Spectrum/Licence renewal (International markets)

Speed of impact:
Rapid

Rating: Down (2017: 1)

Failure to secure additional spectrum due to policy changes relating to the issuing of spectrum licences, non-renewal of existing licences, and/or increased competition for access to spectrum, would significantly impact our ability to increase capacity and deliver future network capabilities.

• Engage government and regulatory bodies, highlighting efficient allocation and resulting societal benefits of spectrum.
• Actively participate in licence renewal processes and spectrum allocation processes.
• Continuously evaluate and implement re-farming and optimisation strategies.
• Proactive spectrum strategy, including potential acquisitions and strategic partnerships under applicable regulations.

Adverse regulatory pressures with regards to data pricing
(South Africa)

Speed of impact:
Rapid

Rating: New

The recently published amendments to the End-User and Subscriber Service Charter Regulations by ICASA regulating out-of-bundle data, as well as a recently launched inquiry by the Competition Commission of South Africa regarding data services, could have negative unintended consequences on our customers, and may prevent, distort or restrict competition.

• Agreed to implement the final regulations as published by ICASA.
• We will offset negative financial impacts through elasticity of demand from data and other commercial actions.
• Inform customers of their data usage, notify them of defined thresholds, and provide personalised up-sell offers in each usage notification.
• Give customers the choice to opt in for out-of-bundle usage and charges and the option to rollover or transfer unused data.
• Conduct awareness campaigns on data usage and recommended options available.

Market disruption (All markets)

Speed of impact:
Slow

Rating: New

We are experiencing intensified competition from a variety of new and existing technology providers, new market entrants and competitors.

• Monetise the network and personal data assets by using Big Data and real-time analytics to provide personalised services to customers.
• Implement pricing strategies to manage the decline of traditional voice revenue through migrating voice to data.
• Established a team that analyses and provides insight into customer behaviour to better position our offerings and further segment our customers with relevant offers and services.
• Ensure superior customer service strategy in place.

Adverse political measures and regulatory pressures (All markets)

Speed of impact:
Slow

Rating: Up (2017: 7)

Stringent requirements set by the regulator or government legislation could have an impact on Vodacom’s profitability, growth and services in our operating countries. Recent significant regulatory and policy changes include mobile termination rates, new mobile financial services licences and regulations, DRC’s sub-contracting law, BEE compliance and the Electronic Communications Amendment Act in South Africa.

• Specialist legal, regulatory and government relations teams at Group and in all operations.
• Engage external advisors and legal counsel to support our activities.
• Engage key stakeholders, and utilise targeted intelligence reports, to understand material legislative changes.
• Proactive engagement with government and other key stakeholders to communicate key messages and proposals on how policy/regulatory decisions positively and negatively impact the sector.
• Participate in broader government objectives and public interest through national industry associations, the GSMA and other influential national/international organisations.
• Regulatory Compliance Policy and a related combined assurance programme in place to ensure that all risks are documented and assessed and that action plans are in place and tracked.

Failure to deliver on strategic projects in regards to fibre and convergence (South Africa)

Speed of impact:
Slow

Rating: Up (2017: 8)

Failure to deliver on new services will negatively affect the future growth of the organisation. Key projects such as our roll-out of fibre or converged projects could impact on Vodacom’s ability to remain competitive.

• New divisions established to focus on strategic projects relating to fibre and digital services.
• Review options to assist in the growth of our fibre offerings either through build or buy.
• Review and monitor our current revenue streams so that we are able to proactively implement controls to manage potential substitution.

Technology failure (All markets)

Speed of impact:
Very rapid

Rating: Down (2017: 4)

Our customer value proposition is based on the reliable availability of our high-quality network. A major failure in critical network or information technology assets – for example, through natural disasters, insufficient preventative maintenance, or malicious attack – would have a profound impact on our customers, revenues and reputation.

• Invest in maintaining and upgrading our network on an ongoing basis, with comprehensive business continuity and disaster recovery plans in place.
• Investments to ensure adequate redundancy capabilities where feasible.
• Comprehensive insurance policies in place.
• Self-provided transmission links on critical routes in our networks to reduce reliance on external parties.

Cyberthreat (All markets)

Speed of impact:
Very rapid

Rating: Down (2017: 2)

An external cyberattack, insider threat or supplier breach – malicious or accidental – could result in service interruption and/or the breach of confidential data, with resulting negative impacts on customers, revenues and reputation, and potential costs associated with fraud and/or extortion.

• World-class monitoring centres to identify attacks timeously.
• Conduct detailed scenario planning on an ongoing basis.
• Ensure that networks and infrastructure built with security in mind.
• Implement controls based on world-class industry standards.
• Continuous improvement programmes in place to mitigate against risks.
• Assurance programme that incorporates both internal and external reviews of third parties that hold data on our behalf.
• Layers of security control applied to all applications and infrastructure that store or transmit confidential personal and business voice and data.

Unstable economic and market conditions (All markets)

Speed of impact:
Rapid

Rating: Down (2017: 6)

The mobile communications industry is often subject to unpredictable and higher direct and indirect taxes in our countries of operation. Other volatile macroeconomic conditions – such as fluctuating foreign exchange and inflation rates – can weaken Consumer and Enterprise spend, reducing revenue and impacting negatively on operating costs and capital expenditure.

• Comprehensive stakeholder relations strategy in all our operations.
• Specialised tax management capability, and seek expert tax advice as needed.
• Adjust our products and services to continue to serve customer needs.
• Group Treasury Policies applied in all our markets.
• Include contingencies in our business plans to provide for the negative operational impacts that could arise from lower economic growth, and changes in interest, inflation and exchange rates.
• Implemented a global cost-savings programme to combat the effects of inflationary pressure on costs.

Non-compliance with laws and regulations (All markets)

Speed of impact:
Slow

Rating: Down 2017: 9)

We operate in a complex and heavily regulated environment. A breach of regulatory requirements could expose Vodacom to significant financial and reputational damage.

• All new products and services are reviewed for compliance with all applicable laws and regulations before being approved for launch.
• All distribution channel agreements are updated to continuously comply with legislative requirements.
• Subject matter experts in our legal and regulatory teams at a local and global level who advise on strategy and manage policy and risk issues.
• Policy of zero-tolerance towards bribery by any employee or third party operating on our behalf.
• Robust, proportionate, risk-based controls to prevent, detect and report money-laundering and terrorist financing.
• Combined Assurance Programme on regulatory compliance, governed by the Group Audit, Risk and Compliance Committee.