Telecommunications giant Vodacom Group continues to spend upwards of R11-billion yearly in capital expenditure (capex) in South Africa as it works to capture the market and transition to a technology company.
The 30-year-old company spent R11.12-billion across its South African operations during the year ended March 31, 2024.
“We invested in our network to support network resilience, leverage our new spectrum assets and enhance our information technology (IT) platforms to maintain our competitive edge and remain South Africa’s most reliable network and network Net Promotor Score leader,” Vodacom Group CEO Shameel Joosub explains.
This is the third year that the South African capex was above R11-billion, with the company steadily increasing its spending from R9.58-billion in 2019, R9.86-billion in 2020 and R10.08-billion in 2021, to R11.15-billion in 2022, R11.17-billion in 2023 and R11.12-billion in 2024.
“In South Africa, capex was directed at improving capacity and resilience of the network and increasing fifth-generation (5G) roll-out. We have 99.1% fourth-generation (4G) population coverage [compared with 98.5% in 2023] and have extended our 5G sites to 2 300.”
Overall, for the year ended March 31, 2024, Vodacom’s capex increased 23.8% to R20.42-billion, at a capital intensity 13.6%.
In 2023, capex was R16.49-billion, steadily increasing from R12.96-billion in 2019 and R13.31-billion in 2021.
“Vodacom remains committed to spending 13% to 14.5% of its overall revenue on capex that ultimately results in an enhanced customer experience through sustained investments in technology and network infrastructure.
“This has and will continue to enhance network resilience through the acceleration of 5G coverage, our rural coverage programme to help bridge the digital divide and keeping customers connected, despite the power challenges across key markets,” he continues.
In Egypt, Vodacom significantly increased its capex from R1.23-billion in the year ended March 31, 2023, to R4.62-billion in the year under review, at a capital intensity ratio of 14.2%, to grow and strengthen the network to support increased demand.
The company’s International capex increased by 15.4% to R4.7-billion, representing an intensity ratio of 15.2%, with focus on increasing both coverage and capacity, as well as continuing the 4G roll-out.
Overall, the group has 46 000 network sites across Africa.
Meanwhile, Vodacom Group surpassed the 200-million customer mark and now serves a combined 203.1-million customers, including Safaricom on a 100% basis, along with 78.9-million financial services customers.
“Our customer base is evenly split across our segments, which include South Africa, Egypt, International business and Safaricom, showcasing the breadth of our footprint, which covers more than half a billion people across the continent,” Joosub comments.
The group aims to have more than 230-million customers by 2027, with 100-million financial services customers, a significant expansion on the 115.5-million customers and 53.2-million financial services customers registered in 2020.
South Africa has 51.65-million customers, a 16.8% increase on the 44.23-million reported in the year ended March 31, 2023, while data customers reached 28.79- million in 2024, from 25.52- million year before.
In South Africa, new services, the consumer contract segment and prepaid mobile data led to a 2.6% growth in service revenue growth to R61.6-billion.
New services, such as financial and digital services, fixed and Internet of Things, in South Africa increased 11.2% and contributed R10.2-billion, or 16.6%, of service revenue.
South Africa’s revenue growth, however, was partially offset by pressure in Vodacom Business, as a shift away from work-from-home policies saw corporate customers recalibrating their spend.
Vodacom Business service revenue decreased by 0.8% to R17.3-billion, with pressure on wholesale revenue.
Excluding wholesale revenue, Vodacom Business service revenue was up 3.4% for the year ended March 31, 2024. Cloud, hosting and security supported growth, with revenue for this segment up 38.5%.
“Our super-app, VodaPay, ended the period with 10.4- million downloads and 5.8- million registered users. Managed alongside financial services, our digital services had a strong year with revenue of R1.6-billion, up 13.6%,” Joosub comments.
Meanwhile, Vodacom is preparing to make its case for its proposed purchase of a joint venture stake in South African fibre company Maziv, after the Competition Commission, in August 2023, recommended to the Competition Tribunal that the deal be prohibited.
This had followed the Independent Communications Authority of South Africa’s approval of the deal in October 2022, subject to licence conditions such as open access.
The proposed acquisition was first announced in November 2021, with Vodacom set to acquire an initial 30% stake in Maziv, a joint venture that will house the fibre assets of Vodacom South Africa and Community Investment Ventures Holdings, owner of open-access fibre players Dark Fibre Africa and Vumatel.
The transaction remains subject to a review by the Competition Tribunal, with hearings due to start this month, during which Vodacom will showcase the strong public interest and pro- competitive advantages that the transaction would have on the fibre market, and the country as a whole.