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Vodacom not swayed by MTR losses, investment set to reach R17bn

Vodacom CEO Shameel Joosub

Vodacom CEO Shameel Joosub

Photo by Duane Daws

30th September 2014

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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Despite the loss of over R1-billion owing to the drastic mobile termination rate (MTRs) cuts, telecommunications giant Vodacom on Tuesday said its spend in South Africa during this current financial year would reach about R17-billion.

This included Vodacom’s R7-billion play for converged communications network operator Neotel and the injection of about R9-billion into its network to cement its competitive edge, Vodacom CEO Shameel Joosub said at the MyBroadband conference, in Midrand.

The competition authorities and the Independent Communications Authority of South Africa (Icasa) were currently mulling the proposed deal – a process Joosub believed would be completed by the end of the year.

South Africa’s largest mobile operator aimed to absorb the India-based Tata Communications subsidiary into Vodacom’s fixed-line unit to be operated as a standalone entity. The combined unit, with an extensive fibre network, would bring Vodacom closer to housing estates and office parks.

In addition to the more than 16 000 km of fibre, Neotel would add more than 1 000 employees and an established customer base to Vodacom’s portfolio.

Access to Neotel’s spectrum would also give Vodacom a “bit of a breather” as South Africa’s operators await the much delayed – and much needed – allocation of the high-demand spectrum required for South Africa’s broadband ambitions.

Neotel had assigned spectrum of 2 X 12 MHz of 1800 MHz, 2 X 5 MHz of 800 MHz and 2 X 28 MHz of 3.5 GHz.

The spectrum would enable Vodacom to accelerate the roll-out of long-term evolution services, providing high-speed, high-quality wireless connectivity to a greater proportion of the South African population, Joosub explained.

However, it “does not solve” the challenge of limited spectrum, but the access to some of it would enable Vodacom to progress some of its high-speed network plans, including that of fourth-generation (4G) capabilities.

More than 10 000 of Vodacom’s base sites were upgraded to handle the next generation technology.

“If we had spectrum, we could switch on 4G tomorrow,” he said, adding that with 84% of the group’s sites equipped with high broadband speed capabilities, Vodacom could cope with the rapid data growth expected over the next few years.

The group was also injecting more than R9-billion on ensuring it maintained a clear network advantage and met rapid data growth, which was now growing at rates of 80% to 90% a month.

The investment showed that Vodacom would not be put off by the substantial losses caused by the MTR cuts, which had widened the group’s year-on-year loss of revenue by more than R1-billion.

Joosub assured delegates that the continuing rate reduction was not hampering Vodacom’s ability and willingness to invest – this despite a huge outcry by some industry proponents earlier this year that Icasa’s proposed glide path could potentially arrest and reverse monetary inflow into the networks.

The MTRs would remain at the 20c rate implemented in April, until September 2015, with the asymmetry rate reduced from the initial 44c to 31c until February.

In October 2015, the MTR would then decline to 16c until the end of September 2016, before dropping to 13c in October 2016.

From March 2015 until February 2016, the asymmetry rate would decline to 24c and then to 19c during the period from March 2016 to February 2017.

Over the next 12 months, the MTRs would remain at the 20c implemented in April, with an asymmetry rate reduced from the initial 44c to 31c.

The rate would then decline to 16c, with an asymmetry of 24c until the end of September 2016, before dropping to 13c, with an asymmetry of 19c by October 2016.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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