The listing of Yebo Yethu shares was said to mark the next step in the evolution in Vodacom’s transformation journey. Established in 2008, Yebo Yethu was created with the intention of providing true grassroots empowerment, through BBBEE. Vodacom issued 14.4 million Yebo Yethu ordinary shares at R25 each and as a result of the offer, approximately 102 000 qualifying Black investors bought a stake in Vodacom SA. At the time of implementation of the Vodacom SA Black Economic Empowerment (‘BEE’) transaction, valued at R7.5 billion, it was one of the largest empowerment schemes in the telecommunications industry in history, resulting in Yebo Yethu owning up to 3.44% of Vodacom SA. During the first five years of the scheme, Yebo Yethu shareholders were not allowed to trade their shares, except in limited circumstances. During February 2014, following the conclusion of the first five years, limited trading in the Yebo Yethu shares commenced on an Over-The-Counter (‘OTC’) trading platform. The decision to list Yebo Yethu followed a directive by the Financial Services Board on 11 July 2014, which called on companies that trade their BEE shares on OTC trading platforms to list their shares on a licensed stock exchange. The Board then decided that the best option was for Yebo Yethu to list on the JSE, based on the certainty this provided for shareholders to trade in their shares as well as the fact that the JSE is one of the best regulated exchanges in the world.

Unlike the Vodacom Group shares listed on the Johannesburg Stock Exchange (JSE) , Yebo Yethu shares held by black public shareholders carry certain restrictions and can only be purchased by other broad-based black economic empowerment (BBBEE) investors (with credentials that are the same or better). Yebo Yethu does not do any business itself and relies on it’s 5% stake in Vodacom, as such good performance by Vodacom SA will drive Yebo Yethu share price and shares.

Live data shows that service revenue increased 4.9% to R49 320 million as the Vodacom business returned to growth following the 50% cut in mobile termination rates (MTRs) in the previous year. Revenue grew at 5.2% to R62 279 million, underpinned by a 6.2% increase in equipment revenue following the 10.5million devices that were put up for sale, 61.6% of which were smart devices. Data revenue showed a performance increase of 27.7% to R17 287 million as strong growth for data continued. Vodacom SAs share price saw forecast growth as data traffic grew to 46.8%, this greatly benefitted Yebo Yethu dividends and the Yebo Yethu share price. Vodacom SA continues to see good ARPU (average revenue per user) growth with customers migrating from 2G to 3G and 3G to 4G, growing by 20.5% and 19.7% respectively. This bodes well for Yebo Yethus share price and its shares on the stock charts. EBITDA growth was impacted by a R531 million foreign exchange gain (2015: R114 million loss) which has been offset by a one-off BEE charge of R128 million included in staff expenses in the current year, and a R308 million voucher release in the previous year.

Vodacom SA, at an individual employee level has instilled a cost-conscious culture across the business, driving good progress through its ‘Fit for growth’ cost savings programme. Total expenses grew 2.5%, well below revenue growth of 5.2%. This spells out a possible rise in dividends and is a boost for the Yebo Yethu share portfolio. Vodacom SAs other cost savings initiatives include optimising network operational costs through maintenance contract renegotiations, self-providing more of its transmission services, and outsourcing its network maintenance staff to realise scale benefits. These should drive strong purchase sentiments on the online live charts for Yebo Yethu. In terms of its capital expenditure, Vodacom SA has more than doubled the number of 4G sites in the year to over 6 000 sites, and extended its high-speed transmission to 89% sites. Vodacom claimed top spot in MyBroadband’s 2016 War Drive, which tested the download speeds of South Africa’s mobile operators’ mobile data networks. Vodacom SA’s fibre deployment has started gaining traction as it accelerates deployment to more estates. Vodacom has also focused more of its capital spend on new billing systems, with forecasts anticipating this to further drive Vodacom and Yebo Yethu share value. Active customers increased by 6.4%, with 2.1 million new customers in the year. The ARPU trend improved largely as a result of lower declines in voice revenue, with customers opting for the more attractively priced ‘Just 4 You’ offers. This was accompanied by a continued increase in data revenue as customers traded up to either 3G or 4G devices.

Active prepaid customers increased 7.6% to 29.3 million. 85% of contract customers have been migrated to new price plans with better value offerings. As a result, contract in bundle spend increased to 71.3% (2015: 69.3%). Active contract customers were flat at 4.9 million. Contract churn fell from 9.2% a year ago to 8.5%, while contract ARPU increased 4.5% to R397 Vodacom SA’s strategic focus on delivering the best customer experience has resulted in a record lead of 15 points over its nearest competitor, as measured through the Net Promoter Score. The company expanded its Travel Saver roaming offer from 27 to 180 countries, and enabled free calls to its call centres whilst roaming.

Service revenue increased 4.9% to R49 320 million as the Vodacom business returned to growth following the 50% cut in mobile termination rates (MTRs) last year. Revenue grew at 5.2% to R62 279 million, underpinned by a 6.2% increase in equipment revenue following the sale of 10.5million devices, 61.6% of which were smart devices. Data revenue increased 27.7% to R17 287 million as strong growth in the demand for data continues. Total expenses grew 2.5%, well below revenue growth of 5.2%. Vodacom SA has made several structural changes to deliver cost containment, such as optimising SIM card distribution costs and buying back its customer bases. All this suggests the viability of Yebo Yethu shares, as the BBBEE component of Vodacom SAs financial performance rests on how well Vodacom SA does.

Telecommunications Services

Telecommunications Services

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