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Africa’s Telecoms Titans: Vodacom Group

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Africa’s Telecoms Titans is a series by Techzim profiling the top 20 leading mobile operators on the continent. Each segment focuses on a specific mobile operator with insights into services provided including marketing and technical competencies.

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Vodacom Group: Vodafone’s Pan African Network

Total Subscribers: 43.5 million (As at 31 March 2011-Intergrated Report)

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Biggest market: 26.2 million subscribers in South Africa

Ownership status:

  • Listed on the Johannesburg Securities Exchange
  • Majority owned by Vodafone PLC

Market Capitalisation: R 128.2 Billion (US$18.3 Billion) – As of 17 July 2011 JSE Closing Share Price

Annual Revenue: 61.197billion (US$8.7 Billion)

Net Earnings: R13.96 Billion (US$1.9 Billion)

Employees: 7 481 as of 6 March 2011

The Vodacom Group is a 65% owned subsidiary of the UK based Vodafone PLC, the world’s biggest telecoms company. The group operates from its Johannesburg Headquarters and serves a market of 5 countries. It was founded in 1994 as a joint venture between Vodafone the South African Government’s fixed line operator; Telkom. The company grew to become South Africa’s leading mobile operator and expanded within the South and Central African region.

Vodacom’s core strengths lie in its relationship with Vodafone; the world’s biggest mobile operator by revenues and custodian of the most valuable brand in telecoms worldwide. Through this relationship, the company has been able to gain economies of scale where product development and marketing is concerned, getting access to group products like M-PESA and connectivity devices. It maintains a leadership position in South Africa (its home market). The operator is also a market leader in Tanzania, Lesotho (where it competes with Econet Lesotho), and Mozambique.

Vodacom recently rebranded from blue to red in line with Vodafone’s global policy of a uniform identity and to reinvent itself as a young company. The company has used this rebranding opportunity to refocus its strategy and reorganised our business by decentralising its operations around three areas:

  • Speed
  • Simplicity
  • Trust

Accordingly, it believes that it has evolved from a cool blue to a red hot persona.

Gateway Africa

Vodacom (under its Gateway Communications division) is Africa’s largest and most advanced connectivity solutions provider. It counts most key telecommunications operators on the continent among its clientele which also includes blue chip companies. The division provides satellite, wireless and fibre optic based solutions through the SEACOM, EASSy, and SAT-3 fibre optic cables-It will also connect to WACS when it is commissioned in 2012. It operates across 40 countries on the continent including Zimbabwe.

vodacom-gateway-map

Gateway Communications is the star within the group as it enables the company to tap into Africa’s booming telecoms space without expanding its GSM footprint. The group is in a strategic position to benefit from Africa’s evolving connectivity needs as it also provides cloud based services. It is intertwined with Gateway Business Africa; the group’s soft infrastructure focused division.

Technical Competencies:

Vodacom has consistently led the way in infrastructure and technical expertise; it began as the first cellular operator in South Africa (2G) in 1994 and pioneered data services, the company has achieved the same feat in other operating markets. It not invests in technology but pays careful attention to the needs of consumers in specific markets. This is largely been possible through the critical mass availed by Vodafone. The company (through Vodafone) works with vendors like ZTE and Ericsson to deploy market specific products and infrastructure. Handsets, network and IT equipment are for the most part negotiated and bought centrally through the Vodafone Procurement Company (‘VPC’).

It collaborates with Vodafone partners in other emerging markets like Turkey and Egypt to introduce services and connectivity products that are affordable and accessible such as a R1000 Android smartphone .During the 2010/2011 financial year the company directly sold 8.7 million phones across the group with 20.6% being smartphones.

Vodacom’s no frills definition of mobile broadband

The company has a total of 8394 base stations in South Africa and 2311 in other markets. All its networks are GPRS compliant with 3G available in all territories excluding DRC. Its entire 3G infrastructure in South Africa has a theoretical capacity of reaching speeds of 14.4 Mbps, with more than half being 21.6 Mbps capable and expansion plans heading in this direction. 2000 sites are HSPA+ standards (43.2Mbps) with investments into LTE on the cards. Vodacom’s guarantee is to provide customers with at least:

  • 1Mbps in urban areas
  • 512 Mbps in sub-urban areas
  • 256 Mbps in rural areas

Every year, Vodafone does an independent ‘test drive’ of its networks around the world. Vodacom South Africa was ranked 5th out of 70 global markets in the data download speed category. The company is working with its competitors, MTN and Neotel to build a national fibre network in South Africa and has also deployed fibre grids in Mozambique, Tanzania, DRC and Lesotho. In Mozambique, it setup a 3000 km fibre grid linking the country’s key cities.

The company is leveraging on its relationship with Vodafone to introduce the revolutionary Vodafone WebBox. The Android powered WebBox was designed to get more people connected to the internet. It turns a TV set into a data device with internet access, games, email, SMS and FM Radio by just plugging in a keyboard with a built-in mobile SIM. Over 2 000 units had been sold in South Africa as of 31 March 2011. The company also has plans to launch the unit across its operations with a Mozambique launch slated for late 2011.

The Vodacom brand is one of the most recognised brands in South Africa-its home market. The company is the fourth most popular advertiser in the country (according to a survey by Sunday Times) and is a key backer of sports and CSR projects. A rebranding decision was put into effect during the first quarter of 2011 to align the brand with Vodafone. Vodafone PLC is the 4th most valuable brand in the world according to a 2011 survey by Brand Finance. It has a brand equity valuation of $US 30 Billion. Rebranding in line with its parent was a feasible business decision for Vodacom.

The company’s brand has played a key role in its market leader position (53% market share) with touch points centred on experiential marketing, PR and sponsorship campaigns. Its vision and purpose is to enable people to communicate and accomplish their goals through its services. Its five core priorities are to:

  • Grow passionate promoters by dramatically improving customer experience
  • Actively create an environment for people to excel and grow
  • Put the power of the internet into people’s hands
  • Drive operational excellence through teamwork
  • Proactively partner with stakeholders (governments-consumers-suppliers-ngos-employees)

The internet forms a very dominant part of the new Vodacom brand, this is due to the company’s realisation that mobile data is set to play a vital role in driving economic growth, creating jobs and improving the quality of life across Africa.

The Zimbabwe Connection:

 Mthandazo Peter Moyo: Vodacom Group Chairman 
Peter was born and bred in Bulawayo, Zimbabwe. He initially wanted to become a doctor or vet but was inspired by a presentation a Charted Accountants Southern Africa representative made at his school. He went on to pursue a Charted Accountant status with KPMG Zimbabwe in 1985.  After completing his articles with the company he moved to Ernest & Young where he worked his way to becoming the first African partner.

His past and present achievements (in no particular order) include:

  • Managing Director of CBZ Building Society
  • Managing Director of Africa at Alexander Forbes Limited
  • Group Chief Executive of Alexander Forbes Limited
  • Managing Director of Old Mutual Life Assurance Company
  • Founder of Amabubesi Group
  • Chairman of Old Mutual South Africa and Old Mutual Healthcare
  • Non-Executive Director at Liberty Group
  • Non-Executive Director at Transnet Limited
  • Non-Executive Director at Pinnacle Technology Holdings
  • Non-Executive Director at Telkom

He also:

  • Obtained a Higher Diploma in Tax Law from Wits University.
  • Received his B. Compt. (Hons.) from UNISA
  • Holds an AMP from Harvard University
  • Studied CA (SA), CA(Z), HDipTax (Law)

Leadership Competencies:

Alan Knott Craig : Founding CEO (May 1993-September 2008)
Alan was the founding CEO of Vodacom and spent 14 years at the helm of the company. According to his Linkedin profile he began his foray into the company while working at Telkom as the Director of Data Communications. He was asked to look into mobile technology in 1991 and spent the next 18 months doing research on it; in 1993 the Ministry of communications released two mobile operator tenders. He subsequently led Telkom’s joint bid with Vodafone and the minority investor, Remgro. Alan then led the company to launching world first innovations such as pre-paid airtime and Africa’s first 3G services.

Alan is still involved with the company as a consultant.

Pieter Uys: CEO and Executive Director
Pieter began his tenure at the company as part of the initial engineering team. Prior to his appointment as CEO, Pieter was the Chief Operating Officer for Vodacom Group from April 2004 until his appointment as CEO in October 2008. He was also the Managing Director for Vodacom South Africa (2001-2005). He has brought a fresh and youthful spirit to Vodacom with rebranding being a part of this.  Under his leadership the company is decentralising its structure to focus on an open and equitable modus operandi. After a recent network outage Pieter demonstrated his leadership acumen by personally taking responsibility for the fault and publishing a letter of apology to consumers.

 

Revolutionary Transparency

In accordance with King III corporate governance standards, Vodacom has set a high corporate reporting benchmark as it has gone beyond financial reporting in favour of a complete and objective integrated report. The report looks at the company’s strengths as well as its weaknesses and leaves no stone unturned. It is at the forefront of transparency and accountability worldwide.

The Vodacom Foundation

The company has a major Corporate Social Responsibility (CSR) policy across its operating markets. It invests in education, Health and ICT projects that seek to bridge the digital divide. In 2010 it invested R77 million into CSR initiatives across its mobile operations. It was voted as the second best brand for community upliftment in South Africa (Markinor Sunday Times Survey).

  • R14 million investment in an HIV/Aids advisory centre
  • Disaster relief in Mozambique after floods
  • Vodacom Red Alert allows customers to donate money victims of natural disasters by SMS (Tanzania & South Africa)

In 2011 Vodacom piloted a project known as the 21st Century Educator project in partnership with the National Department of Basic Education, Microsoft®, Cisco, Mindset and Intel. The project aims to establish nine teacher-training resource centres, one in each province of the country. The department (Ministry) provides and maintains the buildings and the private-sector partners provide connectivity, hardware and software and learning materials. Vodacom committed R3 million to the21st Century Educator project in the year.

Economic Empowerment

Vodacom:

  • Spent R12.5 billion on BBBEE accredited suppliers
  • Attracted a BBBEE partner in a R 7 Billion transaction (20% equity)
  • Has a gender and skills development policy in place with a scorecard to track progress

It is also a believer in empowering informal traders that rely on its prepaid services to earn a living (approximately 100 000). It has setup the Vodacom Academy to train distributors and agents.


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22 thoughts on “Africa’s Telecoms Titans: Vodacom Group

  1. Vodacom anytime anyday. Boy do I wish we had them in Zim, what a difference that’s would have made. A true global brand that delivers world-class products and services. What a joy each time I trip down south and hook up to Vodacom internet, pure joy. Unfortunately in Zim we are at the mercy of kiya-kiya-so operators. Ahh life is difficult.

    1. I disagree there, In fact I support the Zimbabwean government’s move to bar Vodacom or any other international operator from directly operating in Zimbabwe.

      Firstly being a Vodacom user myself I must say that their service is good but by no means amazing as you suggest. In fact within South Africa  many of Vodacom’s competitors are doing well in out maneuvering Vodacom strategies ie MTN. In comparison I found Econet to be just as “titanic” as Vodacom within Zimbabwe’s unique local context. Considering what Econet has been working with and the results they have produced one has little left to do but be impressed. Strive Masiyiwa himself stated in an interview that he’s regularly courted by some of the world’s most renowned blue chip mega corporations, a testament to the value of the Econet business. Let us not forget that Econet itself is a Zimbabwean (Black African) owned multinational corporation that operates in countries like New Zealand it also owns Botswana’s market leading Mascom (Masiyiwa Communications). In Nigeria Econet successfully held off competition from Vodacom before it was forcefully taken-over. Trust me Econet is a permanent and growing feature in Vodacom’s rear view mirror. In Zimbabwe their service is crap (But could it be because of our equally crapy disposable incomes and unsustainably low price expectations and a cassino economy? ) The only way Vodacom could have out-priced Econet in Zim would have been by operating at a loss considering that the prices that they charge in South Africa are more expensive than the ones our operators charge in Zimbabwe.

      The way econet performed during Zimbabwe’s dark decade makes me believe that given the same resources to use, no African operator can out compete Econet in (economicaly/politicaly) unstable markets, Econet has mastered this niche. All this is not to say that Econet is getting cossy in the drivers seat and we are losing patience with their daft actions and lack there of.

      1. 1. They are the minority shareholder in Mascom if ever they still have shareholding there.
        2. In Lesotho they are the smallest, most invisible and trying to make ends meet…..stayed there….Voda rules.
        3. In New Zealand they do not operate but have a 3G license which l’m not sure if they still have.
        4. But however they have a Gateway comms company in the UK which is apparently doing well but soon with the fibre going all over and their reluctance to invest in Fibre and fully take over Liquid soon they will be singing blues……

        In this country they did us great and we respect that but matakadya kare haanyaradze mwana……they should brace up and start delivering proper and good service and not keep on shoving poor service down our throats.

        You can never compare Voda and Econet, look at Safaricom…….check how much they charge then come back and post, its much cheaper for me to roam on a Safaricom line than to use the Econet one…….Safaricom is Voda..

  2. @8f4cbe9a828bc64fd6b6d5e8fb0559b5:disqus  Econet is no longer operating in Bots, they were bought out by MTN. Neither are they in New Zealand, they sold to a group of British and Americans before they had started:http://en.wikipedia.org/wiki/2degrees . They operate in Lesotho, Burundi, and Zimbabwe. I agree with you that they have a historical and sentimental heritage Zimbabweans of all walks of life are proud of, consumers ultimately want a good service.

    1. in Lesotho they are the smallest and most in effective and almost not visible in that little and small country….

  3. As OF 2004 Econet Wireless had the following assets shareholdings in Mascom Wireless Botswana, (40%), Econet Wireless New Zealand, (65%), Econet Wireless Ltd (EWL), (100%), Econet Satellite Services, (100%), Telikom PNG, (51%), Econet Wireless Nigeria – recently renamed Vee Networks, (5%), Independent SMS, (50%), Worldstream, (100%), and Econet Wireless International,(EWI), (100%). But as you correctly noted it has shaded a number of these assets, except for the fact that since the MTN transaction it has retained an indirect shareholding in Mascom. There are also indications that although Econet Wireless New Zealand (EWNZ) has been “re-branded”. EWNZ and initiating partner on the deal Hautaki Trust may still have a reduced stake in the new enterprise, so in effect Econet Wireless International (EWI) may still be an investor and indeed a pioneer in the New Zealand telecoms industry. In addition many sources site EWI as having investments in the East Asia Pacific Rim. Let us also not forget to account for Econet’s non-Econet branded assets in various markets. Also I have not received news of Econet Wireless Kenya collapsing since their 2008 $300million investment plan in the central African nation. It has offices in Botswana, Burundi, Kenya, Lesotho, New Zealand, Nigeria, South Africa, the United Kingdom, and Zimbabwe. In 2010 it succesfully entered the UK’s Mobile Virtual Network market as the first foreign firm to do this. Their partnership with Orange will be similar to it’s existing partnership with South Africa’s Cell C to offer services to its own customers in these countries. 
    To cut the long story short, Econet Wireless is a Pan African force to recon with. I’d rather we contend with frustrating service for a while than simply  sell-out our industry to mega corporations. We deserve a stake in all this too. In their thinking some Africans are like little chicks (baby birds) that close their eyes open their mouths and face the sky hoping for the next worm to fall right into their little misinformed mouths. Don’t people get it? Africans can never change their conditions until the day they (Africans) own multinational corporations that produce and sell their products and service to Africa and Europe then import all the profits right back into our countries. We have to dominate our own continent with our own products. To be frank, Econet is damn well the closest i’ve heard of. Don’t even quote South African “Pan-African” multinationals as examples, all the profits are invested into cape town beach-front condos and off-shore holiday homes. We can’t be content with streaming fast internet while half of our people are starving to death, that is selfish! Rather let the internet be slower while we enrich Africans. Let locals buy private Jets and posh cars for a change at least that’ll employ a pilot and an engineer. Econet is growing! Vodafone has grown! you and I can help econet grow faster

    1. “We can’t be content with streaming fast internet while half of our people are starving to death, that is selfish”. Really??? It is precisely because of such convoluted logic that Africa will probably never have global players like Vodafone (Europe), Bharti Airtel and NTT Docomo (India and Japan respectively). By accepting mediocrity (“Rather let the internet be slower while we enrich Africans”) we have already condemned ourselves to shoddy services and lousy workmanship. How exactly do you enrich yourself by embracing mediocrity while others (Europeans and lately Asian tiger economies) are prepared to sacrifice all they can to provide superior products and services? To be a global player and a ‘tiger’ economy there’s no substitute for hard work, sacrifice and lots of sweat. Accept mediocrity and end up in a ghetto!

      1. There is little long term broad based economic benefit in having Vodafone expand into Zimbabwe. Service improves Yes, but home-bread industry dies. ie a bigger better Vodafone/com in Zimbabwe will help our long term development less than a small Econet is doing currently. Thus my statement! The Chinese Automotive Industry is a perfect example, when it started it was specifically to grow China’s own home-bread industry and to to push employment and genuinely build the economy. When the first cars were made they were renowned for “shoddy services and lousy workmanship” in fact many of them were cheap replicas of well known brands http://gemssty.com/2006/10/29/top-10-copycat-cars/ . The Chinese had to make do with poor quality service while their industries grew and matured. Contrary to your guess, they infact fully embraced and mastered midiocracy. With time their sales improved because Chinese people were patriotic and soon sales of these poor quality cars rivaled bigger brands like Toyota now their revenues have reached stupid levels, only now are the “Asian Giants” slowly shifting towards quality and innovation at a rate much slower than you imply. Geely a Chinese automaker recently bought Volvo. Trace the history of KIA!  You are naive to imagine that young companies can rival the quality of bigger companies over time without sacrificing quality and focusing on volume for a time. Former Singapore PM in an interview with “New African” magazine stated that his economy was grown by embracing counterfeiting and replica products as they are cheap on R & D. The global industry my friend is not designed for new players  from developing nations. Statistics show that small 3rd world companies are being bought-out at a faster rate than ever before. What happened to all the OG telecoms players in many countries? They disapeard, I don’t want Econet to be next.  Quality is the last solution for developing new multinationals.   Do you realise that China (if not yet) will soon sell more phones  than any other country in the world. Only now are some of the phones slowly improving in quality and originality. The people who make fakes phones are not stupid. They are ahead of their time. Hard work, sacrifice and lots of sweat don’t necessarily result in quality. they can also result in volumes.

        1. Take note Econet still is the same with Voda e.t.c if you didnt know most companies that deal with Econet are now foreigners when the locals can do that very well so where are the benefits??? Base stations and Towers???? is this the benefit you really want? Or you talk about real development?

          Lets stay on point Voda has good service, MTN has good service, Cell C has good Service, even Be Mobile in Botswana a locally owned Telco provides good service even better than Orange, development yes we need but we also need good service because if corporates and individuals gets good service at affordable prices it increases productivity in an economy before we even look at the Telcos investing in the country, investing in good and affordable service is investing in the growth of the economy itself……..downstream effects.

          We love Local service providers and we would want more but if they are short changing us we can not sit and say its ok because they are our kith and kin……we pay they deliver…fair and square…

      2. Tracing Vodacom’s own history isn’t it sad that the company that started in the heads of some South Africans is now a British corporation. This trend is unrelenting. JamesM what do you suggest as a solution…? Quality?

        1. It’s not sad that Vodacom was started by a bunch of Afrikaners and now owned by a British company. It underscores a fact that many choose to ignore or accept. Sections of South African industry have pioneered word class (i.e. quality) products and services that international companies couldn’t resist gobbling up. South Africa had internet banking long before Britain ever did. Saddam Hussein had a test of South African products when he was being pounded by armored guns made in South Africa but bought by the US. And the morale of the story is? There’s no substitute of quality products and services. That’s how you outdo the competition and improve your own economy. $$$ flow where better products and services outflank those of others. Poor quality and design finesse in sections of the tech industry in the US and Europe have seen those industries decline while rise up in Asia.

        2. It’s not sad that Vodacom was started by a bunch of Afrikaners and now owned by a British company. It underscores a fact that many choose to ignore or accept. Sections of South African industry have pioneered word class (i.e. quality) products and services that international companies couldn’t resist gobbling up. South Africa had internet banking long before Britain ever did. Saddam Hussein had a test of South African products when he was being pounded by armored guns made in South Africa but bought by the US. And the morale of the story is? There’s no substitute of quality products and services. That’s how you outdo the competition and improve your own economy. $$$ flow where better products and services outflank those of others. Poor quality and design finesse in sections of the tech industry in the US and Europe have seen those industries decline while rise up in Asia.

        3. being able to build such and create value is great, it was the Boers decision to get they value and go, in business there are two different motives: Build Value and move on or Build an Enterprise as your legacy, what they decided was up to them not for us to scrutinize, still the point is Voda delivers a good service.

      3. we know that….Econet enriches Liquid Telecoms, all fibre currently here is Liquid, who is Liquid, a lot of profits go to remunerating excutives, have you been at Econet lately…….ex-pats not Africans so dont even go there, Strive has a lot of investments yes but where are the profits going, the Joshua Nkomo trust???? check how much they give and come back and tell the fora……..we know where the money goes it does not benefit Africans so whats there to lose to get Voda down here to give you great service and they take their money back home with you knowing than someone who purports to be a brother whilst he feeds a foreigner…..

  4. @8f4cbe9a828bc64fd6b6d5e8fb0559b5:disqus The ownership thing is off topic and too simplistic, l suggest you send us a guest article focusing on the issue, which we have discussed before and can get its space ( cmutambo [at] techzim.co.zw ). 
    Every 10% increase in broadband penetration could contribute an extra 2.5% to GDP growth  in Zimbabwe and Africa(ITU). The reality is that some companies are championing mass and qualitative access (and still making a profit) while others are championing profit. Categorising these is a task l’ll leave to you, our job is to inform and interact with consumers and people committed to making this nation and continent’s ICT sector better.

    1. YES AND YES who owns what is something else, we want service, good and affordable broadband will lead to increased productivity, thats all we want….

      1. I wish growing economies was as simple as you suggest. Some may cite SA as a model African nation to portray. A closer look will show that some where they overlooked something important. Broad based growth of their economy, The SA case is now a chronic time bomb, they have fast internet and reliable services but the people don’t care any more THEY WANT A “REAL” STAKE TOO!. Call them lazy at your own peril! Kenya is the next SA. A semblance of growth in highly disadvantaged and imbalanced population.

        I will elaborate later!

    2. I will certainly do that!

      In the case that the issue of ownership is neither here nor there and irrelevant to the broad based growth of our economy I will then say let’s open up the industry. Let us not be sentimental about the history and pedigree of our  local companies, instead let us open the local market. We can complain our voices horse before local companies get the capacity to improve, why not just feed them to the dogs? The reality is that Econet, Africom etc do not have the size, capacity and base to offer fast and reliable, cheap service. What is the logic of putting up with this? Vodacom, MTN , Airtel will come into Zimbabwe at the drop of a pin. I must say that there is something discomforting about the notion of such a move. Services and their quality are a means to an end for corporations, there are not ends in themselves. Please aoutline the steps to the next Zimbabwean (or African) multinational corporation.

      I will be happy to outline more in an in depth article I will write in the near future.

  5. Don’t be fooled the main problem is that Zim service providers rely on Profit margins as opposed to volumes. The Zimbabwean market of only 1.4million internet users has not grown big enough to allow for low prices that take advantage of massive Economies Of Scale. Instead we rely on gaining perhaps 50 000 subscribers and charging them high fees that allow us to pay fixed costs and still make a profit. Only a few of our consumers have enough disposable income to pay for these services so we are stuck with a smaller subscriber base which in turn push prices up WE ARE JUST NOT NUMEROUS ENOUGH TO ALLOW PRICES TO FALL.

  6. How about that a year on and my predictions about Econet are on course towards materialization!

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