Vodacom South Africa - Afrikan Heroes

Vodacom Says Rising Cost Will Affect the Industry

July 11, 2023

Vodacom South Africa MD Sitho Mdlalose has warned that input costs in the telecommunications sector are rising at a faster rate than inflation. Mdlalose, speaking to TechCentral in an exclusive interview, said that although Vodacom has “absorbed a lot of the costs” by implementing below-inflation increases, the cost to serve customers is increasing – and the implication is that Vodacom may have no choice but to pass on these higher costs to consumers. It already increased some prices earlier this year.

“The cost of producing 1GB of data has been increasing” due to investments to reduce the impact of load shedding, among other factors, Mdlalose said.

Diesel costs are also high, with Vodacom spending R350-million on diesel in its last financial year

“The sheer cost of operations given this climate will continue to be a pressure point. That won’t go away anytime soon… We have absorbed a lot of the costs and tried to do only inflationary price increases, even though our costs are above that,” he said.

Speaking in the same interview, Vodacom Group CEO Shameel Joosub said capital investments by the telecoms sector remain “very high”. Vodacom is investing about R11-billion/year in its network, with a significant chunk of that being used to offset the impact of Eskom’s failure to supply electricity reliably. Diesel costs are also high, with Vodacom spending R350-million on diesel in its last financial year.

The energy crisis had a negative impact on Vodacom Group’s earnings in the financial year to end-March. A continuous effort to bolster network resilience by adding backup generators to base stations, using internet-of-things solutions (from its IoT.nxt subsidiary) to control power usage, and even partnerships with rivals have yielded results.

The weaker rand is also pushing up costs for operators, Joosub said. Everything from imported technology used in base stations to licence fees go up when the currency depreciates against the likes of the US dollar and the euro.

Although a focus on cost savings is vital, Mdlalose said the benefit to customers of having a mobile connection when the power is off goes beyond convenience to personal security. “Knowing that Vodacom is there … makes our customers feel safer.”

In May, trade, industry & competition Minister Ebrahim Patel published block exemptions under the Competition Act, which had a direct bearing on the sector. The exemptions have allowed telecom operators – and other companies – to collaborate to address the country’s electricity constraints, even activities normally prohibited by the act.

“These exemptions will enable energy suppliers and energy users to increase supply capacity, reduce the cost of energy or improve the efficiency of energy supply, and secure backup or alternative energy supply to minimise the effects of the current electricity supply constraints,” Patel said.

This has helped lower the cost of adding backup generators to base stations, which are usually shared by network operators, allowing them to consolidate their spending.

“Instead of adding three generators here and another three there [to power only Vodacom’s towers], I might say to MTN that I will add six here if you will add three more to another location,” Mdlalose said.

Vodacom has also collaborated with IoT.nxt to extract telemetry data on the power usage and heat generation of base station components. The data is used to power down components that are not in high demand, helping regulate air conditioning, for example, so that it is only used when needed. This both saves costs for Vodacom and reduces demand on Eskom.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

South Africa’s Vodacom Goes Green With New Eco-Friendly SIM Cards

October 21, 2021

Balesh Sharma, MD for Vodacom South Africa

South Africa’s leading Telecoms Company, Vodacom South Africa is launching Eco-SIM cards made from recycled plastic as part of the company’s ongoing commitment to reduce its impact on the environment by halving its greenhouse gas emissions by 2025.

The telco says it will soon provide customers with new Eco-SIMs in the half-sized format made from recycled plastic, progressively replacing SIM cards currently made from new plastic. The Eco-SIM launch in South Africa forms an integral part of parent company Vodafone’s rollout in 14 of its other markets.

“At Vodacom South Africa, we have always maintained that business success should not come at the cost to the planet,” says Balesh Sharma, MD for Vodacom South Africa.

“We believe that urgent and sustained action is required to address climate emergencies, which is why we constantly launch products and initiatives that aim to preserve the planet in line with our purpose”

Sharma says that the introduction of the new eco-SIM cards in South Africa marks another way in which Vodacom is mitigating its own environmental impact.

The introduction of Eco-SIM cards follows the recent Eco-Rating initiative, launched to encourage consumers to make conscious purchasing choices when picking a mobile handset.

The pan-industry Eco Rating for mobile phones across multiple brands carries a distinct label at the point of sale where these devices are available for sale to customers.

“We are constantly researching and launching initiatives that help us create a sustainable future and preserve our natural resources. The launch of these eco-friendly SIMs forms part of our overall purpose strategy to create a better future and more sustainable world through the adoption of sustainable practices like recycling plastic SIMs, thereby reducing waste. As part of this initiative, we aim to minimise and eliminate plastic usage at all our touchpoints, including our warehouse and our different logistics and distribution chains,” says Davide Tacchino, Managing Executive of Terminals at Vodacom.

According to a statement from the telco, Vodacom aims to minimise and eventually eliminate the usage of plastics at other business touchpoints as well.

Although Vodacom offers eSIM support on wearables in South Africa, most mobile customers still require a physical SIM card for their mobile device until eSIM support for all devices become more widespread. Vodacom has also eliminated all unnecessary plastic and disposable single-use items across retail stores and some of its offices.

This includes the removal of plastic straws, stirrers, cups and cutlery in our canteens. In 2019, Vodacom also eliminated the use of plastic bags across its stores and replaced them with recyclable brown paper bags. All Vodacom stores now use an e-mail receipting system that sends receipts via e-mail or SMS replacing the need to print receipts and saving on paper consumption.