Company Profile and History
Vodacom is a leading African communications group providing mobile communications and related services to 41.3 million at 30 June 2009. Its mobile network covers a total population of approximately 182 million people across five countries: South Africa, Tanzania, the DRC, Lesotho and Mozambique.
Vodacom Group and Vodacom SA were incorporated in South Africa in 1993 as a joint venture between Telkom, Vodafone and VenFin Limited ("VenFin"). The Group launched one of Africa's first GSM networks in South Africa in 1994. In 1996 a 5% stake in Vodacom Group was sold to a BEE company, Hosken Consolidated Investments Limited ("HCI") (through Descarte Investments No 8 (Proprietary) Limited) for R118 million. In 2002, HCI sold its stake back to Vodafone and VenFin for R1.5 billion.
Vodacom DRC obtained its GSM licence in December 2001 and a commercial service was launched under the Vodacom brand in May 2002. As at 31 December 2008, Vodacom DRC has rolled out 514 base stations and 11 mobile switching centres across all nine provinces in the DRC covering 349 towns. The network covers approximately 15% of the geographical area of the DRC and approximately 55% of the population as at 31 December 2008.
Vodacom DRC distributes products through a mix of direct and indirect channels designed to address the challenge caused by the lack of infrastructure within the country. Vodacom DRC’s distribution network consists of 143 exclusive super dealers and local based super dealers and 74 payphone operators. Vodacom DRC had 1 078 outlets of which 35 were Vodashops as at 31 December 2008.
In Country Location
3157 Boulevard du 30 juin, Commune de la Gombe, Kinshasa,
Telephone: +243 81 313 1000
Services and Products
Vodacom DRC offers a range of telecommunications services including contract, prepaid, PABX, ISP and public pay phone services. Vodacom DRC commercially launched a prepaid per second billing package (TicTac+) in December 2007. Vodacom DRC also introduced MMS early in 2007 as well as a Missed Call Notification service to Vodacom DRC customers. ATM recharge and GPRS terminals have been launched to the banks and other corporates, enabling real time transactions.
Vodacom DRC introduced a bulk printing system in the DRC with great success. The system has grown to account for a significant portion of the recharge revenue in the DRC and has been well accepted by Vodacom DRC customers as an alternative prepaid distribution channel.
Vodacom DRC further introduced a new airtime recharge service, allowing Vodacom customers to be topped up by their relatives, friends and associates. New scratch card voucher denominations were launched and there were various promotions to increase the penetration of TicTac+.
Number of Employees
For the year ended 31 March 2009, Vodacom reported revenue of R55.2 billion. Vodacom DRC had 4.0 million customers as at 31 December 2008. Vodacom DRC contributed 5.2% and 1.6% to group revenue and operating profit, respectively for the six month period ended 30 September 2008.
Vodacom DRC’s revenue for the six month period ended 30 September 2008 increased by 22.7% to R1 360 million as compared to R1,108 million for the six months ended 30 September 2007. The increase in revenue was primarily due to the increase in customers, increase in data revenue and the strengthening of the US Dollar to the Rand over the period, offset by a decrease in net interconnect revenue. In US Dollars, revenue increased by 12.1% in the six month period. Data revenue accounted for 3.8% of Vodacom DRC’s revenue for the period ended 30 September 2008 and increased by 40.5%.Vodacom DRC’s profit from operations for the six month period ended 30 September 2008 was R101 million and EBITDA was R338 million, for the six month period ended 30 September 2008, decreasing by 41.3% and 5.3%, respectively on prior year period with an EBITDA margin of 24.9% compared to 32.2% in the prior comparative period.
Vodacom has the leading market position in the DRC with 37%.
Vodacom aims to be a leading total communications provider in sub-Saharan Africa
Vodacom is focused on maintaining its leading market positions in existing markets and expanding profitably into new communication products, services and geographies and to grow its customer base through continued investment in networks and distribution capability. In addition it aims to increase mobile usage by launching affordable and innovative products.
Other strategies include: target efficiencies to ensure economies of scale are realized; build infrastructure to support broadband growth; increase international capacity through investment in satellite and undersea cables; improve access by introducing lower-cost handsets and bundled laptop packages; improve affordability of data usage; develop new converged ICT solutions; expand into converged services closely connected to its core mobile business; retain customers through valued-added total communication services; build market leadership position with competitively priced, high quality offerings; and evaluate further licence and acquisition opportunities in sub-Saharan Africa.
Vodacom’s strategic direction is underpinned by ongoing investments in key areas: maintaining brand leadership; enhancing customer care and deepening customer loyalty; developing our distribution platforms and supply chain management capability; continually improving the coverage, quality and efficiency of our network infrastructure; and inspiring, developing and supporting the sustainable wellbeing of our employees and communities.
The growth in the customer base in the DRC is as a result of attractive connection incentives, aggressive sales and marketing campaigns, increased network roll-out and the launch of per second billing and the release of lower denomination vouchers.
Ownership of Business
Until the implementation of the Vodacom BEE transaction, Vodacom Group held 100% of Vodacom SA. The Vodacom BEE transaction was finalised on 8 October 2008 when Royal Bafokeng Holdings (Proprietary) Limited ("Royal Bafokeng") and Thebe Investment Corporation (Proprietary) Limited ("Thebe"), through their subsidiaries, the black public (as defined in the BBBEE Codes), business partners and employees acquired in aggregate 6.25% of Vodacom SA. The black public, business partners and employees obtained ownership in Vodacom SA through YeboYethu. YeboYethu owns 3.44% of Vodacom SA while Royal Bafokeng and Thebe own 1.97% and 0.84% of Vodacom SA, respectively through their subsidiaries.
On 6 November 2008 Vodafone announced that it had agreed to increase its stake to 65%, and Telkom said that it would spin off its remaining holding by listing it on the Johannesburg Stock Exchange.
Vodacom, via Vodacom Mauritius, owns 51% of Vodacom DRC, while Congolese Wireless Network s.p.r.l. currently owns the remaining 49%.
Benefits Offered and Relations with Government
Profitability in the DRC was negatively impacted by an increase in indirect taxes levied by government, changes in interconnection rates, increases in network maintenance and site costs due to fuel and security increases and challenging market conditions. In US Dollars, profit from operations and EBITDA decreased by 46.4% and 13.6% respectively in 2008.
Because of the lack of government telecommunication infrastructures, each operator has had to invest in its own infrastructure equipment to develop its coverage and operation network.
The country has not yet adopted a national policy on ICT. One is currently being developed, with the support of the Common Market for Eastern and Southern Africa (COMESA). The national ICT strategy is also being prepared, with the assistance of the Economic Commission for Africa (ECA).
The tax system is not favourable to development in the sector. Imported mobile telephones are taxed at 35 per cent of value, upon entry and then they are sold on the domestic market, via the tax on operators’ revenues, which is 18 per cent. Furthermore, operators must pay the 2 per cent regulatory tax in addition to a new excise tax on communication prices, which is also 2 per cent. The equipment is also taxed. Nonetheless, it must be noted that operators were granted exemptions in the past.
The telecommunications industry in the DRC is also subject to a ministerial decree promulgated during the 2008 financial year requiring the registration of the entire customer base of all network operators. This decree required prescribed particulars of all customers to be obtained and maintained by 30 June 2008. Verbal extension was obtained initially to 31 December 2008 and subsequently further extended to 30 June 2009. The Group is making every effort to obtain the required information within the allowed timeframe, but believes it is unlikely that the Group will meet all the requirements in time. The Group continues to engage with the relevant ministries on this matter and is presently unable to reliably assess the potential impact on the Group in the event of partial non-compliance.
In 2009 Vodacom became the first service provider in southern Africa to announce budget cuts after its international operations suffered a drop in revenue over the past quarter. The company said it is cutting back on its budget in the DRC and Tanzania after the mobile market in the two countries were hit by intense competition, weak economic conditions and higher excise duties. It no longer expected to spend the previously budgeted 3 billion rand ($390.2 million) expanding network capacity in the two countries.
On 8 April 2009 the Group entered into a construction and maintenance agreement and supply contract for the building and laying of the West Africa Cable System ("WACS") submarine cable, resulting in the Group becoming a co-owner in the consortium that owns and operates the WACS submarine cable. The Group will receive capacity for its investment and will provide the WACS landing points in the DRC and the Canary Islands. In addition the Group is also committed to provide a cable station building and ancillary equipment at its landing point in the DRC, which will cost an estimated US$2.6 million.
Vodacom's presence in Africa was strengthened with the acquisition of Gateway on 30 December 2008, which has customers in 40 countries in Africa, providing communications services to multi-national companies and telecommunications network operators. In addition, Vodafone has agreed to use Vodacom as its exclusive investment vehicle in sub- Saharan Africa.