SA's top mobile operator Vodacom is betting on the impending smartphone revolution, and subsequent increase in mobile data usage, to offset the hundreds of millions it is expecting to lose to interconnect regulations.
Speaking today at Vodacom's financial half year results, CEO Pieter Uys noted that Vodacom has come under increased pressure after the regulator announced further cuts to mobile termination rates (MTR) from 1 March 2011.
Vodacom reported an R800 million knock in revenue as a result of MTR cuts earlier this year, from R1.25 to 89c. Further cuts are expected over the coming three years, to reach a flat MTR rate of 40c by 2013.
Despite the bleak outlook, Uys explained that Vodacom would increase its focus on delivering high-end smartphones and encouraging the uptake of mobile Internet in the country.
This comes as the company reported 41.1% growth in group data revenue, while data traffic in SA increased by 60.3%.
He pointed out that the usage of connect cards in SA was up 46.1% this year, while smartphone proliferation increased 65%.
Vodacom also saw a surge in mobile Internet customers, adding 1.2 million new users, to reach 7.9 million, which Uys is confident the company can maintain.
The company has committed to increased investment in mobile broadband and fibre networks. Uys stated that Vodacom would expand its smartphone portfolio while also expanding mobile Internet availability in the country.
He noted that the operator would focus on up-selling its lower end customers as the company seeks to increase access to smarter phones.
This will be achieved through its strategy to expand 3G coverage across the country, noted Uys. He stated that Vodacom had added 351 3G base stations and hopes to have between 600 and 650 more before the end of the year.
All 3G sites have a capacity of 14.4Mbps, and Vodacom has 1 800 HSPA+ sites in place, which Uys says will facilitate a smooth cross-over to an LTE-capable network when the time is right.
Related story:
Interconnect hurts Vodacom
Share