Vodacom to Focus on Smaller Companies as Voice Sales Decline

Vodacom Group Ltd. (VOD), South Africa’s largest wireless company, will increase its focus on small-to-medium-sized business customers to offset declining revenue from its domestic voice division.

Vodacom Business will contribute as much as 25 percent of the company’s South African service revenue by 2018, compared with 16 percent, or 8 billion rand ($795 million), for the year through March, the Johannesburg-based company said in a statement today. Total revenue rose 4.5 percent to 70 billion rand last year while service revenue in South Africa decreased 0.4 percent to 48.2 billion rand.

“We historically focused on corporate clients and didn’t have the scale or products to tackle the huge and rapidly growing small-to-medium enterprise segment,” Vuyani Jarana, chief officer of Vodacom Business, said in the statement. The company will now “piggy-back” off its consumer business infrastructure to expand services for smaller companies.

Vodacom, which is 65 percent-owned by Vodafone Group Plc (VOD), is becoming increasingly important for its Newbury, England-based parent as Vodafone struggles to halt a slide in its European business. Vodacom is expanding its data and business services as sales from domestic voice revenue and mobile messaging retreated.

The wireless operator has invested more than 2 billion rand in Vodacom Business since 2008 amid increasing competition in the business services sector.

Shares Advance

Vodacom shares rose 1 percent to 106 rand at 2:10 p.m. in Johannesburg trading. Vodafone climbed 2.2 percent to 191.40 pence in London.

Telkom Group Ltd., Africa’s biggest fixed-line operator, last month pledged to rebuild its corporate unit after the company reported the largest non-mining loss in South Africa company history.

“We want to put Telkom Business on steroids,” Telkom Chief Executive Officer Sipho Maseko said in a June 14 interview. “That means we want to grow faster than the market.”

-- Editors: John Bowker, Robert Valpuesta

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

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

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