It’s no secret that the global economy has been under strain since the 2008/9 economic crisis.
Global financial institutions and our reserve bank have downward revised South Africa’s GDP in recent years.
This in turn has put pressures on the growth and investment projections that companies set themselves year-on-year while rising to the challenge of social-economic development.
Mobile communication companies like Vodacom have invested heavily in infrastructure and complemented this with investment in human resources, communities, and contributions to economic transformation.
Despite the challenging economic environment, Vodacom continues to outperform its targets – evidenced by the
Group’s 5.3% growth in service revenue in the first half of the current financial year and its strong performance in 2015/16.
This has enabled Vodacom to prioritise its commitment to the digital and knowledge economy by investing in its network infrastructure.
Including the current financial year, Vodacom will have invested R27.4 billion in its network in South Africa over a three-year period – as pressures to keep up with coverage, speed, and quality demands intensify.
In the same period, the company invested over R270 million in communities, while total expenditure with black-owned entities amounted to R7.2 billion – of which R5 billion was with black-women-owned entities.
This is the result of Vodacom’s focus on preferential procurement as well as supplier and enterprise development.
Given the impact of the economic slowdown on the South African consumer and global trends on the cost of data, the
cost to communicate in South Africa has been a hot topic in recent times.
It was the focus in public hearings led by the Telecommunications and Postal Services Portfolio Committee in September 2016, while making broadband more accessible and affordable is also one of the objectives outlined in the White Paper published by the Department of Telecommunications and Postal Services a month later.
Vodacom’s price transformation
Accordingly, Vodacom’s pricing transformation plan has seen the company reduce the price of data and voice by more than 60% and 57% respectively over the past four years.
However, Vodacom acknowledges that more needs to be done to respond to consumer needs and the company remains committed to data cost transformation.
At the beginning of 2017, Vodacom launched Siyakha (iSizulu for we build), a platform aimed at lowering the cost to communicate for the emerging market while simultaneously seeking to increase digital and social connectivity.
“The launch of Siyakha is key to helping improving the lives of people that can least afford communication costs. We also continue to improve on the segment approach that recognises the needs of various sectors of society with specific reference to the youth and base of the pyramid segments.
This reflects our core belief that through investments and providing relevant communication and technology solutions, we can change people’s lives,” says Shameel Joosub, CEO Of Vodacom Group.
Smaller bundles and personalised offers through Just 4 You contributed to bundle sales of more than 410 million in the most recent quarter and means Vodacom is on schedule to reach over 1.5 billion bundles sold this year.
According to Joosub, this positively reflects on customer satisfaction scores.
By providing customers with greater value, South Africans seem to be voting with their feet – with Vodacom’s latest active subscriber numbers rising to 36.4 million.
“It’s a complex balance to strike,” says Joosub. “On the one hand, we need to continue to invest in our infrastructure so that we meet the exploding demand for data and maintain our network and customer service advantage. On the other, there is a pressing social need in South Africa to bring down the cost to communicate for people that can least afford it.”
On the White Paper, Joosub said it is important for the government and private companies to work together to find a balanced solution.
“While it is still early days in the entire process, we had been involved in a number of constructive engagements to find a workable solution to make broadband even more accessible and affordable for South Africans. These engagements are ongoing and have the clear intent of contributing to the implementation of the White Paper,” said Joosub.
The White Paper is also focused on driving transformation in the ICT sector.
Vodacom believes that more transformation is required in the ICT sector and agrees that new players with strong BEE credentials should have access to spectrum.
Additionally, the DTI’s new ICT sector codes have put stringent requirement on companies from a BEE and ownership perspective.
Vodacom says it is committed to achieving these goals.
According to recent speculation and a Bloomberg article published in January 2017, Vodacom is currently considering a BEE transaction that will boost black participation in the South African economy.
Without being drawn into commenting on the transaction, Joosub said: “Vodacom is committed to delivering on the ideals of black economic empowerment and continues to explore a variety of options with the primary objective of broad-based inclusivity and employment equity. Any transaction of this nature will be conducted through a well-governed, highly-transparent process.”