Vodacom set for growth
VODACOM’S interim results on Monday are expected to be favourable after the cellphone giant announced yesterday it had enjoyed double-digit growth in revenue in the six months to September.
The 14 percent increase in revenue to R26-billion was despite a saturated South African market and stiff competition in its limited operations. The company operates in only four countries outside South Africa.
Pieter Uys, Vodacom’s chief executive, said: “These provisional results demonstrate once again strong growth in Vodacom’s business. We now have almost 36 million customers, which is a 13.1 percent increase on a year ago.”
Operating profit increased by 12.5 percent to R6.4-billion compared with the previous corresponding period.
Analysts are optimistic that the company is weathering the financial crisis well.
Dopek Pater, Africa Analysis partner, said: “It’s a healthy set of results considering that they incurred increased costs in some of their operations.
“In the DRC, and to a lesser extent Mozambique and Tanzania, their base stations have been suffering power-supply problems, and the company has had to run generators to meet demand,” he said.
Also yesterday, the company launched a R100-million data centre catering for its business clients in an effort to continue revenue growth without relying purely on subscriber growth.
The 1000m² facility will allow business clients to store applications and data for back-up purposes rather than relying on their own costly servers, which waste space and large amounts of electricity during down time.
This has been especially vital for Vodacom, which has been restricted from aggressively expanding into the rest of Africa by an agreement between its shareholders Telkom and Vodafone.
Spiwe Chireka, Frost & Sullivan ICT analyst, said the convergence strategy was common throughout the industry.
Chireka said: “There is saturation in the voice market, at least in South Africa.
“While [the data centre is] mainly for corporate clients, there might be scope for consumers in the future. It’s not a surprise that they’re investing in data.”
Following the sale of a stake that will give Vodafone control of the company, Vodacom will be able to expand into the rest of the continent and beyond.
Pater said that despite the agreement with the government to preserve the Vodacom brand, Vodafone’s strategy of unilateral branding would mean Vodacom would slowly be phased out over the years.
Vodafone currently has 27 operations across the world, including eight in Africa. Four of these are branded under Vodacom.
Pater said: “They’ll most probably establish new operations across the continent using the Vodafone identity, but also make use of Vodacom’s expertise.
Chireka agreed: “We have seen Cel-Tel, which was very well known in Africa, acquired by Zain. In only two years all those operations were fully rebranded as Zain.”
Vodacom is expected to be listed in mid- 2009, following shareholder and competition authority approval.
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