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Vodafone CEO Nick Read ousted after 44% collapse in shares

by Radarr Africa
written by Radarr Africa

Vodafone Group chief executive Nick Read will step down at the end of 2022, after he failed to halt a years-long slide in the telecommunication giant’s share price and mergers with major rivals failed to materialize.  

The UK group owns 60.5% of Vodacom.

Chief financial officer Margherita Della Valle will do the job on an interim basis while the board, led by chairperson Jean-Francois van Boxmeer, seeks a replacement. Read, who’d been in the post for four years and at Vodafone for more than two decades, will stay on an as adviser until the end of March, the company said in a statement on Monday. 

“I agreed with the board that now is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead,” Read, 58, said in the statement.

Vodafone’s share price has sunk 44% since Read took over in October 2018. In that time the Newbury, England-based mobile and broadband giant has retrenched and cut debt. Read’s biggest move may have been to spin out and list the company’s tens of thousands of mobile masts, just selling a stake in Frankfurt-listed listed Vantage Towers AG to a private equity consortium in a deal that valued the business €16.2 billion ($16.3 billion) last month. 

ALSO READ: Premier listing cancelled due to Ramaphosa crisis triggers market volatility

Still, Read struggled to finalize deals that would have reduced the number of players in some of Vodafone’s biggest markets such as the UK, Italy and Spain. An approach for the Italian business was rebuffed, a merger opportunity in Spain was missed, and talks with UK rival Three, owned by CK Hutchison Holdings Ltd., are public but have yet to conclude. 

Vodafone shares rose 1.9% in early trading in London. The stock remains close to 25-year lows. 

Vodafone’s challenges deepened in 2022 after Russia’s invasion of Ukraine sent energy costs soaring, while interest rates also rose. Read faced pressure from investors including Europe’s largest activist fund Cevian Capital AB, which sold much of its stake earlier this year. More recently, a vehicle backed by French billionaire Xavier Niel bought 2.5% of Vodafone saying it saw opportunities to accelerate deals and improve profits.

Vodafone has never appointed an external CEO, so Read’s possible successor may already have some link with the company given its complexity, Berenberg analyst Carl Murdock-Smith said in a note following the announcement. He pointed to Informa Plc CEO Stephen Carter, who serves on Vodafone’s board and was previously head of UK telecom regulator Ofcom, and Nick Jeffery, who was previously Vodafone’s UK head and left the company last year to run US-based Frontier Communications. 

Commercial challenges also await Read’s replacement. 

“Vodafone faces intractable headwinds with Germany punching below its weight, cost-of-living crisis weakening support for market repair and the most readily deliverable transaction already announced,” said Jefferies analyst Jerry Dellis in a note to clients. He added that leverage remains “uncomfortably high” after the Vantage deal and that the dividend policy should be treated as under review.

SOURCE: News 24

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BusinessEconomyINVESTMENTSouth AfricaTechnology

Vodacom spends record R5.8bn on it’s local network as it battles load shedding

by Radarr Africa
written by Radarr Africa

SA’s largest mobile operator Vodacom, which has been battling power challenges and the effects of rising inflation, says it spent a record R5.8 billion on its local network in its half year, including on batteries, as it sought to ensure a more resilient network for customers.

The firm said it had now spent more than R2 billion on batteries alone for the past two years, and its network spend, along with new products, helped underpin a 4.9% in revenue to R41.2 billion in its largest market during its half-year.

However, group headline earnings per share fell 9.5% to R4.57 in the six months to end-September, with the firm taking a hit from launching mobile services in Ethiopia, as well as higher finance costs as its debt climbed.

Vodacom CEO Shameel Joosub said the network investment came “at a time when the country experienced record levels of power outages” and put measures to absorb the pressures faced by customers. “Vodacom has attempted to absorb considerable inflationary costs from the dramatic increase in energy costs as far as possible,” said Joosub

To counter the effect of the country’s energy crisis, Vodacom is piloting a programme that would see it source its electricity from renewable independent power producers and also add the power to the national grid.

ALSO READ: Honor, Oppo, and Xiaomi launches a flagship handsets taking on Samsung in South Africa

Measures such as battery deployment to towers to support network resilience during load shedding contributed to increased group total expenses by 13% to R33.7 billion.

In SA, expenses increased 8.7% to R25.5 billion, impacted by higher costs from equipment sales. The company said the expenses came from higher fuel and energy costs and higher technology and network costs.

Vodacom’s SA operations grew service revenue 3% to R29.5 billion in the first half of the year, with a rise in smartphone penetration supporting growth in data traffic, the company’s financial results released on Monday showed. Data traffic was up 30.3%, with 800 000 new users bringing its total to 23.8 million customers.

Smart devices were up by 11.8% to 27.6 million, while 4G and 5G devices increased by 24.1% to 20.3 million. The average usage per smart device increased by 24% to 2.8GB per month.

“The data revenue growth reflects the high adoption of our data-led bundles, which offer lower rates to the most price-sensitive, lower-income consumers,” said Joosub.

Group service revenue increased 7.2% to R41.7 billion, supported by the local Vodacom operations, which contribute 80% to the company’s earnings.

The startup costs associated with the recent launch of Safaricom Ethiopia, in which Vodacom holds a minority stake, contributed to a decline in earnings, and along with a spend on SA spectrum ensured net debt climbed R6.6 billion to R44.6 billion. Finance costs climbed almost at third to R2.19 billion.

Joosub said the network had already launched in 16 cities in Ethiopia with plans to expand services to 25 cities by April 2023, to reach its first milestone of 25% population coverage. In midday trade on Monday Vodacom’s shares had slipped 4.5% to R123.06, having fallen about 8.7% so far in 2022.

SOURCE: News 24

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BusinessInformation TechnologySouthern AfricaTechnologyTelecommunications

Cell C to avoid engaging in price war

by Radarr Africa
written by Radarr Africa

Blue Label co-CEO Brett Levy told investors Thursday that Cell C will not engage in a price war with MTN, Vodacom, and Telkom’s mobile division.

“We are not getting into any dogfights. We are not getting into any war with any networks,” Levy stated.

“Our price is very competitive as it is,” he asserted.

Responding to questions, Levy also said that Blue Label’s board is considering buying the remaining 50.47% of Cell C.

Following a complex recapitalization deal to try and save Cell C that closed in September, Blue Label’s stake in the company increased from 45% to 49.53%.

“We believe in this asset. We made it clear [in previous sessions] that the Blue Label board must make one of three decisions post the recap,” Levy stated.

“Decision one: Remain where we are. That’s not going to be a decision, so it’s one of two decisions: Do we sell down, or do we take control? And in time, we will give you that exact answer,” he said.

“Sorry we can’t talk more on that.”

Further asked about potential regulatory hurdles a takeover might face, Levy said they don’t foresee any problems at the Competition Commission or industry regulator Icasa.

“I think everyone [at Icasa] would welcome it if we went this route, so everyone has stability.”

During his presentation to investors, Levy said that Cell C has five assets: its brand, radio frequency spectrum, the “engine” (specifically prepaid), and its strength in the mobile virtual operator market.

In explaining Cell C’s “engine”, Levy claimed that it now offers 4G and 5G connectivity through its partnership with MTN.

“As we transition off our network onto MTN… we are now able to offer them 4G and 5G capability. We are able to offer them a much better network,” he said.

Levy mentions the ability to offer 5G at least four times during the explanation.

It is interesting that Levy told investors Cell C can offer 5G, as the operator has not made 5G available to its subscribers or made any announcements to the effect.

Cell C chief technology officer Schalk Visser told MyBroadband in June that they were in discussions with their infrastructure partners MTN (prepaid) and Vodacom (contract) and were close to offering 5G.

Source: My Broadband

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BusinessSouthern Africa

Cell C notifies customers on price hikes

by Radarr Africa
written by Radarr Africa

Cell C has notified its contract customers that most of their subscription fees will increase from 1 December 2022.

The price hikes will affect all postpaid customers, including those in the middle of their contract periods.

Cell C’s postpaid subscribers all roam on Vodacom’s network, even though it has an extensive national roaming agreement with MTN that gives it access to MTN’s 3G and 4G radio networks.

it migrated its contract subscriber to

to Vodacom’s network between December 2020 and February 2021.

“We have not effected any increases to our pricing since 2019 in our quest to ease some of the hardships of the past few years, exacerbated further by the global pandemic that brought along its own set of challenges,” chief commercial officer Simo Mkhize wrote in a letter to affected subscribers.

“However, sustained inflationary pressures and rising input costs have meant price adjustments have become a necessity.”

Mkhize said the exact date subscribers’ price increases kick in depends on their billing cycles.

Percentage increases vary according to package, he added.

“Every effort has been made to keep the price increase as low as possible,” said Mkhize.

Most of the price increases are between 5% and 6%, with some as high as 12.7% and one legacy package getting a 20% hike.

The letter contains fine print stating that Cell C’s agreement terms and conditions apply.

“Customers that have deal packages will need to apply the percentage increase to their current bill amount and not the standard tariff price,” it states.

In an FAQ section attached to the letter, Cell C explains further.

“In cases where you have subscribed to deal pricing, which may include a device, value added services, and/or discounts; your bill amount may vary from the pricing reflected herein,” it said.

“Your bill amount will be adjusted by the same effective percentage increase applied to the standard tariff plan.”

MyBroadband asked Cell C whether affected subscribers would be allowed to cancel without penalty, but it did not answer our question by the time of publication.

Source: My Broadband

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BusinessMobile Telecommunications Network (MTN)Southern AfricaTelecommunications

MTN calls off takeover talks with Telkom due to lack of exclusivity

by Radarr Africa
written by Radarr Africa

MTN, Africa’s largest mobile operator on Wednesday called off takeover talks South Africa’s third-largest mobile operator Telkom due to lack of exclusivity.

MTN had announced the discussions about a potential acquisition in July, while Telkom had also received a proposal from data-focused mobile operator Rain.

“Discussions were at an early stage and had not progressed due to due diligence nor had a binding offer been received by the Telkom board of directors,” Telkom said in a statement on Wednesday.

“The Telkom board has a legal and fiduciary duty to consider all bona fide offers”.

Telkom’s share had crashed 15.5% to R37.82 in early trade, giving back about half of the gains made since the talks with MTN were first announced.

Rain’s public expression of interest in a merger in August had resulted in a public reprimand from SA’s takeover regulator, given that it hadn’t given any approvals. It also came shortly after MTN said it was considering buying Telkom in return for shares or a combination of cash and shares. Rain then made a formal proposal on 14 September.

Bloomberg has also reported that the SA government has received an unsolicited R7 billion bid for its 40.5% stake in Telkom from investment firm Toto Consortium, part of a consortium that controls a 24% stake in Richards Bay Minerals, majority owned by mining giant Rio Tinto.

Telkom had net debt of R7.5 billion at the end of March, and its board is currently considering ways to unlock value for shareholders, believing that the price at which its shares trade do not reflect the underlying value of the business.

One of Rain’s major shareholders, African Rainbow Capital, values it at about R18 billion, while Telkom was valued at a R22.88 billion on Tuesday’s close, and MTN was worth R242.8 billion.

ALSO READ: MTN partners with energy companies to maintain towers running during load shedding

Rain maintains a merger with Telkom could create a “5G powerhouse”  and also mooted other benefits, including in terms of infrastructure, while also avoiding the creation of a mobile “duopoly” in the form of Vodacom and MTN.

Source: News 24

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AirtelBusinessSouthern AfricaTelecommunications

Vodacom plans to expand its network, spends R340 million

by Radarr Africa
written by Radarr Africa

Vodacom will spend R340 million to expand its network in areas in the central regions of Free State and the Northern Cape, with a focus on upgrading and adding new sites in rural areas. 

The telecoms giant said part of the investment would include adding new 3G-, 4G-, and 5G-enabled sites in urban areas, as well as in deep rural areas, to further population coverage.

According to Vodacom, 3G coverage in the areas in the central region has already reached 98.25%, with 4G at 92%. There are plans in the pipeline to triple the 5G footprint in the two provinces by increasing the number of sites to 58.

Evah Mthimunye, managing executive for Vodacom’s Central Region, said the network rollout programme last year had brought the internet to many communities for the first time.  

Mthimunye said the central region had seen a massive jump in network traffic in the past year, which had to be supported by increased network capacity. “In addition to supporting the region’s 44.2% year-on-year surge in data traffic, LTE capacity is crucial, as almost 90% of this data traffic is on LTE technology,” Mthimunye explained.

“This financial year we want to build on this achievement by extending broadband coverage and investing in network upgrades to increase access to connectivity.”

Mthimunye added that the drive was expected to close the digital divide between urban and rural areas.

ALSO READ: MTN Plc and Airtel Nigeria increases data rates by 10 percent.

Other companies in the sector have also revealed their plans for network expansion and increasing 5G connectivity.

Operators that secured spectrum in the March 2022 auction are expected to use some of it to connect rural areas and zero-rate some public benefit site, as part of the social obligations imposed by the Independent Communications Authority of South Africa (Icasa).

Vodacom has previously raised concerns that the proposed 20-year obligation to zero-rate public benefit sites may have “unintended consequences”. The company has already filed a submission to the regulator detailing its issues with some of the social obligations, which it said would “have a material impact on our rural access connectivity strategy”.

The company’s plan to add new 3G sites comes as the government has come up with a proposal to retire the technology by 30 March 2025. Some network operators have called for industry-wide consultation on the plan to end the use of the older generation of wireless technologies. Telkom has described the plan to shut down the 3G network as unrealistic. 

The proposed date for 2G network disconnection is 30 June 2024.

Source: News 24

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AfricaAFRICA NEWSMobile Telecommunications Network (MTN)NewsSouth AfricaSouthern AfricaTechnologyTelecommunications

Operators call for consultation over government’s plan to shut 2G and 3G services in South Africa

by Radarr Africa
written by Radarr Africa

South Africa’s biggest telecommunications operators, Vodacom, MTN and Telkom, have called for more consultation over government’s plan to terminate 2G and 3G services by 2025.

The companies have warned that further talks are necessary to ensure users won’t be impacted as government pushes ahead with plans to get South Africans onto newer technologies based on 4G/LTE and 5G.

The communications minister Khumbudzo Ntshavheni earlier this month proposed that South Africa switch off its 2G cellular networks by June 2024 and its 3G networks by March 2025. But Telkom, for one, has warned that the 3G cut-off date is unrealistic.

The proposed termination of 2G and 3G services in South Africa, contained in a draft policy on the licensing of “next-generation radio frequency spectrum” gazetted by the government, comes as the government looks to free up spectrum for next-generation wireless broadband services.

Shutting down older networks, including those built using 2G and 3G technologies, will help ensure the country “realises the benefits of rapid technological changes in telecommunications”, the draft policy document states.

Here’s how Telkom, MTN and Vodacom have responded to Nsthavheni’s proposals:

  • Telkom: “Telkom supports the decommissioning of the 2G network. However, we are of the view that the decommissioning process should follow industry-wide consultation,” a spokesman said. “Telkom carries less than 1% data traffic on its 2G network with no further investment into the technology. While 35% of our voice has been migrated to voice-over-LTE, we still carry a significant amount of voice on the 3G network, and don’t believe the 2025 deadline is realistic.”
  • MTN South Africa: “MTN agrees that the legacy technology switch off of mobile technologies is required so that spectrum is used for spectrally efficient mobile technologies. However, this needs to be managed in a phased approach to migrate users to newer technologies,” said MTN South Africa corporate affairs executive Jacqui O’Sullivan. “We envisage that the 3G shutdown will occur sooner while leaving a 2G layer to cater for the legacy 2G devices which will take longer to migrate. We believe that the proposed timelines depend on several factors that MTN will engage on further.”
  • Vodacom: South Africa’s largest mobile operator said it is “analysing the feasibility of the timelines” proposed by the minister. The company will “engage further with the minister in this regard”, said a spokesman. “Regarding the switching off of 2G and 3G networks, our considered view is that the decision will require a multi-stakeholder approach.”

Sunset of 2G networks

  • The prohibition of the licensing of 2G devices by communications regulator Icasa by 30 June 2023;
  • The prohibition of new connections or activations of 2G devices on networks by 31 December 2023;
  • The shutdown of 2G services by 31 March 2024; and
  • The shutdown of 2G networks by 30 June 2024.

Sunset of 3G networks

  • The prohibition of the licensing of 3G devices by 31 March 2024;
  • The prohibition of connections or activations of 2G devices on networks by 30 September 2024;
  • The shutdown of 3G services by 31 December 2024; and
  • The shutdown of 3G networks by 30 March 2025.
ALSO READ: South Africa plans frequency trading to empower SMEs

In the draft policy document, the minister describes the proposed shutdown dates for 2G and 3G services as part of a “road map” that will ensure the termination of services is done in a coordinated manner that causes “minimal disruption to services”. The dates are not set in stone, and will be subject to a “continuous review” to free so-called high-demand spectrum.

“The minister, after consultation with the regulator and industry, will issue a policy direction for the shutdown of old generation and inefficient networks,” the draft document states. “The minister … will continuously review, update and publish a revised road map for the shutdown of old-generation and inefficient networks.” 

Source: Techcentral

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Banking, Finance & InvestmentBusinessSouthern AfricaTechnology

Vodacom launches Vodalend, a cash loan service

by Radarr Africa
written by Radarr Africa

Vodacom has launched its cash loan service called VodaLend Cash Advance, a product that allows its customers to take out small short-term cash loans.

The mobile network operator said the addition was geared towards underbanked consumers who need quick and barrier-free access to funds.

The product will be available to Vodacom customers through VodaPay and offers cash advances between R50 and R500.

“Once approved, the money is advanced directly into the user’s VodaPay Wallet,” Vodacom said.

“It can be used instantly for in-app purchases, including buying prepaid electricity and water, paying bills, scan-to-pay in shops, and sending money to friends and family.”

Customers can settle the debt over seven, 14, 21, or 28 days.

Vodacom said it would use the regulated requirements for affordability checks while also considering a customer’s recharge and payment behaviour in the credit decision process.

“This ensures that the service can be accessed by more people, including first-time borrowers who can now enjoy the benefits of a secure, regulated lending solution.”

Cash Advance complements VodaLend’s other financial products, including VodaLend Compare, Voucher Advance, and Airtime Advance.

Voucher Advance allows users to buy vouchers on credit to buy products from stores, including Nando’s and Hirsch’s, while Airtime Advance lets customers buy airtime on credit.

The latter has proven incredibly popular, with Vodacom’s latest annual results showing that the product accounted for 45.2% of all total prepaid charges, amounting to R13 billion.

ALSO READ: Vodacom creates a separate legal entity for its tower business.

Vodacom Financial Services CEO Mariam Cassim said VodaLend Cash Advance aimed to assist millions of South African consumers with no formal credit record.

“With only 26 million South African consumers having a formal credit record, there is still a significant part of the population that doesn’t have access to formal financial services,” said Cassim.

“VodaLend Cash Advance provides affordable access to lending products for those who need these services most, but who have historically been prevented from doing so due to high fees and difficult-to-navigate paperwork.”

Vodacom did not provide details about the interest rates it charged on its cash advances, but Cassim said the product was a potential “game changer” as its fees were less than traditional short-term cash advance providers.

“On average, it’s up to 400% cheaper than using a mashonisa – it moves us beyond financial inclusion to real financial impact,” Cassim said.

Source: My Broadband

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BusinessInformation TechnologySouthern AfricaTechnology

Telkom’s plight against Vodacom and MTN

by Radarr Africa
written by Radarr Africa

Despite investing heavily in growing its mobile subscriber base, Telkom has been losing market share against Vodacom and MTN over the last five years.

In the nineties and early 2000s, Telkom was the dominant telecommunications player in South Africa.

It enjoyed a government-protected monopoly on fixed-line services, and its 50% stake in Vodacom made it a big mobile player.

Things started to change after Telkom lost its fixed-line monopoly and decided to sell its 50% shareholding in Vodacom in 2008.

Telkom launched its own mobile operator, 8ta, to take on Vodacom, MTN, and Cell C, but it was not a cheap exercise.

Over the past thirteen years, Telkom has spent R25 billion on its mobile network but is still far from competing effectively against Vodacom and MTN.

Telkom has also been losing fixed broadband market share. Its ADSL service used to dominate this area, but the arrival of fibre, fixed-LTE, and 5G changed the landscape.

Telkom is now trailing Vumatel in the fibre market and is facing stiff competition from Vodacom, MTN, Rain, and Cell C in the fixed-wireless arena.

Add to that a big decline in fixed-line voice revenue and an ageing copper network, and it is understandable that Telkom is not a favourite among investors.

Market share battle

ICASA’s 2022 state of the ICT Sector Reports revealed that telecommunication revenue exceeded R200 billion in 2021.

Mobile services revenue contributed R114 billion, fixed Internet and data revenue R23 billion, and fixed-line revenue R7 billion.

What is telling for Telkom is that fixed-line revenue, its main revenue stream for years, declined from R15.8 billion to R6.5 billion over the last six years.

Mobile revenue, in comparison, increased from R79 billion to R114 billion over the same period.

It is, therefore, understandable that Telkom decided to invest heavily in becoming a prominent mobile player.

Despite significantly growing its mobile revenue and subscriber base, it is still losing market share against Vodacom and MTN in South Africa.

Over the last six years, Telkom was only able to marginally grow revenue — from R41 billion in the 2017 financial year to R43 billion in the 2022 financial year.

Over the same period, Vodacom grew its South African revenue from R65 billion to R80 billion. MTN increased revenue from R42 billion to R49 billion.

The result is that Telkom is getting a shrinking share of the R200 billion telecommunications market in South Africa.

The chart below shows Telkom’s relative market share against Vodacom and MTN over the last five years.

Source: My Broadband

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Mobile Telecommunications Network (MTN)Southern AfricaTechnologyTelecommunications

Rain request revision of Telkom bid, proposes companies be merged

by Radarr Africa
written by Radarr Africa

Rain has formally requested to present the Telkom board with a proposal to merge the two companies. “Although the terms of such a transaction such as valuation and structure would still need to be agreed, Rain believes there is a compelling business case in combining the businesses,” the company said.

Rain said a merger would create a 5G powerhouse and strong third player to compete with the Vodacom and MTN “telco duopoly”.

It said there is a strong business case for a Telkom-Rain merger and that it offers a more pro-competitive alternative than government selling Telkom to MTN. 

“Some consolidation in the industry is both desirable and inevitable as it leads to better utilization of infrastructure,” Rain stated.

“It should not, however, be at the expense of competition which promotes greater access for consumers to data at more affordable prices.”

Rain said it has over 7,500 4G base stations providing mobile and fixed broadband services and over 1,500 massive MIMO 5G base stations.

ALSO READ: Telkom under pressure as share prices falls by 3%

Its network covers over 6 million homes, and Rain said it has one of the largest Stand Alone 5G networks globally.

“In 2021, Rain bought a substantial proportion of the 5G routers sold globally to enable its customers to connect their homes to its 5G network,” the cellular network operator stated.

“The number of combined rain and Telkom sites will be equivalent to that of Vodacom and MTN, and the avoidance of duplication would result in material capital and operational cost savings.”

Rain CEO Brandon Leigh said they had seen substantial growth and acknowledged that this caused early customer service teething problems.

“We had explosive growth in customers but also significant teething problems with customer service as our call centre was overwhelmed,” Leigh stated.

“Whilst we have been increasing our network’s coverage and capacity, we have also been focused on scaling up our customer service team and building modern customer management systems to bring this under control, and we believe we can handle the expected future growth.”

Rain chairman Paul Harris said there is great potential for a merger with Telkom to unlock growth opportunities.

“Rain’s prospects as a niche player are great. However, the option to combine forces with Telkom would take the merged company to the next level and benefit both Telkom and rain stakeholders,” said Harris.

“It is a pro-consumer option in line with Government policy, and the business case looks compelling.”

Source: News 24

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