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- Vodacom CEO, Shameel Joosub, says roaming partnerships between companies in the country are common business practice.
- Rain has an agreement which allows it access to Vodacom’s network towers, and Vodacom also has a roaming agreement for the use of Rain’s 4G spectrum.
- Telkom has previouly raised concern about the partnership between Rain and Vodacom, asking authorities to look into it.
As the country readies for the much-expected allocation of high demand spectrum by the communications regulator Icasa, a war of words has erupted between service providers over the process, with accusations of unfair advantage and competition.
On Monday, Vodacom CEO, Shameel Joosub, shrugged off the criticism levelled against the company by Telkom that its partnership with mobile virtual network operator, Rain, constitutes a merger and should be investigated by competition authorities.
"We see this more as a ploy to try and get a bigger allocation of spectrum, it is quite unfortunate," Joosub said in his response to the Rain partnership.
"One of the realities we face as operators in South Africa is that we have had to use roaming arrangement to be able to keep up the capacity demand that is required."
Rain has an agreement which allows it access to Vodacom’s network towers, and Vodacom also has a roaming agreement for the use of Rain’s 4G spectrum.
Responding to the claims made by Telkom, Joosub said Vodacom's partnership with Rain was no different to the roaming deal the company has with Telkom. In 2018, Telkom, which is partly owned by the state, phased out its roaming agreement with MTN and signed a new partnership with Vodacom, the country's largest mobile services provider.
Joosub highlighted that roaming partnership were very much part of the business among the local services providers, as Cell C is roaming on both Vodacom and the MTN networks. From the consumers perspective, roaming agreements between companies help users gain achieve better signal quality and prevent the occurrence of dropped calls in areas where their network provider has has limited or no towers.
"We have made no secret of the fact that because we are capex constrained and rain had capacity, we had bought capacity from them through a roaming arrangement," said Joosub.
The Independent Communications Authority of South Africa (Icasa) has issued an invitation to service providers to apply for spectrum, in a process that is expected to be concluded by the end of March 2021. Vodacom, like its counterparts are eager to participate in the allocation of spectrum through auction.
Last week, Telkom CEO Sipho Maseko raised concern that the Icasa's invitation to application would likely entrench the duo monopoly enjoyed by Vodacom and MTN.
Telecommunication companies have strongly benefitted from the surge in internet traffic during the national lockdown period, due to the increased work from home trend, in a bid to curb the spread of the coronavirus. Vodacom interim results presented on Monday showed that data usage surged +86% due to connectivity demand.
"To help cope with sharp increases in data traffic and shifts in customer behaviour patterns, we accelerated network infrastructure spend over the six-month period to R6.6 billion, including R5.0 billion in South Africa," Vodacom said.
The company also attributed the growth to its "substantial reductions in monthly data bundle tariffs".
In April, Vodacom reduced its internet bundle fees by up to 40%, following adverse finding by the Competition Commission on the high cost of data, which was said to be anti-poor. Other service providers also heeded the competition body's recommendation.
The company in the six months to September raised revenue to R47.8 billion, while earning per share and headline earning per share increased at 15.6% and 15.7% to R5.33 and R5.32 respectively.
Net debt increased by R1.5 billion to R36.6 billion from March 2020, but was R4.7 billion lower year-on-year.
