Vodacom to Boost Investment by 30% to Expand Fixed Network

Vodacom Group Ltd. (VOD), the wireless operator with the most subscribers in South Africa, plans to increase its capital expenditure by more than 2 billion rand ($190 million) as it develops its fixed-line business.

Vodacom, which is 65 percent owned by Vodafone Group Plc (VOD), will spend more than 9 billion rand next year on its infrastructure in South Africa compared with about 7 billion rand this year, Chief Executive Officer Shameel Joosub said in a internal presentation to staff at the Johannesburg-based company.

“We’re going to start building fiber into the home, fiber to the business and so on, and really start trying to play a bigger role in the fixed space,” Joosub said in a Dec. 12 video message. “We’re going to spend over 9 billion rand next year and that’s so we can help deliver on the strategy of helping government get to the 2020 broadband strategy.”

Vodafone, Europe’s biggest mobile operator, is putting aside about 7 billion pounds ($11.4 billion) from the sale of its Verizon Wireless stake in the U.S. to upgrade networks for units including Vodacom, as part of an investment plan known as Project Spring. South Africa wants 90 percent of the population to have access to reliable and affordable broadband Internet by the end of this decade.

Vodacom is increasingly focused on small- to medium-sized business customers and is in exclusive talks to buy Internet provider Neotel Pty Ltd. Including acquisitions, the phone company may triple its capital expenditure next year, according to the presentation.

Vodacom has also increased its market share in South Africa to more than 53 percent at the year-end from around 50 percent in its fiscal first quarter, Joosub said. The company’s biggest domestic rival is MTN Group Ltd. (MTN), which is Africa’s largest wireless provider.

Vodacom rose 2.9 percent to 123.48 rand by the close in Johannesburg yesterday.

To contact the reporter on this story: Christopher 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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