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Our performance
Our business
Governance review
Administration
Overview
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Multi-year initiatives
In addition to driving revenue growth, we continue to place a strong
focus on enhancing operational efficiencies and reducing costs.
This has become particularly important given the tough market
conditions that are leading to reduced consumer spend and
increased input costs (page 14). As with other companies in the
sector, key challenges to costs include inflationary pressure, the
operational costs to service incremental sites, higher energy costs,
and foreign currency denominated expenses impacted by
weakening exchange rates.
Despite the tough challenges in the operating environment, we
have delivered valuable savings this year through our structured
multi-year cost savings programme, ‘Fit for growth’. We are
implementing this Vodafone Group-wide programme to which we
contribute and leverage from, global best practice through a
project office that systematically drives focus and maintains
discipline across our operations and activities.
We have placed a particular focus recently on optimising our
customer acquisition and distribution costs. This year, we saw the
benefits of buying back our customers from Nashua (Pty) Limited,
allowing us to directly service our customers and reduce the
ongoing commission. We have now also concluded the repurchase
of our customer base from Altech Autopage (Pty) Limited, the last
of the independent service providers, and will see the benefits of
this transaction realised in the next financial year. We optimised our
publicity spend by consolidating our various agencies into a single
‘red team’, and improved efficiencies to deliver overall cost
optimisation.
Process simplification
We continually look at how we can simplify and speed up the way
we do things to benefit our customers while also reducing costs.
We track and measure the targets that we have put in place, how
long it takes to answer a call, to repair a phone or deliver one. By
introducing and improving our various self-care channels such as
the MyVodacom App, webchat and USSD, we managed to empower
customers to help themselves while also reducing overall call
volumes. We continue to improve on our call centre effectiveness
by fixing the root cause of problems and understanding customer
problems better. As a result, service in our online channels has
grown to over 1 million users per month, at the same time reducing
calls to call centres by 14%. Our next target is to complete a
customer upgrade in ten minutes.
Continually improving the way we do things requires ongoing
innovation, sparked by sharing ideas and experiences across our
operations and the entire Vodafone Group. Through our access to
the Vodafone global procurement programme, we benefit from
their strategic agreements with some of the world’s leading
companies to deliver innovative products and services. Handsets,
network and IT equipment are for the most part negotiated and
procured centrally through the Vodafone Procurement Company
(VPC). We make use of these centralised benefits wherever we can,
while also ensuring provision for local procurement requirements
and targets, such as those included under BEE in South Africa.
Besides the pricing benefits that come with Vodafone’s scale, other
benefits of using the VPC include: access to world-class methods
and standards that help us improve our processes; a stronger focus
on working with our suppliers as strategic partners; reduced
administration as some of our global suppliers are managed directly
by VPC; and enhanced auditing and assessment of certain supply
chain risks. Our supplier performance programme is used to
evaluate suppliers in terms of commercial terms, delivery timelines,
quality of goods and services, category-specific standards, health
and safety, and sustainability. Through the VPC performance
programme there have been evident improvements in the service
received from global suppliers. We continue to consolidate and
optimise our supplier base across the Vodacom companies in
our markets.
Structural savings
As we accelerate our network investment to improve coverage and
quality across our operations, we constantly explore opportunities
to do this smarter and more efficiently to ensure that we retain our
network advantage at the best returns with reduced environmental
impacts and enhanced social delivery. We have increased the
rollout of our low cost base stations that can be deployed in three
days at a cost of only around $50 000. The sites are connected
through satellite technology and powered by solar energy. We have
completed the installation at all our operations of our single RAN
technology that enables the combination of 2G, 3G and LTE/4G
technologies into the same radio equipment. This has had a
number of cost benefits, including reduced on-site floor space
requirements, which reduces our site rentals.
Currently, 88.5% of our sites in South Africa and 89.4% in
International run on our own transmission. This reduces our
network running costs, allowing us to carry data at a far lower cost
than leasing it, with the added benefit of being able to expand our
data network for very little incremental cost. Where possible, we
passively share our network sites, or utilise the sites of other parties,
to reduce operating expenses. As a result, we reduce the impact on
the environment and ease the pressure on planning authorities.
We have also realised material savings in energy costs through the
use of innovative technologies that reduce our energy usage and
carbon footprint. We have extended smart energy meters to roughly
54% of our sites, resulting in more accurate monitoring and rebates
from reconciled invoices amounting to R3.1 million. We are also
implementing a simple solution of installing curtains in our
containers, to reduce the dispersion from heat generating
equipment away from heat sensitive equipment; this has seen a
saving of 18% on energy consumption in some test cases.
Our aim is to drive cost efficiencies in each of our core mobile
businesses to ensure cost growth 0.5 ppts lower than revenue
growth. We continue to foster a cost-conscious culture at an
individual employee level to ensure that everyone across the
Group delivers savings on a day-to-day basis.
Operations