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Johannesburg. – Vodacom Group Ltd, the wireless operator with the most subscribers in South Africa, plans to increase investment on the continent as it speeds up the pace of network upgrades. “In South Africa we’ve been investing R7 billion a year and we want to notch that up a couple of levels,” chief executive Shameel Joosub said.
The company will increase capital spending as a percentage of revenue to as much 17 percent from 13 percent in 2013, he said.
Vodafone Group Plc, the world’s second-biggest wireless provider, is putting aside about US$10 billion from the sale of its Verizon Wireless stake in the US to upgrade networks for units including Johannesburg-based Vodacom, in which it owns 65 percent, as part of an investment plan known as Project Spring.
“We put together a programme about how we want to accelerate our investment in South Africa and the opportunity presented by Project Spring makes it easier for us,” Joosub said.
The additional spending will also go towards the improvement of 3G network connections in Tanzania, he said. Vodacom is increasingly focused on small- to medium-size business customers and is seeking to buy Internet provider Neotel (Pty) Ltd. The company’s earnings per share excluding one-time items climbed to R4,39 in the six months through September, compared with R3,96 a year earlier, it said in a statement.
Vodacom shares gained as much as 1,7 percent, the most in almost three weeks. The increased investment in South Africa will help improve fibre access to homes and businesses and enable a faster roll out of 4G networks, Joosub said on the call.
“In Tanzania, it’ll be more about 3G coverage but also making sure we’ve captured the opportunity in rural coverage.”
Data revenue from Vodacom’s international operations more than doubled to R985 million, while its total mobile data revenue rose 29 percent to R6,1 billion, according to the statement.
Vodacom may curb how much it invests in South Africa if the company can’t reach a compromise on a reduction in mobile termination rates with the country’s communications regulator, Joosub said at a presentation yesterday. The amount mobile-phone companies pay each other to end calls on another network will halve to US20c in March, the Independent Communications Authority of South Africa last month.
“The level of investment in South Africa will be influenced by mobile termination rates,” Joosub said.
“The right number is 20 to 25 percent a year, is what one could realistically accommodate.” – Bloomberg.
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