Better network the answer, says Vodacom CEO
Vodacom CEO, Pieter Uys says that a better, faster and more efficient network is good preparation for a high-volume, low-margin data-based environment which may emerge in the mobile operator market.
Cell C CEO, Alan Knott-Craig recently said that cellular operators will have to adapt their business models to accommodate the high-volume, low-margin data environment (instead of the current business models relying on high margin voice revenue).
“So you’re working with very tight margins; huge amounts of traffic coming at you, or will be coming at you; much, much lower prices on data, sucking in customers; [you’re] probably going to find a lot of the voice going on the data networks in future – so [you’ve] got to do something about that cost structure, there’s no question about that,” said Knott-Craig.
Knott-Craig said that Cell C is well-positioned to compete in this changing business environment because it is a much smaller company than Vodacom and MTN, which means it can adapt to changing business models easier.
However, Vodacom’s Uys is confident that Vodacom is well prepared for what is to come in the cellular space, partly because of their continued network improvement and coverage growth.
“We have been busy with this over the last few years, replacing network equipment with the latest technologies, gaining quality and efficiencies. We have also been working hard at self-providing transmission to as many high capacity base stations as possible,” said Uys.
“The key success factor here is network quality and capacity. We increased Group capex 37% year-on-year and focused on adding base stations, swapping out equipment and self-providing transmission. We intend to keep capex at a similar level (11-13% of revenue), so that we have the capacity to deal with higher volumes of data traffic, and keeping the business models balanced.”
Uys added that disruptive technologies like Voice over data (using VoIP technology) will not hurt Vodacom. “Our business plans assume data prices going down, higher data volumes, new technologies, and new services,” said Uys.
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