Vodacom’s Neotel deal is officially dead and M-Pesa was a “tough choice”

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Vodacom announced today its revenue earnings at its annual results presentation, but there were a number of points which stood out beyond the rands and cents of the report.

Earlier last week Vodacom announced that it would be discontinuing the mobile money transfer service M-Pesa; at the earnings announcement briefing, Vodacom CEO Shameel Joosub explained why:

“We need to make tough calls when needed,” he told the gathered journalists, referring to the cancellation of M-Pesa. He went on to say that the major problem with M-Pesa in South Africa was its slow uptake. The mobile operator aimed to have 10 million South Africans on the service, but it could only manage nine million in total across the entire African continent.

“There is a great market for M-Pesa, but locally it is different. In South Africa we have high banking penetration and regulations that hamper growth,” he said. Joosub did add though that Vodacom will be supporting M-Pesa in its other international regions.

Vodacom’s acquisition of mobile and fixed line operator Neotel fell through this year, and Joosub confirmed that the two companies won’t be pursuing it any further.

“The deal is dead. But there are possibly other opportunities for co-operation,” he said.

Please Pay Call Me

Another sticking point for Vodacom was the recent ‘Please call me’ court case it lost against former employee Kenneth Makate. The Constitution Court ruled that Vodacom needs to compensate Makate, as the ConCourt deemed that he was the original inventor of the call-back system.

“Vodacom will be guided by its values and innovation, and the success of the technology was built on our employees. Vodacom respects the ConCourt ruling, and we have started discussions with Makate.”

Joosub said that for Vodacom, the situation was regrettable and it will be aiming for a “…swift resolution. We have initiated negotiation discussions on a reasonable amount.”

Joosub declined to elaborate on a specific amount, but did add that it will be dealt with as a priority.  “We can’t prejudge the outcome of negotiations, but from a financial point it is a contingent liability. The ConCourt has asked us to negotiate in good faith, but we can’t determine what the amount will be.”

Fibre to the people

Vodacom has also been making a push in the fibre internet space, and Joosub revealed that Vodacom to date has invested R500 million in urban infrastructure, and another R2.5 million for fibre connections to base stations.

During the results presentation, Vodacom also alluded to the fact that it would be investing more money in video content offerings. Joosub declined to give more details, just saying that it would be looking at “different content partnerships” for further growth.


Charlie Fripp

Charlie Fripp

Charlie started his professional life as a motoring journalist for a community newspaper in Mpumalanga, Charlie explored different journalistic angles since his entry into the fast-paced world of publishing in 2006. While fostering a passion for the arts, Charlie developed a love for technology – both which allowed him to serve as Entertainment and Technology Editor for an online publication. Charlie has since been heavily involved in consumer technology for various websites and publications. He thoroughly enjoys World War II films and cerebral documentaries; aviation; photography and indie music. Oh yes, and he also has a rather strange obsession with collecting coffee mugs from his travels.