Wednesday, January 26

Vodacom plans to invest R10.5bn in the network, expand into loans and investments

FIFI PETERS: Vodacom, which released its first half results earlier today, says it plans to invest R10.5 billion in its network in the current financial year. The company added 6.2 million clients in the period, bringing total subscribers to nearly 130 million.

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Vodacom CEO Shameel Joosub joins Market Update. Shame, thank you very much for your time. Just tell us about the R10.5 billion and exactly where they are going.

SHAMEEL JOOSUB: Thanks, Fifi. Of course, a large part of the investment will go towards keeping up with the demand for mobile data and the growth that we are experiencing. So a large part of the investment has gone into that.

Then of course with the current power outages, there will be a lot of investment going into things like batteries and this sort of thing so that we can try to keep the grid running, even when the power goes out; a huge investment is being made in that. And then of course also investing in the fiber back wall …… 14.4 and then of course in financial services and IT.

FIFI PETERS: Digital infrastructure is one of the areas that our government has identified. I would like more involvement of the private sector in [that], and it is one of the areas identified in the Economic Recovery Plan. I just wanted to know if any of these investments were part of the government’s broader plan.

SHAMEEL JOOSUB: I think it contributes to the broader plan of the government, as does the entire telecommunications sector. I think the telecommunications sector spends about R30 billion a year. Of course, that helps in delivering the plan for SA Inc, so to speak.

FIFI PETERS: It’s been a pretty busy six months for the group, Shameel, with their entry into Ethiopia, with the consortium there, and now, more recently, in Egypt. I think the opportunities are well known, just given the communication from the company on why it is making these deals. But what are the main risks for these transactions to realize value?

SHAMEEL JOOSUB: Well, I think of course the opportunity is there; As you say, all these opportunities carry risks. Of course, aspects such as the exchange rate have an influence, and you always have to be vigilant [that]. Political unrest is another problem that always exists as a risk in all of our markets.

But other than that I’d say a lot of this is in our control – making sure we’re buying into the right equipment, having the right management, and taking advantage of the opportunity.

FIFI PETERS: On the pandemic, as your sector has benefited from the increased demand to do everything online, there have also been pressure points. I would like to understand the semiconductor shortage: to what extent has this been a problem for Vodacom?

SHAMEEL JOOSUB: Of course, the pandemic in South Africa has risen dramatically, so the demand on networks and investment, that is, between 10 and 5 billion rand, is there and you must constantly make sure to keep up to date so that your customers have a great experience. The semiconductor shortage is not great, to be frank, because it affects the supply of devices. It affects the supply of network equipment, etc. and causes delays.

At this stage we are trying to manage it by being proactive in purchases and that kind of thing, but it does depend on how long this shortage prevails because it will affect the supply.

FIFI PETERS: Speaking in addition to supply, we have seen how the pandemic affects supply chains globally and delays the arrival of new stocks for most companies. How is the situation in your stores?

SHAMEEL JOOSUB: We try to make sure. Of course, some devices are in short supply or not getting the volumes you want. An example would be the launch of the new iPhone. The demand is much greater than the supply and of course with things like semiconductor parts there is usually a shortage, anyway, of Apple devices when it launches. But these things will be a role for everyone. I don’t think any provider is immune. Some may be better prepared than others, but it affects that immediate availability. You are now introducing more vendors in some respects, just to make sure you have enough stock.

FIFI PETERS: Shame, walking away from the pandemic, I think it recently brought 5G to Mpumalanga, following the launches in Gauteng and Cape Town. Just tell us more about 5G plans and which cities are next.

SHAMEEL JOOSUB: I think we will continue to expand. It starts with big cities first, then secondary cities, and continues to expand and continue to grow with the penetration of 5G. Part of this also depends on how quickly device prices drop.

So we will continue to invest in the network, but we also have to be able to cope with the traffic and be able to switch traffic from the 4G network to the 5G network, which is a better technology for data.

But it also comes down to affordability. You don’t want to rush out and cover the entire country and then basically not have the gadgets and the affordability of the gadgets. Therefore, you must be very concise and knowledgeable about how to invest.

So invest ahead of the curve. But you can’t invest path ahead of the curve because you are actually wasting capital expenditures that could be used to serve or keep up with traffic on the 4G side.

FIFI PETERS: Lastly, with respect to its financial services division, we have seen that revenue in that division continues to grow strongly. You are now the largest fintech platform in Africa by [number of] subscribers. How do you plan to take further advantage of this position?

SHAMEEL JOOSUB: I think what we have is a really solid platform. We now process $ 302 billion a year, which is equivalent to R4.5 trillion a year. So with 57 million customers now buying a financial service product from us, we continued to evolve our M-Pesa platform, but it would also have seen great links with the launch of VodaPay in South Africa, which has been incredible in terms of uptake. in just over four weeks. Very, very exciting in that sense. You will see that we increase the number of services, but we also bring the e-commerce part of VodaPay to our international markets.

We are increasing the number of use cases on both the VodaPay platform and the M-Pesa platform. Yes, I think it is going to be very exciting because now we are expanding into loans, investments in the markets. You can shop online on the VodaPay platform, and that ability will also be incorporated into M-Pesa.

FIFI PETERS: It’s okay, Shameel. Thanks for your time. We’ll leave it there, sir. That was the CEO of the Vodacom group, Shameel Joosub.

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