Vodacom CEO takes jibe at Telkom over Rain deal

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Vodacom CEO Shameel Joosub believes there could be other issues surrounding Telkom’s complaint to the Competition Tribunal over the legality of his company’s roaming agreements with SA’s mobile data-only network Rain.

Telkom wants anti-trust authorities to make a call that the arrangements constitute a notifiable merger and should be subjected to scrutiny by the competition authorities.

The debate flared after Telkom approached the Competition Tribunal with its demands, saying multiple agreements between Vodacom and Rain grant the country’s largest mobile operator use and control over the deployment of Rain’s spectrum, including the planning, rollout, maintenance and service of its radio access network.

In an interview with ITWeb, Joosub said there was no reason to misconstrue the agreements with Rain as a merger, because such roaming agreements are the norm in the industry and Telkom’s complaint may be seeking to influence the upcoming spectrum auction.

“What we need to be careful of is Telkom trying to restrict the amount of spectrum we can get at the auction by making noise about it [Rain and Vodacom agreements], whereas this has already gone through the Competition Commission and Independent Communications Authority of South Africa (ICASA),” says Joosub.

The matter was first examined by the Competition Commission and ICASA in 2018, and both found nothing wrong with the agreements.

The squabble among the telcos comes on the back of a recent move by the regulator to set the ball rolling for the spectrum auction.

The regulator has since set reserve prices per spectrum band as high as a billion rand.

The cheapest is the 3 500MHz lot, with a reserve price per lot of R9.8 million, and the highest lot is 800MHz, with a reserve price of R1.1 billion per lot.

This development is a breakthrough for the telecoms sector, which has, for years, been battling with ICASA over the allocation of these licences.

Mobile network operators Vodacom, MTN, Telkom and Cell C have been readying themselves to take advantage of the spectrum to strengthen and develop new services, such as 5G.

Joosub tells ITWeb: “Firstly, Telkom has more spectrum than anybody in the market; they have a huge advantage. Secondly, let’s be frank, why are we using Rain spectrum? The reason we are roaming on the Rain network is because we don’t have capacity, so we need more capacity, which is going to come with the spectrum auction. So for now, we have to buy capacity from somebody and Rain has the ability to sell to us.”

He says the agreements with Rain aren’t exclusive and Telkom could also approach Rain for a similar partnership.

“There are similar arrangements between MTN and Cell C, and Telkom also uses our network, Cell C uses our network. So I think roaming is very rife in the industry.”

Rain shareholder Michael Jordaan has also commented on the issue, tweeting: “Can’t make this stuff up. Telkom complains that Vodacom roams on Rain; but Telkom itself roams on Vodacom.”

Turning to the long-awaited spectrum allocation, Joosub says the move by ICASA to set dates for the auction is “inspiring and it is important that those dates are delivered on”.

He says spectrum allocation will help speed up 5G rollout; however, for the services to reach most parts of the country, it will take years as there is also a need for prices for 5G-enabled devices to come down.

Joosub, who announced Vodacom’s blowout half-year results yesterday, says his company is also searching for opportunities within the cloud market, as it seeks to grow diverse revenue streams.

Shameel Joosub, Vodacom Group CEO.
Shameel Joosub, Vodacom Group CEO.

In the six months ended 30 September, the telecoms group’s stellar results were supported by higher customer demand for smart devices, including smartphones and tablets, driven by the COVID-19 lockdown.

He says in the wake of the pandemic, Vodacom’s cloud services have been “going very well. In terms of growth, I think we have had something like 58% increase for our cloud services.”

Joosub notes that after the entry of Amazon Web Services (AWS) into South Africa, Vodacom signed up as a premium partner and sees big opportunity there.

“We have created a number of services on top of the AWS platform, which we are now reselling to customers, and I think they are exciting.”

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