Customers up 35 per cent, spend per head down 25 per cent: what the phone ledger says.

By Kanisa Magazine · November 2023

Vodacom Congo now counts 21.8 million customers, 35 per cent more than a year ago, and each of them spends US$2.40 a month, a quarter less than before. That pair of numbers, from the operator’s results for the quarter to 30 September, is as good a portrait of Congo’s non-mining economy as any official table: more people connected, and less money flowing through each connection.

Beside it, the Banque Centrale du Congo’s November digest shows provisional growth of 6.6 per cent and cumulative copper output of 2.37 million tonnes, already close to the 2.39 million of the whole of 2022. The mining headline is strong. The question this article asks is what the phone bill says about everyone else.

Customers up, spending per head down

Vodacom DRC added about 5.7 million customers in a year and lost a quarter of its revenue per user.

Vodacom’s interim booklet, published in mid-November, reports DRC customers of 21.78 million at 30 September against 16.11 million a year earlier. Monthly revenue per user fell from US$3.2 to US$2.4. Voice usage dropped from 32 minutes per user per month to 22. Data customers rose only 6.3 per cent, to 7.14 million. Over the six months, DRC revenue was US$323.6 million, up 3.9 per cent in US dollars, and EBITDA US$121.0 million, up 2.3 per cent. The group said its international business in the DRC was “subdued by the macroeconomic environment”.

How to read a falling ARPU

Falling revenue per user usually means new, poorer, lighter users joining, not existing users leaving.

Two things drive the pattern. The first is mix: the customers added are disproportionately new subscribers on small top-ups, which dilutes the average even if no one cuts spending. The second is wallet pressure. Customer numbers actually slipped from 21.85 million in June to 21.78 million in September, which suggests that at the margin some households are rationing airtime. Neither force shows up in a GDP table. Both show up in the phone company’s ledger within a quarter, which is why the telecom line is a better real-time read of household demand than the national accounts.

The state’s side of the same squeeze

A budget that assumes 13.5 per cent of GDP in taxes cannot carry household incomes on its own.

The 2024 finance law the Senate adopted on 17 November sets spending at CDF 40.5 trillion, about US$16 billion, and, according to the figures reported by Actualité.cd, assumes GDP growth of 6.4 per cent, inflation of 10.9 per cent and tax pressure of 13.5 per cent of GDP. The BCC’s own Kinshasa index rose 0.79 per cent in the latest week and the digest’s policy table shows annual inflation above 21 per cent, double the budget assumption. With tax pressure at that level, the government’s ability to prop up demand through wages and public works is limited, and the gap between mining output and household income is likely to persist into 2024.

Why mining dollars reach households slowly

Royalties, taxes and contractors’ payrolls take months to turn into household spending.

Copper and cobalt mines pay for most of their inputs in dollars, many of them imported. The Treasury receives its share in royalties and taxes that arrive with delays. The households that benefit first are those on mine payrolls and with contractors. Everyone else benefits through public spending, which in the digest’s fiscal structure leans heavily on wages and exceptional items rather than capital works.

What a consumer-facing business should do

Plan for volume growth with thin margins per customer, and price for the lighter wallet.

For any company selling to Congolese households, the Vodacom numbers read as a template. Customer counts can grow fast, 35 per cent in a year, while revenue per head falls 25 per cent. A business expecting its early-adopter margins to scale will be disappointed. The better plan is to design for the lighter wallet: smaller unit sizes, daily or weekly price points, mobile-money collection and dollar-indexed pricing wherever the customer’s income is dollar-linked. And track a telecom operator’s ARPU each quarter, because it will move before the official numbers do.