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Grow services
We are continuing to identify new opportunities to grow revenue
through the provision of new services in some of our non-traditional
areas such as mobile financial services, insurance, IoT, fibre to the
home and business and content. We have established dedicated
acceleration units to drive further uptake in each of these areas.
Mobile financial services
Our M-Pesa mobile money initiative remains a strong growth driver
in our International operations, with active customers up 15.4% to
9.2 million. In Tanzania, our partnership with Commercial Bank of
Africa to introduce M-Pawa, the country’s first mobile savings
and loans product, has shown good results. Launched in
September 2014, we now have 1.6 million customers actively
using M-Pawa services. There has also been steady uptake of our
International Money Transfer (IMT) services, which we are looking
to expand further. Unfortunately in South Africa, our progress with
M-Pesa has been much slower than anticipated. This is in part
due to a very high banking penetration, the regulatory environment,
challenges in distribution and customer uptake. As a result, we have
taken the decision to terminate our M-Pesa service offering in
South Africa, but remain committed to expanding this service
further in our other markets.
Insurance
We have developed various short-term insurance and long-term
insurance products. These include life and funeral insurance, and
device insurance offerings, with different offerings targeting specific
segments of the market. This year, we launched screen insurance
and are seeing a very good uptake. We also launched prepaid
funeral insurance where customers can use their prepaid wallet to
pay. Our insurance portfolio has grown steadily, generating revenue
this year of approximately R524 million, an increase of 18.8% on
last year. Revenue from our long-term insurance business grew
123.8% off a small but fast-growing base. Only 500 000 of our
contract customers currently have device insurance, which leaves
significant opportunity for growth in this offering. We are also
focusing on scaling up our funeral and life insurance business,
leveraging off our strong brand and customer base.
Internet of Things (IoT)
This year, our IoT connections grew 28.2% to 2.4 million, providing
20.7%
1
revenue growth across various different IoT offerings to
our customers. The growth is fuelled by increased digitization of
key value chains and operations, ranging from point of sale systems,
smart metering and retail systems to usage-based insurance (UBI)
services. The most valuable potential of IoT lies in the application
of technology to deliver social progress at scale. Although the
principal focus for IoT has been in South Africa, we will be extending
these into our International operations, having made good initial
progress in Tanzania. We are also extending the trading network
to include the informal sector, within a sound economic model.
Vodafone’s position as the global market leader in IoT, and its
extensive resources in Africa – such as its dedicated IoT platform,
its automotive capabilities and its remote monitoring and control
services platform – provide us with a unique differentiator which has
proved beneficial in securing several highly competitive bids for
large-scale IoT connectivity rollouts.
Fibre
The rollout of fibre forms an important part of our growth strategy,
and will be critical to realising the full potential associated with the
increasing move to a digital-based economy. Our progress this year
in rolling out fibre has been slower than anticipated, as we develop
the systems and skills needed to deal with a very different business
model to our traditional mobile-based suite of products and
services. At year end, we had 17 384 endpoints passed and
1 223 billed endpoints. During the year, we connected 100 estates/
business parks, and are currently rolling out a further 75 estates/
business parks, with a total count of 15 242 fibre customers in these
estates/business parks. Despite the setback with the recent
termination of the Neotel deal, we continue to anticipate significant
growth in this area as we implement our strategy based on
wholesale, self-build and co-build.
Delivering content
We see valuable opportunity in using content – such as music
streaming, gaming, TV and video, news or sport – to drive an
increase in data uptake and revenue. In addition to driving data
sales, the distribution of content provides the opportunity to grow
service revenue such as billing content and in-app purchases to a
user’s account, as well as providing the infrastructure to service
providers to distribute their services. In implementing our reseller
strategy, we have developed valuable partnerships with content
providers, and are focusing on forging further partnerships in the
year ahead. We are also ensuring effective synergies for content
delivery associated with our key sporting sponsorships.
Grow enterprise
Enterprise has had a particularly good year, benefiting from a
comprehensive enterprise transformation strategy that was initiated
three years ago. The enterprise transformation programme has
comprised various elements, including, but not limited to,
investment in infrastructure, the development of new products,
services and support systems, and the provision of the skills needed
to meet the demands of the next generation enterprise. Through
these initiatives, our fixed-line and managed services business in
South Africa grow by 26.5% year-on-year, comprising 14.9% of the
total enterprise service revenue.
This growth has been spurred by the increased demand for fixed
services – particularly our IP-VPN and cloud and hosting services –
as enterprises begin to migrate to the cloud at an accelerated rate.
Better economics, increasing digitization of the economy, and
technology transitions are further driving the adoption of cloud
services. The demand for data centre capacity driven by big data,
and the transition of enterprise resource planning (ERP) systems
such as SAP to new SAP HANA platforms has resulted in Vodacom
Business acquiring more customers to the cloud infrastructure.
To be able to provide managed cloud services to very large
enterprises, we have partnered with IBM to build an industrial-scale
cloud infrastructure, through IBM’s 46th Cloud Managed Services
point of delivery (POD) for Africa and Middle East. Combined with
STRATEGY: Growth
continued
1. Growth normalised for consolidation of X-Link in the prior year.
Vodacom Group Limited
Integrated report for the year ended 31 March 2016
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