Vodacom to grow in South African market

By Marc Castro

Nov 11, 2013 02:35 PM EST

Vodacom Group Ltd, the top wireless operator in South Africa, had laid out plans to increase investment on the continent. as it speeds up the upgrades for its network services. 

According to Vodacom CEO Shameel Joosub, during a conference call, "In South Africa, we've been investing ZAR7 billion or USD677 million a year and we want to notch a couple of levels." He confirmed that the company would be increasing its capital spending as a percentage of revenue from 13% to 17% in 2013.

The second largest wireless provider, Vodafone Group Plc, had put aside nearly USD10 billion from the sale of its Verizon Wireless stake in the United States in order to upgrade its networks for units, such as Vodacom, which Vodafone owns nearly 65%, in the upgrade plan called "Project: Spring".

Joosub added, "We put together a program about how we want to acclerate our investment in South Africa and the opportunity presented by Project Spring makes it easier for us." The added expenditures would go towards the improvement of the 3G network connections in Tanzania.

He further added, "In Tanzania, it'll be more about 3G coverage but also making sure we'e captured the opportunity in rural coverage." The investment in South Africa would improve the fiber access to homes and businesses with the goal of faster usage and adoption of the 4G networks. 

Shares of Vodacom increased by 1.7% the highest in almost three weeks and were traded at ZAR115.11 per share as of late afternoon in Johannesburg. The data revenues from Vodacom's operations on the international front as it doubled to ZAR985 million. It also saw mobile data revenues increase 29% or ZAR6.1 billion according to the issued statement. 

In a final observation, Joosub said, "The level of investent in South Africa will be influenced by mobile termination rates. The right number is 20 to 25% per year is what one could realistically accommodate."

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