Vodacom Mimics Apple in Revamp of South African Shops

(Corrects share price in 10th paragraph of story published April 10.)

Vodacom Group Ltd. (VOD), South Africa’s largest wireless carrier, is revamping its retail stores to offer services similar to those popularized by Apple Inc.

Consumers will be able to test products such as mobile phones and tablets and consult technicians at support stations comparable to Cupertino, California-based Apple’s Genius Bar, according to Vodacom Chief Executive Officer Shameel Joosub. The company is testing the project at three outlets before expanding to more of its 270 stores in the country.

Shopping at Vodacom will “be more closely aligned to the Apple experience than a normal transactional experience that we have today,” Joosub, who took over as CEO this month, said in an interview at the company’s headquarters in Johannesburg.

Vodacom, which is 65 percent-owned by Vodafone Group Plc (VOD), is seeking ways to expand its business after local mobile sales fell in the three months through December. Mobile voice revenue, which accounts for about half of the company’s South African sales, slipped 2.3 percent to 7.6 billion rand ($852 million) in the quarter. Mobile messaging dropped 5.6 percent.

“It is operators looking for other things than price to compete on,” David Lerche, an analyst at Avior Research Ltd., said by phone. “They would both rather compete on quality and marketing than on price. There’s price pressure coming from Cell C as well as 8ta and Telkom mobile to a lesser extent.”

Photographer: Nadine Hutton/Bloomberg

A logo stands outside Vodaworld, the headquarters of Vodacom Group Ltd., Vodafone's biggest African business, in Johannesburg, South Africa. Close

A logo stands outside Vodaworld, the headquarters of Vodacom Group Ltd., Vodafone's... Read More

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Photographer: Nadine Hutton/Bloomberg

A logo stands outside Vodaworld, the headquarters of Vodacom Group Ltd., Vodafone's biggest African business, in Johannesburg, South Africa.

European Slide

Vodacom is becoming increasingly important for its parent as Newbury, England-based Vodafone struggles to halt a slide in its European business. Vodacom surpassed Vodafone’s U.K. unit in 2010 by profit, and outpaced the Spanish division the following year.

Joosub was appointed head of Vodafone’s Spanish business in 2010, having previously been at Vodacom for more than 15 years. In July last year, he was named successor to Vodacom CEO Pieter Uys, who resigned after four years.

Vodacom also sells services in Lesotho, Mozambique, Tanzania and the Democratic Republic of Congo. South Africa accounted for almost 85 percent of its revenue last quarter.

The company’s shares have trailed those of MTN Group Ltd. (MTN) They have gained 0.6 percent in the past 12 months, while MTN have gained 25 percent, valuing Africa’s largest mobile-phone operator at 309 billion rand.

Vodacom shares, which have fallen about 11 percent this year, rose 1.2 percent to 110.3 rand at the close of trading in Johannesburg today, giving the company a market value of 164 billion rand.

Problem Focus

“We’ll be focusing on the root-cause problem,” Joosub, 41, said in an interview last week. “We’re trying to ensure that we have clear differentiation when we compare our store with our competitors’.”

An in-store advisory service could help remedy existing phone support that shopper Clinton Hawley called inadequate.

“I find them pretty good, but when phoning in, the advice is a bit pathetic,” the 27-year-old mechanical engineer said outside a Vodacom store in Sandton City, Johannesburg.

The wireless-service provider has about 270 stores in South Africa, including those operated by franchises, while MTN operates about 450 stores in the country including franchises, according to MTN spokeswoman Matebello Motloung.

Apple (AAPL), which has a market value of about $408 billion, doesn’t have retail stores in Africa, according to its website, though products including iPhones and iPads are sold through a reseller network across the continent.

To contact the reporter on this story: Christopher Spillane in London at cspillane3@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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