Tuesday, May 18, 2010

Southern Africa - Vodacom to spend ZAR 7.4 Bn to boost non-voice services

[itweb!] SA's largest cellular company, Vodacom, will spend R7.4 billion in the current financial year to bolster its networks, as it faces a period of slowing revenue growth in voice.

Cellular companies in Africa are facing increasing competition on the continent. The local market is also coming under regulatory pressure as the Independent Communications Authority of SA trims the interconnect rate.
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Voice revenue only grew a percent during the year, compared with data growth of 33%. As a result, Vodacom has set its sights on growing revenue from data, which will be the growth driver of the future, says CEO Pieter Uys.

The company is spending R7.4 billion across its operations to improve increasing broadband coverage and self-provide data. Uys says the money will go into improving broadband network coverage and quality.

Of the billions to be spent, the bulk will go into SA, which will benefit from R5.1 billion in expenditure.

SA is Vodacom's largest market and accounts for 26.3 million of Vodacom's 40 million customers and R50.4 billion out of total revenue of R58.5 billion. Uys says 10% of total revenue in SA was earned from data.

In charge

Uys, presenting the company's first full year results post its unbundling from Telkom and separate listing, says he wants to make sure Vodacom does not have to rely on anyone else. “We need to be in charge of our own destiny.”

Uys says the company has the largest 3G network in SA and has 38% of the local broadband market. It competes against the other cellular networks, as well as several fixed-line offerings in this space.

In SA, the operator's data revenue grew 33% in a period when traditional voice revenue is showing signs of slowing, growing during the year at 5.6%. Uys points out that data use in SA is up 58.4%, and the company has a 58% share of the local data market.

Uys explains that Vodacom's capital investment is focused on growing its data market. Last year, Vodacom spent R6.6 billion on capital investments, of which R4.6 billion was spent in SA.

This year, Vodacom will focus on the access layer of the network, and is running fibre to base stations. It already has 1 000km of fibre deployed.

Vodacom begins R7.4bn capex spend

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