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Segment Performance |
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| FIXED-LINE OPERATING EXPENSES |
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Fixed-line operating expenses, before inter-segmental eliminations, increased 3.1% in the six months ended
September 30, 2006, to R11,501 million (September 30, 2005: R11,156 million), primarily due to
increased employee expenses, services rendered, operating leases and selling, general and administrative
expenses offset by a decrease in depreciation, amortisation, impairment and write-offs and payment to
other operators.
Employee expenses increased 14.9%, largely due to increased salary and wages and benefits expenses as result
of an increased headcount necessary to deliver on improving service levels and the deployment of the NGN as
well as salary increases, increases to medical aid expenses and increased bonus provisioning.
Payments to other network operators decreased marginally by 1.0% as a result of lower payments to
international operators, partially offset by higher payments to mobile operators. Payments to mobile
operators increased 0.3%, largely as a result of increased commitment from the fax to e-mail service partially
offset by a 0.5% decrease in fixed-to-mobile traffic. Payments to international operators decreased 7.4%
primarily due to the decrease of volumes in switched hubbing, partially offset by a 7.7% increase in
international outgoing traffic volumes.
Selling, general and administrative expenses increased 11.8% as a result of a increased marketing
expenses, materials and maintenance and bad debts.
Services rendered increased 12.8% with property management expenses increasing 5.5% as a result of
increased maintenance. Consultants and security costs increased 22.1% primarily as a result of increased
cost associated with the next generation network deployment, customer centricity programmes and the
regulatory accounting and Sarbanes-Oxley compliance project. Additional increases were as a result of the
higher costs of transporting equipment from warehouses to final drop-off points due to an increased number
of reported faults resulting from adverse weather conditions.
Operating leases increased 5.2% primarily as a result of increased vehicle lease rates, increased vehicle
maintenance and increased ad-hoc vehicle rentals offset in part by a 0.2% reduction in the vehicle fleet from
9,710 vehicles at September 30, 2005 to 9,691 vehicles at September 30, 2006.
In recognition of changed usage patterns of certain items of property, plant and equipment and intangible
assets, the Group reviewed their remaining useful lives as at March 31, 2006. The assets affected were
certain items included in network equipment, support equipment, office equipment and IT software and
hardware. The revised estimated useful lives resulted in a decrease of 18.8% in the depreciation,
amortisation, impairment and write-offs to R1,734 million (September 30, 2005: R2,135 million).
Fixed-line operating profit decreased 5.6% to R5,202 million (September 30, 2005: R5,512 million)
with an operating profit margin of 31.5% (September 30, 2005: 33.6%).
EBITDA decreased 9.3% to R6,936 million (September 30, 2005: R7,647 million), with EBITDA margins
decreasing to 42.0%. (September 30, 2005: 46.6%). |
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| MOBILE SEGMENT |
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| The mobile segment accounted for 35.8% of Group operating revenue (September 30, 2005: 31.4%) (after
inter-segmental eliminations) and 27.8% of Group operating profits (September 30, 2005: 22.5%).
Vodacom’s operational statistics are presented below at 100%, but all financial figures represent the 50%
that is proportionately consolidated in the Group and presented before inter-segmental eliminations. |
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| SUMMARY |
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Year ended |
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March 31, |
Six months ended September 30 |
| In ZAR millions |
2006 |
2005 |
2006 |
% |
| Operating revenue |
17,021 |
8,088 |
9,733 |
20.3 |
| Operating profit |
4,435 |
2,113 |
2,483 |
17.5 |
| EBITDA |
5,907 |
2,782 |
3,289 |
18.2 |
| Capital expenditure1 |
2,571 |
1,238 |
1,571 |
26.9 |
| Operating profit margin (%) |
26.1 |
26.1 |
25.5 |
(2.3) |
| EBITDA margin (%) |
34.7 |
34.4 |
33.8 |
(1.8) |
| Capex to revenue (%) |
15.1 |
15.3 |
16.1 |
5.2 |
| 1. Including spend on intangibles |
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