miron, for your question. The first question in terms of which channel, yes, maybe I can convert you into an e time advanced customer. But yes, we find the USSD channel being the predominant channel, more than 95% of our A Time advances are taken through USSD, which is really a very convenient channel for our customers to transact through. We have just launched it on the My Vodacom app and we've seen a significant growth Through the myvodacom app, but we still yet to get to the USSD numbers from a channel point of view. We offer advances for ZAR3, ZAR5, ZAR10, ZAR20 depending on the credit scoring of the customer.
What has worked very well for us is we've started to introduce or rather we introduced about a year ago data advances. So this makes it whole lot easier for a customer to just take an advance in one easy step instead of having to take an airtime advance and then purchase data. We've now launched data advances and we're starting to launch different bundle advances as well. So more and more we're finding it's all about the customer experience and it's all about Decreasing the number of clicks that you can create to get a customer to take advantage of your product. From a churn point of view, we definitely find through the various analysis that we've done that the cohorts of customers that actually use Airtime Advanced have lower churn, But also, A Time Advance has been seen to increase the average ARPU of a customer.
Our bad debt write off So sits at less than 0.5%, which is completely unbelievable for a product of this nature given that our average advance It's around ZAR7. So real nano lending or nano credit type product. But yes, we definitely find that It helps with churn and it helps with ARPU as well. And maybe just an interesting point for you to note, at Vodacom On a daily basis, we have something called a failed transaction event. This is every time a customer tries to do something, I understand an SMS or make a call and they run out of airtime.
There's a ping that goes to the network, which is Term failed transaction events. And what we've done is we've now incorporated Airtime Advance into each one of those instances. Every time a customer tries to do something and they don't have airtime, if they were provisioned customer on the base for airtime advance, we push them an airtime advance. So we remind you that they can Taken advance and again, this has seen a significant increase in the use of the product. So I hope that answers the question.
Wonderful. Thank you so much. The second question is on the South African CapEx. In the first half, I think CapEx grew 5% And service revenue growth was about the same. In this quarter, I see service revenue growth is still mid single digit, but CapEx Drew, even quarter on quarter or year on year, about 12%, 13%.
And you did say you have Reasons to do that, and you explained a few, but is the Cell C transaction part of this growth in CapEx? Or is it something What worrying about it, I mean, if your CapEx is growing a lot faster than revenue. So just some thoughts on that please, Shamil. And I have another question.
Okay. So just to be clear, the CapEx spend for the year will be lower than the CapEx spend for last year in South Africa, okay, In total. So don't put too much focus on the quarterly pieces. We have front ended a lot of the CapEx Into Q1, Q2, Q3, so you will see the further step down in Q4. But essentially, in totality, the CapEx spend will be slightly less That it was this past financial year or let's say in the 2020 financial year for South Africa.
Perfect. That explains it to us. The last one is MTN sort of in terms of Cell C revenue recognition, at the moment, they're using a Cash based recognition of revenue rather than the usual accounting way, how I mean given that The contract and broadband subscribers are going to be starting to roam on you very soon. What's your plan for revenue recognition of Cell C?
So I think that revenue recognition will be normal. And the way the deal is constructed, Let's just say without giving too much details and secrets away, let's just say it's in a much better form where we get the money And that we will be able to ensure that we get paid for the services and leave it at that.
We're going to leave
it there. Okay. Thank you so much guys.
Thank you. The next question is from Slava Duktayev of Goldman Sachs. Please go ahead.
Yes. Thank you so much for the call. When would you expect your Super App to rollout in South Africa basically to have a material contribution towards the bottom line? And how should we think about the impact on financials? Is it more about the additional revenue streams or lower churn?
And basically, if you can assess the margin impact for the group over time, that would also be helpful. And secondly, Shamil, if you can comment on the competitive France in South Africa mobile market over the last few months and year to date? Thank you.
Hi, Clive. Thanks for your questions. I'll take the first two and Jamil the last one. Just on potential timing, we're still very much on track to meet our initial promise, which was a pilot closed user group launch in around April, May of the new platform. We'll be launching within There is more user testing group to really just ensure that the product is working.
We have a zero tolerance approach In terms of customer experience on this product and so we'd rather take a little bit of extra time focusing on testing and ensuring that it's really what we want to take to market. Hopefully, once everything goes according to plan, we look to then launch into the market soon thereafter. In terms of revenue streams, I must just share that the intention on this product is a pure platform economic model to start with. So initially for the 1st 12 months, I'd say, our real focus is going to be on driving downloads and active users to the super app. The idea is that you're wanting to grade as many users as possible and you want to get the frequency of visits up to the app before you can actually start monetizing the customer.
The monetization opportunity obviously comes from the fact that we own the payment That is ingrained into the super app. So every single payment that happens through the super app on any of the mini programs as we like to Call them. We'll go through the Vodacom payment gateway. And so Vodacom monetizes on the payment fee, But we also have different margin arrangements with all the different merchants who will be coming onto the super app in terms of monetization when a purchase is made On the platform through Vodafay. And then lastly, we'll be launching a store value capability as well.
And here, The monetization opportunities will be very similar to how we monetize the NIM Pesa business.
Yes. On the competitive landscape, I think what we've seen is, I would say, On the one side, I'd say more reasonability in terms of, let's say, Competitiveness the normal competitiveness being there between us, between us, Telkom and And MTN, we've seen Telkom bypass Cell C and move into 3rd spot as the 3rd biggest operator in the country. So I'd say the Telkom definitely over performing. I think South Sea under the circumstances Keeping it in above water, I think it's probably fair. And then of course, us in MTN, the normal fighting as such, But a lot more reasonability from JALCOM in this last quarter, but also during the year.
Of course, here and there, there will always be 1 or 2 offers, which I call kind of draw cards, if you like. And I think those are those will continue, but I think the price gap between us and Telkom and us and Cell C It's narrowed completely. And of course, the gap between us and MTN is very small now.
Okay. Thank you very much.
Thank you. The next question is from Patty David of All Weather Capital. Please go ahead.
Hi, good afternoon, Tramin and team. On the Telkom And it comes from the reason for the legal action is that it comes from account auction Spectrum that it does not currently have. I mean, what's Vodafone's thinking around that? I mean, how do you You get a promise that you're going to get the spectrum when it's released and you pay for it upfront?
So look, I mean, to be honest with you, we have seen in other markets when I was in Spain as an example, The spectrum was auctioned in advance as a definitive date was set for when the spectrum would be available. And I think As long as there's a time scale and a time line of when it will happen by, I think that's the important part for us. That thing gives us the ability to build out, Get the thing done and so on. And like I say, I mean, ideally, you want to pay for it when you get it, right? But In the interest of moving forward, it's been 16 years since we last did spectrum.
So I think These are nuances that you can live with is the way I would put it. So you want my honest view? I don't think I think Telkom is just using it as an excuse in terms of trying to find reasons why to hold up The spectrum auction, which I think is quite damaging for the industry in totality, Including for themselves. So I think the logic in my view is fundamentally flawed.
So just a second question, a follow-up on the MTN vehicle action. Anurag, I guess what you said that you'll have taken a different view. But if I heard right, you said that you'll believe that once the Casa gets to auction platform, things Will work out. I mean how close are you to that? And isn't it a bit late for them not to have that platform yet because this must be done by the end of March, right?
Yes. So look, I think MTN's review on the other hand has merit Because Iqasa hasn't provided certain clarities on the That of course has been requested on some of the opt in rounds. I mean, our hope was that it can be sorted out During the issuing of the auction rules and the appointment of the auctioneer and so on. And that's still our hope. Of course, if it doesn't happen, that will always gives us the opportunity to challenge it.
So we'd be playing a very careful watch on the MTN process. And yes, because we share some of the or the one concern specifically That MTN has raised. And we're still hopeful that Icasa will sort that out in the offshore doors. But We keep our powder dry to see when and if ICASA does Issue those rules and clarifications.
Thank you.
Thank you. The next question is from Zio Dussep of Nedbank. Please go ahead.
Hi, everyone. Thank you for the questions. Just one from my side, please. On the IoT business, the business seems like It's becoming pretty big. It looks like it's added allowing 0.65 percent to service revenue growth.
I noticed that your revenue, the IoT connection Increased year on year by 17%. I was just wondering, is that all driven by volume per connection? And is that the sort of volume growth You are seeing per IoT connection annually. And then just to double check, IoT revenue is captured in other service revenue, right? Thanks very
much. So it is captured in other service revenue. And I think on the IoT growth, so what's happening is that we're seeing a big growth in our Take up of IoT services, both locally and internationally. Remember, IoT. Nxt is a South African subsidiary, We're now selling our services as far as the field as California, but we've had some really nice uptake of the platform by Vodafone UK, Vodafone Netherlands, Vodafone Germany.
So it's being embedded more and more into the Vodafone group. Of course, not all that revenue is flowing yet. But I think it's a very credible story. Locally, what's happening is that basically what we are seeing Yes. That the growth in the number of SIMs and remember we've got so I think our IoT play in general is quite strong Because we've got the GDSP platform, which allows us to put sub cards into anything basically across networks.
So it allows us to locally, internationally, you always have connectivity is what the GDSP platform basically drives. And so that's growing quite nicely. But also us putting sensors on 2 different things through IoT. Nax is also growing quite nicely. So I think The partnership of it.
Nxt through dotcom has given it a lot of credence and credibility. So I expect that business to keep growing and the IoT business to be to become a more meaningful numbers as we go forward.
Thanks very much, Neil.
And just to clarify, yes, IoT is in other Service revenues.
Thanks, JP. Thanks a lot.
Thank you. The next question is from Vikram Sharma of RMB Morgan Stanley. Please go ahead.
Hi, guys. Yes, I just
want to ask more in terms of acquisitions. There has been news around that Vodafone is looking to sell its Denaean operation, which you kind of manage. I don't know if you've got any thoughts on it. Would you be interested in something like that? Or the focus is still more on getting acquiring something on the fiber space?
Thank you.
Yes. So I mean just to be clear on Ghana, we have indicated previously That we are not looking at Ghana. And it's not part of our plans to acquire Ghana. We will continue to manage it on Vodafone's behalf. The fiber plants remain a priority for us.
And of course Ethiopia, yes, through Savaricom.
Thank you. Sir, we have no further questions.
I don't know if there's been enough, maybe just one or two comments On Ethiopia, so we basically put together very strong consortium, okay, which we're quite pleased about. So effectively, we have The Vodaf consortium, as we call it, will have 57%, okay? So the economic interest will be 51% Safaricom, 5.7% Vodacom, Of course, first rate of refusals on the other shares from the other investors. So with Tomo, which is the huge Japanese conglomerate, very credible, at 25%. CDC, which is the UK Sovereign Investment Fund, Funded 10%.
And then we have reserved 8% for the IFC to join. We feel that this is a very, very strong consortium, and therefore, we will be putting our best foot forward on it. We've also managed to get some very good terms on non recourse debt funding. And you would have seen announcements from the DFC. And the DFC and IFC both have offered us funding.
So at very low rate, but also nonrecourse. So we're quite pleased about it. We have support from multiple governments that include The U. S, U. K, South Africa, Kenya, Japan, the European Union and so on.
Thank you, sir. We have no further questions in the queue.
Okay. And thank you for joining us on the call. In closing, we are encouraged by the positive results out of South Africa and improved trends in our international operations during this period. This remains consistent with our outlook provided in our interim results, and we're keeping an eye on which of these trends and behaviors remain permanent. Thank you to everyone for joining us.
Thank you, sir. Ladies and gentlemen, that then concludes this conference and you may now disconnect your lines.