Vodacom investments under the spotlight

Vodacom’s performance in the investment arena has come under the spotlight recently with high profile failures, including Gogga, Zoopy, Vodacom Gated Services, The Grid, and Gateway.

Some of the companies which Vodacom invested in accused the operator of not providing the support promised, and reneging on its side of the partnership.

The former Gogga Connect CEO, a company in which Vodacom had a stake, went further and accused the mobile giant of being “100% responsible for killing Gogga”.

This raises the question how Vodacom performed when looking at a wide range of its investments, which include operational investments and higher risk ventures.

According to information gathered from Vodacom’s annual reports and industry sources Vodacom does not have a great investment track record.

The following table provides an overview of many of Vodacom’s investments over the last few years.

Company Reason for investment Date (approximate) Status
Successful investments
Xlink Communications (Pty) Ltd (75% plus control) Venture November 2007 Still invested
G-Mobile Holdings Ltd Venture September 2007 Still invested
Stortech (75% plus control) Venture February 2009 Still invested
Afrigis Venture July 2009 Still invested
Unsuccessful investments
Gogga Tracking Solutions (Pty) Ltd Venture During 2007 Exited
WBS Holdings (Pty) Ltd t/a iBurst Venture October 2007 Exited
Westside Trading 163 (Pty) Ltd t/a Vodacom Gated Services Venture Mid 2008 Exited
Zoopy (Pty) Ltd Venture June 2008 Still invested, Vodacom looking to exit
The Grid (Division of Vodacom) Created by Vodacom During 2007 Closed
Gateway Operational December 2008 Exited
Other operational and regulatory investment
Smartphone SP (Pty) Ltd Operational August 2007 Still invested
Waterberg Lodge (Pty) Ltd Operational During 2008 Still invested
Vodacom Converged Solutions (Division of Vodacom) Operational During 2007 Still invested
Wheatfields Investments 276 (Pty) Ltd Holding treasury shares on behalf of the Group November 2009 Still invested
National Porting Company (Pty) Ltd Requirement by ICASA – MTN and CellC other shareholders with equal share August 2007 Still invested
Africell Cellular Services (Pty) Ltd Operational October 2006 Amalgamated into VSP

Feedback from companies in which Vodacom invested

The feedback from the companies in which Vodacom invested and holds a stake was mixed.  Many of these companies would not comment on their relationship with Vodacom.

Xlink said that they would prefer not to comment on whether the Vodacom investment helped the company and whether it worked out as they expected.

Zoopy founder and former CEO Jason Elk said that he has moved on and would rather not comment on the past [hence Vodacom’s investment in Zoopy and whether Vodacom stuck to its end of the bargain].

AfriGIS and Stortech – which recently announced that its CEO Tim Knowles had resigned – also did not comment on Vodacom’s shareholding in the company.

Googa Connect’s former CEO Eugene Beetge was less diplomatic, saying that Vodacom did not support Gogga as agreed. “The original deal was loosely based on a verbal agreement with everything in e-mail. This was all thrown aside when it didn’t suit Vodacom Service Provider’s model,” said Beetge.

Beetge added that Vodacom was “100% responsible for killing Gogga.” He said it was not a good period in his life, fighting against what he once believed could have been a good partnership.

However, it is not all doom and gloom.  Wireless G CEO Carel van der Merwe said that the Vodacom partnership deal does provide benefits to Wireless G.

“We have invested more than 30 million rand in our billing engine to cater for our own as well as Vodacom Wi-Fi needs,” said van der Merwe.

He added that Wireless G’s recipe for success with the partnership with Vodacom is to gain top level support in Vodacom, but to stay focused on execution.

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Vodacom investments under the spotlight