Vodacom South Africa has identified three big growth drivers for the coming years, and only one is directly related to its core business of mobile communications.
Vodacom CEO Shameel Joosub revealed on Monday at the group’s financial year-end results presentation in Johannesburg that it has ring-fenced the internet of things (IoT), fibre to the business (FTTB) and fibre to the home (FTTH), and insurance as three new areas of significant future growth.
In IoT, Vodacom has effectively repackaged its machine-to-machine communications business, where it sees big opportunities in connecting disparate devices — from security cameras to industrial systems and home appliances — to its mobile network.
“We experienced 20.7% growth from IoT connections [in the 2016 financial year],” Joosub told journalists, analysts and investors at the group presentation. “We now have 2.2 million Sims in machines or things [and] we continue to leverage off Vodafone’s IoT platform [for growth].”
Insurance is also proving to be a big money spinner for Vodacom South Africa, where it sells device insurance and funeral policies, among other things. Insurance revenue was up by almost 19% to R524 million in the 2016 financial year, Joosub said.
The third pillar of future growth will be fibre broadband, he said.
“Fibre is still key to our future. Now that [the] Neotel [deal] is off, we are continuing to expand organically. We have entered into wholesale agreements [with other fibre providers] and our own build passes 25 000 homes. We have 190 estates in our pipeline.”
He said that although only 10% of homes passed had taken up Vodacom’s fibre services, it was still early days, with most of the fibre build having happened in the past 12 months.
Vodacom has invested R500 milliom to date in both FTTB and FTTH.
“In this year’s budget, we have a step-up in terms of investment. And we will continue to look for opportunities that will allow us to accelerate fibre — in addition to the base station fibre, where we continue to invest about R2.5 billion/year.”
Joosub emphasised, however, that Vodacom’s first priority for capital expenditure will remain mobile. He said that if Vodacom is successful in getting access to additional radio frequency spectrum for its mobile network, it will be able to “optimise capex, allowing us to divert more capital into fixed lines”.
“Our first priority is mobile, however, so we will always put the money there first to cope with growth and ensure customers get an exceptional offering from us.”
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