BUSINESS MAVERICK

Vodacom making good on key strategic growth areas

Ruan Jooste | 14 May 2019

Vodacom has taken a small but significant step by acquiring a majority stake in IoT.nxt – a local Internet of Things company, signalling that it may see its future leaning towards new services technologies.

 

Vodacom is further venturing into new services and technologies that will use mobile networks as a connection point or hub. It has announced that it is buying a majority stake in IoT.nxt – a local Internet of Things company based in Centurion. IoT.nxt is one of the gems in the stable of investment holding company Talent10 Holdings, of which Sipho Nkosi, current chairman of Sasol and former Exxaro CEO, is a majority shareholder.

 

The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.

 

“Our acquisition of IoT.nxt, with their unique edge technology and tech-agnostic platform, plays a significant role in solving the challenges of legacy systems that have limitations of integration and will position Vodacom extremely well in being the digitalisation partner of choice for customers, beyond connectivity,” says Shameel Joosub CEO of Vodacom, during a webcast with the media discussing the annual results for the year ended 31 March 2019.

 

“IoT.nxt CEO Nico Steyn says that IoT is bringing new insights into business and is disrupting different sectors. As a result, most industries now looking towards digitisation, like IoT, to start driving productivity and efficiency.

 

The company has established itself as quite the niche player in this space in SA with clients like Vodacom, Anglo American, Bidvest and PPS, to name a few listed as clients on their website. It has also made significant inroads into Europe and the US.

 

The firm has already invested heavily in applications and online platforms, leveraging Big Data, Artificial Intelligence and Robotic Process Automation to improve its customer service. And with this latest acquisition, one thing is very certain: customer service is at the crux of Vodafone’s future strategy.

 

“By introducing new ways of using big data and machine learning, we now use this to drive intelligent decision making including optimising capex investment, greater sophistication in financial services and constantly improving our personalised product offers to customers,” says Joosub.

 

“We expect the solid momentum from our digital services platforms to continue. Further, the strategic partnerships being formed by our Enterprise business will strengthen our IoT offers and Enterprise propositions, ultimately to the benefit of consumers. It has announced that its IoT division has over 4 million connections to its IoT platform.

 

The analyst firm Gartner says that by 2020 there will be over 26-billion connected devices.

 

Vodacom recognised the unique offering in IoT technology and made this investment to allow it to leverage the entire IoT value chain,” says Wayne Fitzjohn, Talent10 CEO. “This investment will drive development and expansion into more territories for IoT.nxt and allow the company to further commercialise a number of its vertical solutions to off the shelf products, without slowing down its core development and innovation of its platform,” he says.

 

IoT has long been hailed as an opportune market and with the pending launch of 5G, it’s likely the technology will soon become the norm.

 

In fact, Vodacom IoT technologies are already embedded within several connected vehicles built by firms such as Audi, BMW, Daimler, Ford, General Motors, Jaguar Land Rover, Porsche, SEAT, VW and Yamaha motorbikes.

 

In March, Vodacom Business announced findings of its latest IoT Barometer 2019, which highlights a clear picture of how non-adopters of IoT business will have fallen behind rivals within a few years.

 

Commenting on the findings, Peter Malebye, Managing Executive for Vodacom Business IoT said: “IoT is central to business success in an increasingly digitised world, with 72% of adopters saying digital transformation is impossible without it.”

 

The good news is that IoT enablement platforms make the technology easier to deploy for businesses of all sizes and connectivity options like NB-IoT and 5G will make implantation easier and improve services.

 

Malebye stated that looking to the future, new technology will continue to power the performance of IoT.

 

Says Joosub: “In August last year, through Vodacom Lesotho, we laid claim to being first in Africa to connect customers to a commercial 5G network.”

 

He says Vodacom SA is ready to follow Lesotho’s lead, but government’s continued failure to release the required spectrum is proving detrimental to the industry.

 

At the beginning of April 2019, the telecommunications and postal services department announced, in a statement, that the policy directive would be issued by the end of that month. However, in a later statement, the department indicated that following extensive consultations, the minister “deems it necessary to hold the Policy Direction on Unassigned High Demand Spectrum in abeyance for consideration” for the next administration.

 

“It has been 14 years, almost 15 years without any additional spectrum being secured,” says Joosub. “We are being left behind from participating in the Fourth Industrial Revolution.”

 

A 5G spectrum auction has been slated for 2020, but given the government’s track record, the likelihood of this deadline being met is questionable.

 

Adequate spectrum is an important resource for mobile operators, and Joosub said it would allow mobile networks to cut mobile data prices in half.

 

He says on the financial period under review: “A sharp reduction in our out-of-bundle tariffs contributed to the 37% decline in effective data prices since the end of March last year. In addition to enabling customers to manage their spend and utilise their data, virtually worry-free, this translates into a further R2-billion in savings enjoyed by customers as part of our ongoing pricing transformation strategy. Over a three-year period, data prices have fallen by 57%; despite not having access to further available spectrum.

 

“5G is a game-changing proposition for mobile operators. It offers a combination of speed, as well as capacity, reliability, and ultra-low latency required for mission-critical services like healthcare and basic services, as well and the expansion of IoT.

 

“Vodacom has updated our medium-term targets to reflect these opportunities and the benefits of its Safaricom acquisition, and now expect a mid to high single-digit growth rate in Group operating profit.

 

“In the past year Group saw strong customer growth adding almost 4-million customers, including 1.5-million in South Africa. This doesn’t factor in the additional 2.3-million customers that chose to join the Safaricom network.

 

“Together we connect over 110-million customers to a better future,” adds Joosub. “Group revenue was up 4.3%, mainly due to a solid performance by its international operations, which helped to offset some of the pressures in its home market.” DM

 

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