This pleasing performance has been accompanied by
Vodacom securing an outright net promoter score (NPS)
lead over all our competitors in all our operations.
During the year, we completed the transformative
R42 billion acquisition of a strategic stake in Safaricom,
and in the same month we became the first (and
currently only) telecommunications company to list on
the Dar es Salaam Stock Exchange, a record-breaking
listing involving the participation of more than 40 000
Tanzanian investors.
This year, we improved our BEE score and achieved
a Level 3 BEE contributor status. This reflects our
commitment to implementing meaningful and
sustainable transformation.
South Africa
Our industry-leading application of Big Data and machine
learning, created to deliver personalised bundle offers
based on customer behaviour, continues to differentiate
us from our competitors. Through our ‘Just 4 You’
platform we have accelerated the uptake of bundle offers,
driving the sale of 2.3 billion bundles in the year, up
51.3%. Customers using bundles have grown 13.9%
to 18.7 million. Data bundles sold increased 54.7% to
766 million, with the average monthly data usage on
smartphones increasing 18.4% to 784 MB, driven in part
by a 44.8% increase in 4G customers to 7.3 million.
Enterprise service revenue grew 10.8%, and our Enterprise
mobile customer base increased 6.9% year-on-year to
1.3 million customers. We achieved impressive results
in growing our customer base through our segmented
propositions in the youth (Vodacom NXT LVL) and
emerging market (Vodacom Siyakha) segments. We more
than doubled the number of customers on our Youth
platform to 3.3 million, and saw 7.7 million low-income
customers on our Siyakha platform using Facebook flex in
the first year. Our financial services strategy is also gaining
momentum with our insurance direct recharge offering.
The 4.9% rise in service revenue growth is particularly
pleasing given the revenue impact associated with
reducing out-of-bundle data prices by as much as 50% in
October last year, as well as the early phase investments
in new revenue streams, including fibre, content
propositions and financial services. As part of our
commitment to democratising data, we have reduced our
effective rate for data by 21.6% year-on-year, and by
42.5% over the last three years. Our accelerated rural
coverage programme was instrumental in Vodacom
becoming the continent’s first operator to reach 80%
population coverage on a 4G network.
International
In our International operations, it was a particularly good
year for Mozambique and Lesotho, while our commercial
efforts in Tanzania and the DRC continue to show strong
momentum. This portfolio produced a 7.4% increase in
normalised service revenue on the back of rising
customer numbers, strong demand for data, and the
continued accelerated uptake of M-Pesa.
Revenue from mobile money continues to be a
significant contributor to the Group. The combined
customer base, including Safaricom, grew 11.5% in the
past year and now exceeds 32.3 million. During this
period, M-Pesa customers processed transactions worth
R1.3 trillion, making it the biggest mobile money
platform across the continent. The total transaction
revenue from M-Pesa across the portfolio is R10.2 billion,
which is significant. M-Pesa revenue is flying with a
growth rate of 30.4%* and 11.7 million customers in the
International portfolio, and 14.2% M-Pesa revenue growth
and 20.5 million customers in Safaricom.
Despite a turbulent political context, Safaricom delivered
net profit growth of 14.1% for the year, supported by
strong growth in data and M-Pesa revenues, and a 5.1%
increase in customers to 29.6 million. Vodacom’s portion
of the eight-month profit contribution from Kenya’s
leading telco was R1.5 billion.
We are seeing the benefits of our significant strategic
investment in Safaricom. As part of our commitment to growing our financial services, we are building on Safaricom’s
extensive M-Pesa experience to expand our merchant payment
system in Tanzania, and to get each of our other mobile money
markets to the same level of sophistication. We are working closely
with Safaricom to enable them to enhance their platforms through
our skills and IT systems in Big Data and machine learning.
Positioning Vodacom for a digital future:
Our Vision 2020 strategy
We believe that digitisation offers exciting opportunities for us
to extend revenue streams beyond connectivity, as well as
unparalleled potential to accelerate social transformation.
Our Vision 2020 strategy has five key strategic elements,
aimed at delivering on our core vision of being a leading digital
company that empowers a connected society.
Using machine learning, Big Data and analytics, we will be
deepening our understanding of consumer behaviour, and
developing highly-personalised offerings, with the ultimate goal of
achieving relevant offers for the segment of one. In the Consumer
space, we are targeting opportunities to monetise and grow data
usage by developing Consumer digital services in digital content,
financial services, Consumer IoT, and specific partnerships in areas
such as e-Commerce, e-Education and e-Health. To drive
Enterprise growth, we are focusing on building our core sales
channel, expanding our Cloud and security business, and
becoming the IoT solutions partner of choice. The key objective is
to protect and grow traditional revenue streams, while expanding
to complementary adjacent services.
Our goal is to provide the most engaging customer experience,
blending the best of technology and human interaction in a
personal, instant and easy way, substantially enhancing the
quality of service. We are investing in Big Data and analytics, chat
bots, online self-service and IT-based customer engagement and
management tools, and will be further modernising and digitising
our retail channel. We will be building on the early successes of
our segment-based county, cluster and micro-cluster model, to
drive our targets to secure and consolidate our leadership in
market share per segment and county. Our goal is to be the NPS
leader in all markets, with distinct leadership in digital interactions.
In modernising our network, and as part of our smart capex drive,
we will be growing our connectivity footprint expanding 4G coverage,
providing 5G readiness and utilising Big Data intelligence and an
Agile culture to deliver smart network planning and smart network
operations. We are deepening our IT capabilities and implementing
an IT acceleration programme. Our key measure of success will
be our Network NPS score, measuring customer experience on
our networks.
We have begun the process of digitising our own organisation, built
on a culture that fosters organisational agility and collaborative
working, that attracts and develops the rights skills, talent and
diversity, and that uses Big Data and analytics to leverage data for
improved decision-making. This year we have enhanced our core
team of data engineers, data scientists and modellers, and will be looking to double our capacity in the next year. We measure our
success in applying digital in our new ways of working, through our
employee engagement score and particularly how we adopt digital
in our mindset as a business.
Our strategic objective is to ensure that Vodacom is the customer
brand of choice, with a strong purpose-driven brand and a
deserved reputation for accelerating socioeconomic
transformation through digital solutions, and for showing
leadership in promoting BEE in South Africa. We have prioritised
seven of the global UN Sustainable Development Goals (SDGs),
where we believe we can have the most meaningful impact, by
democratising data, extending the coverage and quality of our
network, and providing digital products and services aimed at
promoting financial inclusion, education, agriculture, and
healthcare. We are targeting to remain the industry leader as
measured by our Reputation Index survey.
Outlook
Regulatory and policy developments remain an important
challenge across all our markets. In South Africa, we have had
constructive engagements with government and the regulator,
where we have highlighted our concerns regarding the draft
Electronic Communications Amendment Bill. While we fully
support government’s ambitious objectives for the sector – in
terms of increasing the affordability and reach of broadband, and
accelerating economic transformation – we are concerned that
the nature of the proposed new WOAN would have significant
negative consequences. We have proposed an alternative ‘hybrid
model’ – comprising a competitive WOAN with the opportunity to
access spectrum for current operators – which we believe would
have a greater positive impact in broadening connectivity, driving
down costs and accelerating transformation.
Access to spectrum remains a critical need in making our
communication services more affordable and in delivering new
technological advances to customers across our markets. We will
continue to engage constructively in these processes with
regulators and government to ensure a speedy and fair resolution
for the industry at large.
Looking ahead, we are encouraged by renewed economic and
political stability in most of our markets. I believe that our
investment and efforts to drive revenue diversification and digital
transformation across the Group are having the desired effect, and
that Vodacom is well placed to realise and share the significant
opportunities associated with the increasingly rapid uptake of
digital technologies. I remain confident that we have both the
right strategy and the right team to drive exciting growth
opportunities as we seek to change people’s lives through
building a connected society.
In closing, I wish to thank my colleagues on the Board and the
executive team for their guidance and assistance over the year,
and Vodacom’s employees across our markets for their
commitment in delivering on our strategy. The future is exciting.
We’re ready.
Shameel Aziz Joosub
Chief Executive Officer
1 June 2018
