Broadening access to communications

There is a pressing need to bridge the digital divide and extend access to mobile communications to those who are still marginalised from the significant socio-economic benefits they provide. A growing body of research shows that mobile communications have the potential to change people’s lives for the better by promoting economic development. Considering the rapid uptake of mobile communications in Africa, there is no doubt as to the economic value of voice, data and internet services. The Group grew its customer base to close on 40 million, up 16.5% on the prior year, an increase of more than 5.6 million customers from the previous reporting period.

A number of key issues contribute to extending services to new customers: the extent of network coverage, distribution models that allow access to our products and services in remote communities, more affordable products and handsets, providing services that are key to commerce as well as specific products and services for those excluded from mainstream communication channels.

Network coverage

Vodacom SA’s network comprised 7 481 2G and 2 880 3G base stations at the end of March 2009, covering about 98% of the population with 2G services and 28% of the population with 3G services. This not only meets the requirements of our license agreement, but also the demand for mobile communications from a growing number of customers across South Africa. In the year under review, Vodacom SA built 316 2G and 322 3G base stations. Vodacom SA has also rolled out a WiMAX network comprising a total of 141 base stations in the key metro areas.

During the year under review, Vodacom Tanzania has extended its network by almost a third, focusing extensively on increasing coverage in rural regions throughout the country. We continue to invest in expanding network coverage and quality in all our international operations, with more than 400 new base stations added during the year in the four countries. Tanzania and Mozambique were the main beneficiaries of this investment, followed by Lesotho where we commenced 3G services.

Vodacom continues to rollout next generation communication services, including broadband and data networks, both mobile and fixed-line. We provide customers and other stakeholders with periodic updates on network coverage through various channels, including the annual report, monthly Vodaworld magazine and online (at www.vodamap.net/3G).

Affordable products and handsets

Products introduced during the financial year to improve affordability include:

• R5 voucher – Vodacom reduced the lowest denomination airtime voucher from R12 to R5. The R5 vouchers had reached 34% of sales volumes and 12% of usage value by March 2009.
• Yebo4Less – Launched in May 2008, this prepaid tariff plan offers customers variable discounts (up to 99%) based on the customer’s location and time of day. By the end of March 2009, Yebo4Less had 4.8 million customers.
• Ad-funded Call Me request – This ad-funded free service, delivering a “Please Call Me” SMS to the recipient enjoys volumes of over 620 million messages per month.
• Short voice service (SVS) – Voice messages of up to 30 seconds are allowed at a cost of R0.90 per SVS. More than 2 million messages have been sent since the launch in October 2008.

Tackling the challenge of affordable handsets across all our markets, Vodacom first introduced Ultra Low Cost handsets in South Africa in 2007 and subsequently in Tanzania, Lesotho, Mozambique and the DRC in 2008; immediately selling nearly a million of these handsets in South Africa alone. This year, prices have come down by an average of 20%, to between R200 and R300 per handset, and our volumes reached two million handsets sold.

Mobile banking for the unbanked

Access to affordable banking services for the unbanked population has been a challenge facing countries across the developing world. In addition, carrying cash often represents a high risk and constrains commercial activity. Following the successful launch in Kenya of M-PESA by Vodafone’s affiliate, Safaricom, Vodacom launched a similar mobile money transfer product in Tanzania in the year. Following the success of this product, Vodacom intends to launch a similar product for the South African market.

Reducing the level of preventable exclusion

In September 2008, Vodacom relaunched its new speaking phone range for visually impaired customers with special software that converts the information displayed on the cell phone screen to speech, with the customer paying no extra fees for this utility. Uptake of these phones has increased threefold, with over 800 phones sold in six months, compared with 2 400 between 2004 and August 2008. We aim to launch Vodacom’s Specific Needs products and services in our international operations and research has already begun in conjunction with disability organisations in Tanzania to investigate the rollout of the speaking phones.

In our quest to provide the best network service with the broadest possible coverage, Vodacom is constantly looking for opportunities to upgrade and extend the network while reducing costs. This ongoing investment in our network infrastructure ensures that we can provide our customers with word-class services and improved access. In the 2009 financial year, we started implementing a major radio renewal project. The new equipment drives significant improvements in coverage, technology features and operational costs. The increase in transmit output power provides better signal quality and broader coverage while achieving a 30% to 50% reduction in power consumption in some instances. We have also reduced signal attenuation in the base stations by deploying remote radio heads to the top of the masts, replacing long RF cables that previously linked the radio head component in the containers to the antennae. Before After According to Andries Delport, Executive Director of Engineering and Technology: “The constant improvements in radio equipment and technology made future-proofing a key requirement for the project. The new base stations are specifically designed to facilitate the seamless implementation of new features and new technologies. Through the renewal project, we are already preparing our network infrastructure for Long Term Evolution (“LTE”), the advanced wireless mobile radio technology that will succeed the current 3G / HSPA technology used by operators.” The ease with which future technology upgrades could be implemented will ultimately benefit our customers, specifically in broadening access to enhanced data connectivity in both metro and rural areas. Also, increased quality and signal strength reduces the number of stations required for future expansion. Furthermore, the new radio equipment uses less electricity, thereby effectively reducing CO2 emmissions.