Vodacom's future without Telkom is looking bright, with the company determined to take hold of every opportunity its new majority shareholder, Vodafone, has to offer.
“The company is going through some changes. Telkom is selling us. With it comes significant opportunities for us,” said Vodacom CEO Pieter Uys, speaking at last week's 2008 MyBroadband Conference.
Uys explained Vodacom will now be free to participate in, and benefit from, Vodafone's research and development (R&D) investments. “Vodafone has resources that they put into R&D which they did not share with us before. We can now have access to it.”
Vodafone's annual report for the year ended 31 March 2008 showed the company spent £234 million on R&D over the financial year - or 0.6% of its revenue in the same period (£35.5 billion).
Uys said large mobile operators, like its new parent company, also have significant sway with mobile suppliers. One example is Vodafone's involvement in the development of the much-hyped BlackBerry Storm. “The BlackBerry Storm can be expected in SA soon,” added Uys.
The Storm is widely tipped to be the best competition for Apple's iPhone, sporting several interesting technologies, as well as the usual bells and whistles.
Competitive landscape
However, Uys said the biggest opportunity for Vodacom will arrive on the services level, which he said is about to be an increasingly competitive market. “We always embrace competition. It is why we are where we are now. We will respond to the market and will see what happens.”
He says the licensing of the value-added network service providers will bring a stream of new competition that will keep the incumbents on their toes. “Competition is an excellent thing. Especially if you consider how much the prices for broadband have come down over the last few years.”
He explained that 1Gb of broadband, a few years ago, would have cost a subscriber in the region of R40 000 and now sits at about R300. “With new service providers on the horizon, prices will drop even more.”
While he agreed that it would be difficult for new providers to start building infrastructure, virtualisation and other like technologies will make it easier to bring cheaper infrastructure to the market in the near future.
Building blocks
Not only is Vodacom becoming independent of Telkom's shareholding, it is also looking into becoming independent of the behemoth's backhaul infrastructure.
Vodacom has started rolling out its own backhaul, having completed four of 11 fibre metro rings. “From a Vodacom Business perspective, we have influenced route planning so that we can provide access to particular buildings for key customers during the first roll-out phase,” said Vodacom Business executive director Wally Beelders, at the 2008 MyBroadband Conference.
He added that the metro rings will be extended to regional and then national fibre backbones, and are expected to be completed over the next three years. “While we are getting there with our plans, we can still do better. The backhaul is still not where we want it to be, so we will keep working on it.”
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