Vodacom has signed a global partnership agreement with international shareholder Vodafone, with Vodacom expecting the deal to translate into numerous benefits.
Vodacom Group CEO Alan Knott-Craig says it was a strategic decision that will make Vodacom a member of one of the world`s largest mobile communities and put it at the forefront of developments that are expected to change the face of the world`s communications landscape.
Knott-Craig says although Vodafone is already a shareholder, the companies will now work hand-in-hand, rather than simply having a board-level arrangement.
"By becoming part of the Vodafone brand, we can offer multinational companies a seamless global service and value-adding corporate deals. In addition, we gain access to Vodafone`s global products and services," he says.
Democratising e-mail, Internet
One of the first products that will be marketed is the 3G Vodafone Mobile Connect Card, which slots into a laptop and connects via Vodacom`s high-speed data network and will tie in with Vodacom`s third-generation (3G) network roll-out, anticipated later this year.
The card enables customers to access business applications such as e-mail, calendar, contacts and databases speedily when out of the office.
"The second major benefit of joining the partnership will be to benefit from Vodafone`s global leadership, as we will be able to leverage the organisation`s economies, which in turn will benefit our customers most," says Knott-Craig.
"Within the next five to 10 years, current GSM technology will become outdated and the 3G technology that is being developed now has the potential to democratise e-mail and Internet access in the same way that cellphones democratised telephones for millions of people, by putting the world of computing in the ordinary person`s lap."
He says crucial to its success will be the point where this sophisticated technology interfaces with the consumer, as it will take enormous work behind the scenes and plenty of money to put an easy-to-use wireless and high-speed communications tool in the customer`s hand.
"This is exactly what Vodafone`s research and development is focused on, but the amount of R&D required to achieve this would probably be beyond us were we not part of a big partnership like this," says Knott-Craig.
3G investments
He says Vodacom is rolling out an initial 470 3G base stations at a cost of R400 million in the major metropolitan centres. Users with 3G phones and 3G data cards will be able to access the 3G network by December 2004, he says.
The company will invest a further R400 million next year as its 3G network roll-out gains momentum.
"Vodafone live! will be the cornerstone of our 3G consumer offering and will be launched early next year. Another benefit to our subscribers is that we will enhance our extensive roaming by providing our customers with seamless international roaming on the Vodafone network and those of its partners."
Dr Thomas Nowak, a director of partner networks at Vodafone Group marketing, says this deal was designed to take the organisations` partnership to the next level and will allow Vodafone consumers to access networks seamlessly around world.
"Internationally, Vodafone has some 10 million Vodafone live! handsets in use around the world already, with an average revenue per user that is 65% higher than the normal consumer base."
Equity, branding issues
Asked whether the partnership would result in a change in equity, Nowak says: "I believe we can achieve our objectives without increasing equity share. Obviously in the long-term, if an opportunity were to arise, we would investigate it, but certainly not right now."
Knott-Craig adds that Vodacom would not be prepared to change its branding completely to that of Vodafone, "but maybe sometime in the future we will put our feet in the water to test the possibilities".
"The fact that Vodafone has been a shareholder since 1993 means there is an excellent base of goodwill and trust on which we can build this alliance. Because of the exponential surge in the development of mobile technology, the only way forward is to make sure you are aligned with a leading global player," he says.
"This alliance is not just about drawing data revenue, as there are also products in the pipeline that will help drive our voice business, because we cannot forget that the majority of revenue today is still voice."
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