Vodacom is branching out
The group aims to boost yearly revenue 15% within three to five years — in addition to growing its core cellular operations — by adding new services.
“There is no way the mobile sector is going to keep growing at the same rate it’s growing now,” said Thami Msimango, chief operating officer of its Converged Solutions division. “Two to three years from now we have to have new revenue lines that will sustain us for the next 10 years.”
Speaking at the Southern Africa Telecommunications Networks and Applications Conference in Mauritius this week, Msimango said Vodacom would compete fiercely as a provider of mobile, fixed, broadband internet and broadcasting services. It would tackle the fixed-line operators and internet service providers head on, he said.
“It takes leadership to take a business that’s doing exceptionally well and making money till it’s coming out of our ears and decide to shift focus, into an area that we don’t know if we will come out alive,” he said. “We are building a business that’s going to take two to three years to be profitable. In three to five years’ time we should be providing 10% to 15% of the revenue.”
Vodacom will not say how much it has set aside for its evolution. But similar plans announced by MTN last week begin with a R1,3bn investment in fibre optic cables to carry more voice and data traffic. A focus for Vodacom is to provide data back-up and storage facilities for the major banks, including offshore data storage centres. For gated residential communities it plans to provide all the telephony and internet connectivity, and networked security cameras.
It will offer small companies access to software applications over a network so its clients do not need to install business software themselves.
Vodacom’s plan would not be affected by any change in ownership, with Telkom negotiating to sell its 50% stake in the business to Vodacom’s other shareholder, Vodafone. “We have had discussions with Vodafone already. Everything we are doing was blessed by the board,” Msimango said.
Telkom acting CEO Reuben September said there was no news on the potential deal to sell its shares to Vodafone or on a separate negotiation that could see MTN acquire Telkom’s fixed line assets.
At their most extreme, those deals could leave Telkom as an empty but cash-rich shell, or Telkom could retain its media division and its retail services to consumers. The latter seems more likely, with September saying: “I can’t divulge any further information, including time lines for the corporate action which may result, but this must be read as a clear indication that we are taking our approach to new business models very seriously.”
Telkom has mapped out a strategy based on selling a package of fixed and mobile voice, video, internet access and broadcasting. “We are moving away from voice as a major revenue earner,” he said.
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