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Vodacom says that the current blockade, which has led to its data traffic increasing by up to 40%, has shown that it can lower its data production costs and attract more customers once additional spectrum is auctioned to mobile operators.
While network operator CEO Shameel Joosub said there will be no additional data price cuts this year, the new spectrum, which Vodacom expects the government to auction in late 2020, may allow further price cuts.
Joosub said the blockade has shown Vodacom that the data has good price elasticity, which means that if its prices drop, demand will increase further. The temporary additional spectrum that SA’s Independent Communications Authority granted to mobile operators in April has shown Vodacom that it will be better able to play the volume game if it does not have to deploy additional 3G or 4G sites to serve new customers. of data.
“It shows us what the capacity is if we access more spectrum and how that can reduce savings,” said Joosub, who also added that the price elasticity of the data has been “above our expectations” during the current blockade.
However, Icasa only gave mobile operators additional spectrum on a temporary basis to help the government spread the word about the coronavirus crisis. They must return it before the planned spectrum auction.
Abnormal traffic growth
Ruhan du Plessis, an analyst at Avior Capital, said the shutdown had resulted in a structural change that will make demand for digital and data services permanently higher. Due to the change, he said that Vodacom would maintain above-average traffic growth, but that a new spectrum will be needed to carry this traffic.
“Several factors will affect where the demand is going. Telkom has the ability to capture the low end on mobile devices, but also the fixed demand from home. Vodacom has clients with high-value contracts that have the ability to maintain spending and Locks make the ability to make operators of other operators difficult. “
More growth levers
Joosub said the group will continue to diversify its investments in companies like the Internet of Things and financial services.
The group, which already offers microcredits to small and medium-sized companies in SA, will seek to introduce nanocredits in the country. Vodacom has distributed $ 2.5 billion of these small securities in several other African countries through its joint venture M-PESA. He said that in SA, the loans will be extended through its “improved” VodaPay platform that will launch later this year.
“We see an opportunity that if we can advance airtime, we can advance things like electricity, water and other products and services,” said Joosub.
