Spectrum auction a key priority for Vodacom, as mobile provider shows strong demand for new services

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Vodacom's Covid-19 approach includes accelerating support to governments.
Vodacom's Covid-19 approach includes accelerating support to governments.
  • Vodacom sees the assignment of spectrum as instrumental in extending coverage, improving quality of service and lowering the cost to communicate in SA.
  • The group will also continue with its Covid-19 response and ensuring investment in its network to accommodate rapid shifts in customer behaviour.
  • In South Africa alone, it invested R2.7 billion to support data demand and shifts in customers' needs to work, entertain and educate from home.


Participating in the Independent Communications Authority of South Africa's (ICASA) high demand spectrum auction is a key strategic priority for Vodacom in the quarter ahead, Group CEO Shameel Joosub said in a statement on Tuesday.

"We see the assignment of spectrum as instrumental in extending coverage, improving quality of service and lowering the cost to communicate in South Africa. Any further delays to this process will likely have a negative impact on consumers," commented Joosub.

Fin24 reported recently that Vodacom's rival MTN Group has taken legal action against the terms of the highly anticipated auction of new broadband spectrum, seeking an order declaring parts of the auction process unlawful. 

ICASA has indicated it would oppose MTN's court application. ICASA announced the upcoming sale of more than R8 billion of spectrum in early October. MTN is opposed to ICASA's plan to allow smaller network operators to have a first pick of the spectrum being made available, in what is known as "opt-in lots".

The long-delayed auctioning of spectrum is expected to take place by end of March and it is not clear if the current legal battles would have any impact on the set deadline. Telkom has also mounted a multi-part challenge against the auction process.

The release of spectrum, which is expected to free up capacity for network providers to roll-out faster internet has been delayed by over a decade. Previous attempts to hold the auction failed due to disputes between the government and regulator over how it should be conducted and who should most benefit.

Expansion

Vodacom said on Tuesday it invested R3.4 billion in its network across the group in the quarter - including the expansion of 4G coverage, speeds and capacity. In South Africa alone, it invested R2.7 billion to support data demand and shifts in customer behaviour patterns with a need to work, entertain and educate from home.

In addition, the group will continue with its Covid-19 response and ensuring that it continues to invest significantly in its network to accommodate rapid shifts in customer behaviour.

Vodacom announced in a trading update for the quarter ended 31 December 2020 that group service revenue grew by 3.9%, driven by strong growth in South Africa and improved growth from international operations. Group revenue growth of 6.4% in the quarter was ahead of group service revenue growth and supported by equipment and non-service revenue in South Africa. 

South Africa service revenue was up 5.4%, reflecting strong demand for new services and connectivity, according to Joosub. International service revenue declined by 1.4%, with M-Pesa supporting a notable sequential improvement in the year-on-year decline of normalised service revenue.

Vodacom's Covid-19 approach includes expanding network coverage and resilience, accelerating support to governments, enhancing digital accessibility and digital adoption, supporting the strategies of customers as they adapt to the "new normal" and promoting financial inclusion.

In South Africa, 23 million customers took advantage of discounts and the greater value offered through its summer "ShakeOff 2020" campaign and the recently launched VodaBucks loyalty programme, with an additional 1.45 million customers connecting during the quarter. 

Increased demand for its Airtime Advance product and insurance policies has placed the group's financial services business in a healthy position, having increased revenue by 24.3%, as the business continues to scale. 

"Our partnership with Alipay will add new dimensions to our Financial Services' proposition and in particular VodaPay, which will become our single lifestyle super app," said Joosub.

Revenues from M-Pesa increased 10.1%, largely the result of a 7.7% increase in customers, with almost 16 million people - or just under half of the group's international customer base - now making use of our M-Pesa platform. Including Safaricom, monthly M-Pesa transactions were US$24.2 billion, up 57.8% year-on-year. In Mozambique, for example, NGOs are now able to distribute cash through M-Pesa, with over 300 000 households expected to benefit from this initiative. 


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