Our material risks

Each year, the Vodacom Group Board reviews the critical strategic risks facing the company and approves the Group’s risk appetite. The identification and assessment of these risks are informed, amongst other things, by an understanding of our business model (click here), significant trends in our operating environment (click here) and the relevant interests of key stakeholders (click here). A review of our risk management processes and structures is provided on click here.

Our five strategic objectives:



Context     Mitigating actions   Strategic response

Regulatory decisions and changes in regulation

We must comply with a wide range of requirements that regulate the licensing, construction and operation of our networks in our operating countries. The decisions of regulators relating, for example, to the granting of spectrum licences, customer registration requirements, BEE compliance (in South Africa), and wholesale and retail tariffs, may impact our business model.

    
  • We have established specialist regulatory and government relations teams.
  • We participate actively through written submissions and formal hearings on legislative and regulatory changes.
  • We have access to best practice and international debate through Vodafone.
  • We conduct detailed scenario planning on an ongoing basis.

 

  

Increased competition

We are facing increased competition in all our markets, including from some non-traditional sources. Our ability to compete effectively depends on the quality, capacity and coverage of our network, the quality of our customer services, and the pricing and nature of our services and devices. Ensuring that we proactively anticipate, and where necessary respond to, changing market conditions is essential to maintaining revenue growth.

    
  • We ensure competitor differentiation by investing significantly in network infrastructure to ensure leadership in coverage, call quality and data speed.
  • We strive to deliver a differentiated customer experience by constantly reviewing the pricing and nature of our products, services and devices, and the quality of customer care.
  • We invest in new technologies and the reach and quality of our sales and distribution channels, seeking to improve the customer experience across all touch-points.
  

Unpredictable political, economic and legal risks

The value of our investments in our markets may be affected by political, economic, tax and legal developments beyond our control, including developments due to public sector corruption. The mobile communications industry can often be subject to unpredictable, higher direct and indirect taxes in our countries of operation.

    
  • We have a comprehensive stakeholder relations strategy in place in all our countries of operation.
  • We have implemented an anti-corruption, anti-money laundering and anti-terrorist financing programme to prevent the giving and receiving of bribes and other corrupt acts.
  • We have a specialised tax management capability, and seek expert tax advice as needed.
  • We will consider litigation to enforce compliance with legislation among competitors.
  • We adjust our products and services to continue to serve customer needs, especially in the tough economic environment.
  

Major network and billing infrastructure failures

We operate complex mobile networks that rely on third parties to provide power or transmission. Network and billing infrastructure may also be damaged by natural disasters or a deliberate malicious attack. In particular, network outages may negatively impact customer usage, revenue and our reputation.

    
  • We have comprehensive business continuity and disaster recovery plans in place.
  • We invest in maintaining and upgrading our networks on an ongoing basis.
  • We have self-provided transmission links on critical routes in our networks to reduce reliance on external parties.
  • We are making investments to ensure adequate redundancy capabilities where feasible.
  • We have comprehensive insurance in place.
  • We continue to consider dual generator and alternative energy supply solutions where feasible.
 

Complying with competition legislation

The South African competition authorities have been actively targeting different industry sectors, with the Competition Commission launching full-scale enquiries into non-competitive practices. We may face penalties, reputational damage, or lose stakeholder and shareholder confidence if we do not comply with the requirements of the South African Competition Act.

    
  • All new products and services are reviewed for compliance with all applicable laws, including the Competition Act, before being approved for launch.
  • Detailed evaluations of the impact of new products and services, promotions, campaigns and tariff enhancements are done in terms of the Electronic Communications Act.
  • All distribution channel agreements have been updated to comply with legislative changes.
 

Customer privacy

Our ability to protect sensitive customer information is material to building trust with our customers and to our reputation. Vodacom follows best practice to ensure that we limit data leakages and breach of our information.

    
  • We have implemented the Vodafone Global Privacy Framework and toolkit in all our markets.
  • We are responding to privacy requirements through an enterprise project across all areas of business. Awareness and training form part of the project.
  • Legal and Regulatory Affairs continues to engage with key stakeholders as we implement the necessary processes to ensure that our information is protected.
  • Protection of Personal Information (PoPI) compliance.
 

Cybersecurity

We ensure that we have a superior security programme in place to protect, monitor and react to malicious cyber-attacks. We provide due care to ensure that our network and our customers’ information are protected.

    
  • We have world-class monitoring centres to identify attacks timely.
  • We conduct detailed scenario planning on an ongoing basis.
  • We ensure that our networks and infrastructure are built with security in mind.
  • We implement controls based on world-class industry standards.