Our performance
Governance review
Other
This has been another pleasing year for Vodacom, with significant value created for each of the company’s stakeholders.
This substantial value generated and shared over the year reflects the effective execution of the Group’s strategy, in the face of challenging market conditions across all operations.
This has been an eventful year in South Africa, both for business in general and for the telecoms sector in particular. The recent sovereign debt rating downgrade, the continuing political uncertainty, and weak levels of job growth, have placed a strain on the economy and on levels of business and consumer confidence. In the telecoms sector, we have seen strong consumer calls to reduce data prices, as well as some significant regulatory and policy developments.
We have engaged with government throughout the year on their Integrated ICT Policy White Paper, and more recently on the revised ICT sector code for Broad-based Black Economic Empowerment. Vodacom’s Vision 2020 strategy shares government’s underlying objective of broadening access to connectivity and realising the full potential of ICT as a means of achieving the country’s developmental goals. In my review last year, I spoke of the closer dialogue that we were seeing between government and business, and of the expressed willingness of many government leaders to address some of business’s key concerns. The need for such dialogue remains as important as ever. As an industry, the telecoms sector can play an instrumental role in driving further transformation and facilitating inclusive economic growth. For this to be fully realised, however, it is critical that we work together to find solutions that are in our collective interest, and that most effectively harness the power of the market to drive the innovation that the ICT sector can provide. It is, therefore, important that the carefully considered hybrid solution as proposed is accepted to move the industry forward and help government achieve its objectives.
Our International operations have had a particularly challenging year, feeling the impact of high exchange rate volatility and regulatory changes in most of our markets, especially the customer registration requirements in the DRC, Tanzania and Mozambique. In each of these countries Vodacom has done the utmost to ensure compliance with these registration requirements, and has worked closely with regulators in an effort to maximise the efficiency of these processes.
The DRC remains the most challenging of our operations, facing continuing concerns around security and infrastructure, a significant weakening of the Congolese franc, and potential political instability around the proposed presidential elections. Given this tough operating context, it is encouraging that we have managed to regain most of the customer numbers disconnected in compliance with customer registration requirements in the prior year, regained market share, and successfully rolled out the Vodacom rebranding across the country.
In Mozambique, we had positive performance over the year, maintaining double-digit revenue growth despite challenging economic conditions, including the 55.8% depreciation of the metical against the rand. While we anticipate some further macroeconomic challenges in the year ahead, with the recent downgrade of the country’s sovereign debt rating, we have a very strong base for further growth, with significant potential for data optimisation and further uptake of M-Pesa on the back of the new operating platform.
Tanzania has seen a year of two halves: the impact of the customer registration requirements and the challenging competition at the beginning of the year, has been offset by the continuing strong growth in data and M-Pesa over the second half. The team has put considerable effort into ensuring the first listing of a telecoms company on the Dar es Salaam stock exchange (DSE), reflecting its strong commitment to localisation. With a young population, strong GDP growth, and low levels of data penetration, the country presents exciting opportunities for data growth.
Lesotho had another excellent year, with strong revenue growth and good uptake of our targeted segmented propositions. Opportunities remain for further smartphone penetration and more utilisation of our 4G network.
As Chairman of the Board my primary responsibility is to ensure that the Board provides an informed and objective oversight of the Group’s strategy and performance, and that it delivers effectively on its fiduciary responsibilities. This year, we commissioned an independent evaluation of the Board’s activities, and were reassured by their findings that the Board is doing well in fulfilling its duties. I believe that the Board’s continued effectiveness reflects the skills, experience and diversity of its members, and their deep understanding of the Group’s activities and operating context.
Although half of our non-executive directors represent Vodafone, and thus are not deemed independent as recommended by King IV, as a Board we are satisfied that the balance of power and objectivity on the Board is sufficient and does not require additional independent voices. To address non-compliance with the JSE Listings Requirements, we had agreed with the JSE that the respective Chairs of the Remuneration Committee and the Nomination Committee (neither of which has a majority of independent non-executive directors) would have a casting vote in the event of any deadlock or dispute.
During the year, we began to prepare for the succession planning of our independent directors and of the Chairman of the Audit, Risk and Compliance Committee. Given Vodacom’s Vision 2020 strategy, which seeks to reposition the Company as an overtly digital organisation, as part of this succession planning we will be looking to bring on board new skills to ensure the effective oversight of this digitisation strategy.
After eight years serving as Chairman of the Vodacom Board since listing on the JSE, I have decided to step down from the Board to take up the exciting opportunity of joining Old Mutual Emerging Markets as its CEO with effect from June 2017. I wish to express my deep gratitude to all my colleagues on the Vodacom Board and the executive team whom I have worked with throughout this time. It has been an incredible privilege to be a part of Vodacom’s significant growth over this period.
I look forward to watching Vodacom’s continued success as it repositions itself as a digital company that is committed to democratising Internet access, and providing the digital products and services that empower the lives of its customers.
MP Moyo
Chairman
2 June 2017
