The re-launch of M-Pesa, extensive network upgrades, increases in data demand and fibre deployments were the topics of discussion at a Vodacom media breakfast held at the One & Only hotel, in Cape Town yesterday.
The Vodacom group added eight million customers to its user network in the past year, boosting its global figures to 60 million customers, said Richard Boorman, executive head of corporate communications at Vodacom, during the breakfast. In South Africa, Vodacom increased its user base by 3.2 million, taking local numbers to over 32 million, he went on to say.
"Times are tougher than they have been in the past. Network providers have a tough challenge balancing attempts to make things more affordable and bringing prices down, but at the same time, investing in their networks," Boorman noted.
Steven Barnwell, managing executive for Vodacom in the Western region, detailed that Vodacom is refreshing existing technologies, future-proofing its network, and has earmarked R600 million for network investment in the Western Cape in the current financial year. "My colleagues in other regions would not like me saying this but the Western Cape network is the best in the country," he joked.
Data on the up
Data traffic in South Africa is up 70% year-on-year. In the Western Cape specifically, data is growing by 75% each year, according to Barnwell.
"The biggest growth is coming from data users," he said, outlining that there are two types of data users in SA. For high-end, mobile broadband customers, there is a need for fast, long-term evolution (LTE) network technology, which is driving growth in the LTE network in the metropolitan areas, said Barnwell. "One of the ways we are catering to these customers is through our LTE deployments in the metropolitan areas, with base stations in the busy metros now using fibre-optic technology."
There has also been strong growth on the lower end of the market, he continued, dubbing this market segment "first time Internet users". According to Barnwell, this growth is driven by low-cost smartphones, used by people living in rural areas who are only able to access the Internet via a mobile handset.
As a point of interest, Barnwell revealed iPhone owners are typically heavy data users, often consuming three times as much data as customers with other handsets. But on the other end of the scale, Boorman noted there are users with high-end, LTE-enabled devices, like iPhones, who are not using any data services at all.
As much as Vodacom is focusing on data, said Barnwell, the brand is also investing in things like high-definition voice, and introducing noise and echo cancellation to improve the quality of voice services. New mobile termination rates mean revenue on the voice side of the network has declined but there is still an increase in volume, which means it still has to invest in voice infrastructure, he noted.
"Voice is still very much a growth business," said Barnwell. However, he mentioned that some provinces, like the Western Cape, are moving away from being voice markets to being data markets. "Ultimately people are calling less and less. And we are seeing similar movements with SMS."
Network expansion
"To meet increased demand for data, we are investing massively in the network. We have put R9 billion into the network in South Africa, an increase of 30% on last year," Barnwell highlighted. As part of this network investment, Vodacom increased the number of LTE base stations on its network by 50% to about 1 000 sites, Boorman added.
Barnwell discussed an investment plan called Project Spring, which is part of Vodafone's efforts to expand its investments in developing regions. According to Barnwell, Vodacom rolled out 134 new 3G sites in the last financial year, compared with about 70 sites in the previous year. He noted that boosting LTE networks is Vodacom's fastest rollout plan, outlining that in the first half of last year there were only 19 LTE-capable base stations in the Western Cape and this year the operator has already rolled out 183 LTE-enabled base stations. "Our strategy is to invest early and in that way we can leapfrog our competitors."
Fibre-to-the-business
"To support growth in data consumption and to aid network expansion, you need fibre-optic capabilities. This takes a long time and is a huge investment but once you deploy the fibre you don't have to upgrade it for many years," said Barnwell.
Both Barnwell and Boorman discussed Vodacom's new fibre-to-the-business (FTTB) offering, which was launched this week. The product is targeted at business parks across the country, with the idea to deploy a hub in the business park and then to sell fibre access to individual tenants in that business park. According to Barnwell, the service is aimed at small and medium enterprises; with 2 000 customers already having placed pre-orders for this service.
Once the business infrastructure is established, Vodacom can leverage this to deploy fibre-to-the-home offerings, Barnwell mentioned, which will be aimed at townhouse complexes and gated communities.
In line with this, Boorman highlighted that Vodacom's recent bid to buy Neotel, if approved, will significantly boost Vodacom's fibre network.
Reintroducing M-Pesa
Despite an unsuccessful attempt at bringing M-Pesa to SA in 2010, Vodacom recently announced that it would re-launch the mobile money service.
According to Barnwell, the product has been "massively redesigned" to iron out all of the kinks that were a problem with the initial launch. From a usability perspective, the aim was to make the latest version of M-Pesa more simple and user-friendly, he said. Registration was also a challenge during the previous rollout attempt, which Barnwell said has been improved by allowing self-registration, in addition to providing customers with the option of linking a Visa card with their M-Pesa wallet.
This means users can swipe their M-Pesa card like any other credit or debit card. Barnwell cited safety as a big concern with the 2010 M-Pesa launch, with people not really trusting this idea of virtual money. He believes the addition of a physical M-Pesa card makes the service more tangible for those who still feel uncertain about a virtual money service.
"While M-Pesa is a virtual wallet and is targeted at the unbanked market, one of our key strategy changes around this service is to link the banked market with people who are unbanked," Barnwell said. He added that the focus this time around is on a more comprehensive distribution strategy and on making M-Pesa services more readily available to informal markets. M-Pesa has also been launched in Europe, which opens up new possibilities for global transactions using this service, Barnwell noted.
"Acknowledging that it didn't work out that well last time around, we are now focusing on distribution, registration and the introduction of various promotions and loyalty offerings," said Boorman. "In order for it to work, it needs to be simple and affordable, especially when compared with other banking services."
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