It gives me pleasure to present
Vodacom’s Integrated report, in
my first year as Chairman. After
eight years on the Board, it is an
honour for me to be serving in this
role at such an exciting time in the
Company’s journey, as it pursues
its ambitious strategy in the
digital space.
Chairman's statement
Phillip Jabulani Moleketi
This has been an eventful year for Vodacom, with some significant developments within the Company and across our markets, accompanied by encouraging performance across the Group.
In August 2017, we completed the largest transaction in our history, the R42 billion acquisition of a strategic stake in Safaricom. The transaction has diversified our financial profile, and positioned the Company as a serious financial services player in Africa with R1.3 trillion moving through the M-Pesa system, enabling us to drive further adoption of the successful mobile money service, M-Pesa, across our operations, and providing a very valuable platform for delivering on our vision of empowering a connected society.
In the same month, Vodacom Tanzania became the first telecommunications company to list on the Dar es Salaam Stock Exchange. This was the largest listing in the exchange's 19-year history, raising TZS476 billion (around R2.9 billion), and involving the participation of more than 40 000 individual Tanzanian investors and all the major pension funds. Vodacom's compliance with the listing requirements, reflects the company's clear commitment to contributing to Tanzania's growth and development.
Our International operations
It has been pleasing to see the strong performance this year throughout our International operations, despite various regulatory, macroeconomic and/or currency-related challenges in most of these markets. This performance has been underpinned by good progress in data monetisation and strong M-Pesa penetration, both of which present significant opportunities for further growth, supported by additional network roll-out and an expanded product portfolio in the Enterprise space. We believe that some of the markets are ripe for consolidation in the telecoms sector, and that Vodacom is well positioned to realise potential associated opportunities.
South Africa
In South Africa, the year was characterised by volatility in the political, regulatory and economic environment. In February 2018, a new administration under the incoming President Cyril Ramaphosa was appointed. We are committed to engaging actively with this new administration, and to work with them in identifying opportunities which harness the full potential of ICT in achieving national and global developmental objectives. Accelerating socioeconomic transformation by broadening access to connectivity lies at the heart of Vodacom's Vision 2020 strategy. For this potential to be realised, however, it is critical that there is a regulatory and policy framework that is conducive to the long-term investment in network infrastructure needed to increase connectivity and bring down prices. Access to spectrum and providing certainty on licences to operate are fundamental to any such investment.
In our recent engagements with government, where CEO Shameel Joosub has played an active role, we have highlighted our concerns regarding the draft Electronic Communications Amendment Bill, and we have proposed a constructive alternative 'hybrid model'. We believe that a hybrid approach, establishing a competitive wholesale open-access network (WOAN) alongside the opportunity for spectrum access for current operators, would address the government's transformation mandate and have a greater positive impact in driving down the cost to communicate. We have been encouraged by the new administration's commitment to an evidence-based approach to rule making, and look forward to continuing our engagement with them in the hope of finding the best way forward on this issue.
A core part of our vision of empowering a connected society is our commitment to playing a leadership role in driving Broad-Based Black Economic Empowerment in the country. A significant development this year will be the conclusion of our BEE deal. This significant transaction builds on a strong tradition of promoting employment equity, supplier development, retail transformation, skills development and social investment. Our acknowledged performance in these areas is evidenced by Vodacom consistently outperforming all other network operators, and being rated this year as the 'Most Empowered Black-Managed Company' on the JSE. Ten years ago, Vodacom executed a R7.5 billion BEE deal, one of the largest deals at the time. This deal is maturing in October 2018, and to replace this we will be concluding a new deal, mainly with existing holders, which has over 82 000 investors. The underlying shares to this deal will now be at the Vodacom Group level, allowing exposure to the Group's International operations, greater transparency and improved price discovery.
Governance and strategy
Following Peter Moyo's retirement in July 2017, we have been joined on the Board by Saki Macozoma, who brings fresh insight and valuable experience, having served previously as chairman of Liberty Life Holdings and Standard Bank, as well as past president of Business Leadership South Africa. We are privileged to have a very talented Board of 12 directors that have the necessary depth and diversity in skills, experience and perspective to hold the executive team to account on the development and execution of its strategy.
The Board had a valuable opportunity this year to undertake a comprehensive review of Vodacom's Vision 2020 strategy. During a dedicated two-day Board discussion in December 2017, we engaged not only with the responsible Vodacom executives, but also directly with individual employees involved in developing and implementing various elements of the strategy. This more 'experiential' approach greatly assisted us in our role of overseeing the strategy process, enabling us to engage in some productive and robust conversations with the executive team, and helping to further refine the ambitions and activities.
As outlined in more detail in this report, Vodacom has a bold ambition of transforming the business into a 'leading digital company', protecting and growing its existing activities in the more traditional telecoms area, while diversifying into adjacent new business in the digital space. Realising this ambition will require developing critical skills and competencies in such areas as Big Data analytics and Artificial Intelligence. It will require having the right networks and technologies in place, as well as the right organisational culture to deliver significant digital innovation and yet maintain a strong, people-centred customer focus. In our Board discussions, we have highlighted the importance of finding the right balance in managing time and resources, between retaining market leadership in our current core business and investing in potentially radical new opportunities.
Acknowledgements
On behalf of the Board I would like to express our appreciation to the executive team and all of the Vodacom employees for their invaluable contribution to the Company's success. I would also like to thank our business partners, shareholders and other stakeholders for their ongoing engagement and support.
As a leading African mobile network operator, Vodacom is operating in an incredibly dynamic and exciting time. I am confident that we have the right strategy and leadership team in place to deliver on our vision of becoming a leading digital company, empowering a connected society. I look forward to working with my colleagues on the Board to ensuring that the Company delivers on this vision.
