Vodacom wants to grow its financial services business in SA to R2 billion in the next 12 months.
So said Vodacom Group CEO Shameel Joosub yesterday during an interview with ITWeb, after the company announced its interim results for the six months ended 30 September.
According to Joosub, the telco has turned around its previously loss-making financial services unit into a vital business cog.
In the past six months, Vodacom’s financial services grew by 37.1% to R972 million. During the same period, the operator advanced R4.9 billion in airtime via its Airtime Advance platform to 9.9 million customers.
Vodacom’s insurance revenue increased by 21.8%, driven by the launch of products such as VodaPay, which enables direct airtime purchases and bill payment for electricity and other payments.
“We had to rebuild the business, which is now close to a billion rand in the last six months and that is going to be a R2 billion business for us. We are going to do it slightly different to M-Pesa, because with M-Pesa we have stored value because of lack of banking infrastructure but here it’s different because we have banks.”
In its financial results, Vodacom said M-Pesa transactions exceeded R41 billion a month.
“We have our insurance platform, which is doing very well, and we have 1.6 million customers. Our Airtime Advance platform has seen five million advances. We have close to 10 million people using these types of services and they are growing, and will continue to expand.”
Over a month ago, Vodacom announced plans to leverage its large base of active customers to bring financial products to everyone in SA.
Out of Vodacom's 43.2 million South African customers, the vast majority, 37.3 million, are prepaid customers and only 5.8 million are postpaid. This, Vodacom said, presents opportunities “any insurance company and bank would kill for”.
The Vodacom boss believes SA is one of the fastest-growing places when it comes to fintech. This as new research by Rand Merchant Bank shows SA has a flourishing fintech sector.
Fintech has disrupted the financial sector across the world, bringing much-needed innovation and change, and Vodacom wants to be part of these changes, as evidenced by the success of M-Pesa.
Spectrum welcome
Turning to government’s spectrum allocation strategy, Joosub said Vodacom supports the plan but the devil will be in the detail as the telco makes its submissions on the roadmap.
The Independent Communications Authority of South Africa (ICASA), at the beginning of this month, published the long-awaited information memorandum on the licensing process for the assignment of the International Mobile Telecommunications spectrum.
ICASA’s document sets out the roadmap going forward for the auction of spectrum that the sector has long been waiting for.
This spectrum will enable local mobile operators to deploy 5G technology.
The regulator has asked interested parties to make submissions on its plans to allocate high-demand spectrum.
“It is very encouraging that 5G is in there [the plan] as well. We are submitting comments by the end of January,” noted Joosub.
He added SA will be ready for 5G deployment as it is important for the country’s future plans.
“We will be ready; that’s not an issue. The evolution in the space will grow. I think it’s important to be there because it is one of the underlying technologies for 4IR [the fourth industrial revolution] and that’s why the allocation is crucial.
“From 2G, SA has been there [in the forefront]. In 5G, without spectrum, you can’t do much. I think it [5G] will allow us to be part of the evolution as it comes.”
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