Stakeholder 'hot topics' in 2018
Data costs
The issue: The cost of accessing communications services in general – and data in particular – remains a prominent concern for consumers and policy makers. Following the high-profile #datamustfall social media campaign launched in South Africa in 2016, the Competition Commission and ICASA have both launched processes relating to the cost and nature of data services.
Material stakeholder groups: Customers; government; industry regulators; and media.
Our response: We recognise the imperative of further lowering data prices, while not compromising our ability to make the investments in network and IT infrastructure needed to broaden and improve service delivery. We have various initiatives in place to reduce data costs and encourage customers to optimise their bundles and data usage; these include:
- Providing customers with bundles for varying periods of validity at affordable pricing (down to 3c per MB for a one-day, 1GB package);
- Reducing our out-of-bundle rates by up to 50%;
- Improving our in-bundle and out-of-bundle smart notifications for customers in line with ICASA's recommendations, and launching a data refill service to manage out-of-bundle pricing;
- Running targeted consumer campaigns to increase awareness on how to buy maximum-value bundles, check balances and more efficiently manage data usage; and
- Making data more affordable through various propositions that lower the cost barrier, such as Facebook flex (a low data, free version of Facebook without photos and video) and Siyakha (a platform offering access to zero-rated career, education and health websites).
Delivering social transformation
The issue: South Africa, our largest market, has some of the highest levels of inequality, unemployment and poverty in the world. Given the need to promote greater economic inclusion in the country, the South African government has highlighted its commitment to implement 'radical economic transformation'. In terms of the ICT sector, this is reflected in key provisions of the National Integrated ICT Policy White Paper and the Electronic Communications Amendment Bill. In our other markets there is similar pressure from government, regulators and consumers to further broaden access to digital services.
Material stakeholder groups: Government; industry regulators; employees; business peers; and customers.
Our response: Our Vision 2020 includes a clear commitment to removing barriers to digital access, and to deliver the significant societal benefits associated with improved connectivity. We are committed to playing a transformative role in the provision of financial services, education, healthcare and agriculture, and to demonstrating leadership in promoting BEE in South Africa. Our existing initiatives to accelerate socioeconomic transformation include:
- Our M-Pesa product that provides affordable access to financial services to more than 32.3 million (including Safaricom) customers, increasing savings, reducing poverty and opening up valuable economic opportunities;
- Our substantial investment in extending networks into rural areas across our countries of operation;
- Promoting commercially viable mobile agricultural solutions through our Connected Farmer platform, and delivering measurable education and health benefits through our mobile data initiatives;
- Our Siyakha platform, offering zero-rated health, education and career portals for low-income consumers in South Africa;
- Our investments in enterprise development, preferential procurement, skills development and employee diversity resulting in Vodacom consistently being recognised for leading BEE performance; and
- A retail transformation strategy that encourages greater 'black' ownership of our franchise channel.
Customer privacy
The issue: As our customers become increasingly connected, and as the ability to track and analyse consumer behaviour becomes more sophisticated, the need to ensure the full and effective protection of customer privacy and personal data has become more critical. This issue has received increased prominence globally.
Material stakeholder groups: Customers; government; industry regulators; and media.
Our response: Respecting the customer's right to privacy remains a top priority for us and is integral to our Code of Conduct. Our customers' rights are balanced against those of various security and enforcement agencies that are legally entitled and required to request customer information, and to instruct us to suspend service in certain circumstances. We manage such requests in accordance with Vodafone policies, procedures and guidelines, and with applicable local laws and regulations. As part of the Vodafone Group, we contribute to Vodafone's industry-leading law enforcement disclosure report, which provides a detailed insight regarding demands from law enforcement agencies in 28 countries. In South Africa, we abide by the Protection of Personal Information Act (POPIA).
Network quality and coverage
The issue: Maintaining network quality and performance is an essential source of competitive differentiation. Unplanned disruptions in network performance negatively impacts consumer sentiment, which is sometimes rapidly disseminated on social media.
Material stakeholder groups: Customers; government and regulators; suppliers; employees; and media.
Our response: To cater for the significant increase in data usage, we have invested R11.6 billion across our markets to widen our 3G and 4G data coverage, improve voice quality and increase data speeds. In South Africa, our 3G coverage has increased to 99.4% of the population and 4G coverage to 80.1%, with high-speed transmission extended to 92% of our sites. Routine network quality tests confirm that we lead in most quality indicators. Our International mobile operations now have 7 288 2G sites, 5 258 3G sites, and 609 4G sites. Accessing spectrum remains a critical factor in further improving network quality and coverage, and reducing data costs.
Investors' perspectives on Vodacom's performance
We engage regularly with our major investors; the following is a summary of some of their key sentiments over the past year.
The 'Bulls' - seeing the upside in our performance
- Strong management execution.
- Positive earnings contribution from Safaricom.
- Solid capital allocation, delivering best-in-class return on capital employed (ROCE).
- Strong network investment.
- Sustained data growth potential, indicating future growth opportunities.
- Significant fibre and enterprise opportunity over the past year to supplement growth.
- Strong balance sheet capacity and cash flow generation, to support both dividend and future acquisitions.
- Generally improved investor sentiment following the appointment of President Cyril Ramaphosa.
The 'Bears' - identifying areas of concern
- Concerns that the Electronic Communications Amendment Bill threatens the current business model.
- Impacts of ICASA's pricing regulation and comments from government on data pricing in South Africa.
- General political and macroeconomic uncertainty impacting confidence.
- Potential impacts on anticipated BEE deal.
