A view from the top of SA’s best network

In 1993 when Vodacom was awarded a licence to operate a GSM cellular network in South Africa

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In 1993 when Vodacom was awarded a licence to operate a GSM cellular network in South Africa, the company soon realised the need to aggressively grow its network and increase its capacity for the next decade. In just eight years, Vodacom had over five million subscribers and continued to grow both its network and subscriber base at a rapid rate.

Today, Vodacom is the largest telecoms provider in South Africa and provides mobile and fixed telecoms services to over 103 million African customers, including Safaricom. Across the border, they have grown their mobile network business to include operations in Tanzania, the DRC, Mozambique, Lesotho and Kenya, and their mobile networks cover a population of over 284 million people.

Through Vodacom Business Africa (VBA), the telecoms giant also offers business managed services to enterprises in over 30 countries. Majority owned by Vodafone (60.5% holding), Vodacom is also one of the world’s largest communications companies by revenue.

The man at the helm

The first business venture Shameel Joosub was involved with was selling samosas outside factories when he was just five years old.

By the time he was seven, he had his own business, and by 12, he was running an uncle’s bottling factory during the school holidays. Today he’s the CEO of Vodacom, and at only 47 years, his early business skills have given him a head start.

Born in Laudium, in Pretoria, and raised by his divorced mother along with five siblings, Joosub’s entrepreneurial skills were born from a sense of duty to help his family put food on the table.

“I used to buy popsicles, freeze them and bring them to school where I had my very own distribution network. Each of my friends would sell the popsicles on a portion of the playground. I’d like to think that not much has changed, the playground has only just gotten a lot bigger,” he jokes.

“It was also during these early years of trading that I learned a very hard lesson—never take your eye off the merchandise.”

After school, he joined an accounting firm and began his articles, while studying through UNISA part-time. Shortly after he qualified in 1993, he joined Vodacom as the Senior Accountant in the General Ledger Budget Control Division, three months before it became operational. He was later promoted to handle the budgets and began working with Vodacom founder Alan Knott-Craig, making sure that the deals the CEO started were executed. One day, Knott-Craig told Joosub that Siemens had offered to sell Vodacom some handsets, a field Vodacom had never entered before. Joosub switched on his haggling skills, got a 30% discount on the price, and sold all the stock in the same day.

“This led to the creation of Vodacom Equipment Company, with 26-year-old me as the MD. It was my job to move the stock in and out as fast and as profitably as possible. It was so successful that we convinced Vodafone to replicate this globally,” he says.

“This was a good way for me to learn the business from the bottom up and by 2004 we had grown to 12 million customers. I was promoted to managing director of Vodacom SA in 2005 and the following year we were able to double that customer base. I think a lot of that has to do with choosing the right teams in each company and employing the right people. As a team, we pulled together and at the end of the day, we got results.”

But in 2010, he was asked to turn around Vodafone Spain, which needed transforming to survive in a declining and highly competitive market. Understanding this opportunity to be a necessary broadening of his experience and a stepping-stone to the post of CEO for the entire group, Joosub accepted the role.

“I was called back to South Africa in 2012 and asked to become the CEO for the Vodacom Group, at the age of 41.”

During his time at Vodacom, and more recently as CEO, Joosub believes he has much to be proud of, having overseen a number of key strategic moves for the company including recently being the first operator to commercially launch 5G in Africa, in Lesotho.

“Highlights for me include the launch of prepaid in South Africa and the launch of 4G. As CEO, the Safaricom acquisition has been another success, as is the growth in international business and the growth of M-Pesa. Our success in the SA market, our share performance and the YeboYethu deal – something I have been involved in since before my move to Spain – are all great achievements. It has been nice to see our hard work come into fruition,” he says.

Keeping up with changing technology

“The telecoms industry is all about investment. You need to invest in the network to provide quality network coverage, while also focusing on constantly improving your service to customers.

“We have not always been perfect, but our philosophy places the customer at the centre, from both a product and service perspective, and this includes everything from call centres to stores, service levels etc.,” he says.

In today’s money, Vodacom has invested R140 billion into the network so far, a significant investment that has involved a lot of job creation along the way. Even more impressive is that R26 billion of that has been invested in the last three years alone.

“The level of investment grows with each technological change. We have seen the networks change fundamentally from just a voice service in big cities where customers used ‘brick’ cellphones to devices that are smaller and infinitely more powerful that use high speed networks to transmit data such as 4K quality video. There has been a constant evolution, and soon 5G will be more prevalent, bringing the likes of virtual reality to our doorstep,” Joosub says.

“It’s important that we make sure that the technology and the devices go hand in hand. As the devices become more complex, so do the networks. We have had to build a lot of smart capability into the network, to ensure fast response times for Google or Facebook, for example. These are just some of the changes that bring more complexity and more functionality to today’s customers.”

There can be little doubt that mobile penetration is proliferating, bringing with it numerous benefits for people, particularly those in rural areas, who were previously disconnected from their surroundings.

“When we look at the availability of cellphones in the country, we must remember that there was not a big penetration of fixed lines to start off with. Mobile technology has, in a sense, democratised telecoms. Additionally, prepaid—which was invented by Vodacom for the world—has ensured that everyone has access to mobile technology, not just the middle to upper class,” he says.

“It has changed the face of communication. Our next step is to democratise data, and we have started up many initiatives to drive the cost of the device down. We are also partnering with Facebook and Google to bring costs down. We have already introduced cheaper devices to ensure access, recognising that mobile technology has given ordinary people access to email, social media etc. It has transformed the social agenda; it’s not just communication anymore but the ability to market yourself, learn and even entertain yourself.

“We are pushing for continuous rural expansion, where we introduced coverage to over 100 new rural sites in March this year with another 200 rural sites planned for the coming year. Overall our coverage reaches 99.2% of the country with 2G and 3G, and 4G coverage is up to 85%.”

Joosub also believes that Artificial Intelligence will be used more and more in the coming years, playing a much more prominent role in what they can offer customers.

“We can also use big data to analyse customer behaviour. Just4You is a perfect example of how we are personalising offers based on customer behaviour. Just4You currently has 12 million users, accounting for 65% of sales totalling 2.4 billion bundles a year.”

Working for Social Change

Vodacom’s flagship mobile education programme (mEducation), developed in partnership with the South African Department of Basic Education, provides ICT equipment and free internet access to 3 000 schools and 92 teacher centres across South Africa.

“We have trained over 200 000 teachers on the use of ICT in the classroom, of which 14 000 teachers were part of the diagnostic assessment for Maths and English,” says Joosub.

In April 2017, Vodacom was awarded the contract to supply a school management solution to the Eastern Cape Department of Education to help with the administration of over 5 000 predominantly rural schools across the province. This tailored solution now enables the Department to collect reliable and consistent data about each school, helping to ensure that resources are being deployed in areas of greatest need.

“Recognising that many learners in South Africa do not have access to textbooks, the Vodacom e-School platform provides a secure and free online learning content portal for Grade R–12 learners. Through this technology, the school curriculum is accessed through cell phones, tablets and laptops. Currently, we have more than 490 000 learners registered on the platform, providing access to quality digital content as of August this year,” he says.

“As part of our commitment to reduce the cost to communicate and to contribute to free education, we have also entered into a partnership with 19 universities to zero-rate online access to curriculum content provided by these universities.”

The Vodacom Youth Academy is currently in 10 of the 92 teacher centres and was established in partnership with CISCO, Microsoft, the Independent Development Trust (IDT) and Mict-Seta. The project offers free ICT skills training in both Cisco and Microsoft, focusing on IT (Cisco ITE; A+, N+ and Microsoft).

“Our primary target is out-of-school, unemployed youth with Grade 12 certificates who have passed Mathematics, Science and English. This academy has already benefitted 966 trainees since its inception four years ago,” he says.

As part of Vodacom’s commitment to Youth Development, they launched a partnership with the Innovator Trust in 2017, which is a Small Business Development Agency created by Vodacom in 2014 through an R750 million investment specifically for Small, Medium, and Micro-Enterprise (SMME) development. The Innovator Trust has provided SMME training to graduates from the academy through this initiative, the Vodacom Youth Empowerment Programme (VYEP).

Through the Vodacom Change the World programme, established in 2011, Vodacom has annually selected around 20 volunteers to work for a Non-Profit Organisation (NPO) of their choice in South Africa for a year, at no cost to the volunteer or the host organisation.

“These volunteers are given the opportunity to do something close to their hearts while imparting skills and expertise to the NPO. To date, we have invested more than R35 million on project funds, salaries and grants to the NPOs. A total of 100 volunteers have participated in the programme, delivering more than 100 projects,” he says.

“Last year, in response to the devastating fires and storms that occurred in the Southern and Western Cape, we set up a R20 million disaster recovery fund to provide much-needed support and aid for those most affected when disasters arise. Over 1 200 SIM cards loaded with airtime were distributed to disaster relief personnel in Knysna and residents to improve communication and emergency response. We also offered support to 10 schools in the Western Cape, one teacher centre and a school in KwaZulu-Natal.”

On ‘Mandela Day’ last year, thousands of Vodacom staff across the country each spent 67 minutes packing food parcels for learners from previously disadvantaged schools. The initiative formed part of a larger project that the Vodacom Foundation has rolled out across the country, building on its inaugural food security drive launched in honour of International Nelson Mandela Day in 2013.

“Last year, our employees and key partners, including the Nelson Mandela Foundation, Gift of the Givers, Kaizer Chiefs and the Blue Bulls, celebrated Mandela Day by packing 50 000 food parcels that were distributed to 60 schools across the country. The parcels contained non-perishable items such as peanut butter, baked beans and canned meat. We also partnered with Food and Trees for Africa to plant fruit trees and set up vegetable gardens at seven food gardens across South Africa,” he says.

Vodacom has also continued to build on the successful establishment of a Gender-based Command Centre by supplying laptops to the Department of Social Development’s (DSD) ‘safe door shelters’ with the aim of using ICT skills training to empower gender-based violence (GBV) survivors.

“The survivors also receive an NQF Level 3 end-user computer certificate. To date, we have trained 360 survivors. This Command Centre, which was established in 2014 in partnership with the DSD, is a 24-hour call centre dedicated to providing support and counselling to GBV victims. The Centre also caters to people with a hearing impairment, with Skype, USSD and SMS conversation capabilities, as well as geocoding system elements. Social workers proficient in sign language have been trained on trauma management,” he says.

Transformation is a top priority

“We are very committed to transformation through the implementation of Broad-Based Black Economic Empowerment (BBBEE), and this commitment was recognised in 2016 when the Vodacom Group was awarded the Top Most Empowered Company on the JSE and Top Most Black Managed Company. In 2017, Vodacom was once again awarded as Top Most Black Managed Company on the JSE.

“We also achieved a recognition award from the BBBEE Commission in March 2018 for being the first company in South Africa to report fronting practices identified through our procurement processes,” Joosub says.

Vodacom South Africa has exceeded its target of Level 4 and attained a Level 3 BBBEE status, while its subsidiary, Stortech, retained its Level 1 rating. This resulted in the Group having a significant improvement in its overall scorecard points, moving from 101.91 points to 108.03 points.

“In the 2017/18 financial year, our consolidated training spend has also increased from R175 million to R248 million, with more than R8.5 million invested in the development of black youth living with disabilities, R5 million more than the prior year,” he says.

Vodacom’s enterprise and supplier development is made up of procurement, supplier development (2% net profit after tax (NPAT) spend target), and enterprise development (3% NPAT spend target).

“Under procurement, our commitment is demonstrated in the shift of spend to BBBEE-status suppliers and black-owned suppliers. We have also spent R173 million on supplier development, up from R151 million in the prior year, specifically targeted on developing SMMEs within Vodacom’s supplier base,” he says.

This has included investing R14 million towards the transformation of their retail franchisee base, which resulted in 24 Vodacom shops changing ownership to black individuals in the last year alone. Under enterprise development, more than R388 million was invested in the past year developing black-owned ICT SMMEs in South Africa outside of Vodacom’s business.

“We also believe that when you empower a woman, you empower the entire society, so we have spent R9.8 billion towards women-owned suppliers and continue to appoint women in strategic positions within our company. In South Africa, we spent R30.8 billion towards BEE status suppliers to provide access to previously disadvantaged groups, and also created the Vodacom trade direct platform to provide tender opportunities to our suppliers.”

Encouraging entrepreneurship forms another critical aspect of Vodacom’s transformation strategy. The company has intensified their efforts to support SMMEs and the broad-based transformation of their supplier base, with encouraging results. The sustainability of SMMEs in the telecommunications sector is a key priority for Vodacom and as such the Group ensured that over R462 million was paid within two days from receiving invoices to qualifying SMMEs during the 2017/18 financial period.

“We actively engage with suppliers to transform their ownership to greater than or equal to 51% black ownership. And, in October 2017, we launched an online trade portal, creating a platform for SMMEs to express interest to provide goods and services to Vodacom and/or to become channel partners. Currently, over 60 000 members access tender opportunities through the platform,” he says.

YeboYethu

Vodacom recently announced that it would be embarking on a R16.4 billion empowerment deal that will replace its current R7.5 billion black economic empowerment (BEE) deal, which is due to unwind in October.

The new deal will give shareholders in BEE partner YeboYethu a more direct holding in Vodacom Group.

“This new transaction includes a newly formed employee share ownership scheme and will take its BEE shareholding to 20% of the group. It will also be the largest ever broad-based BEE transaction in the telecommunication industry, replacing and building on the R7.5 billion Vodacom SA BEE ownership scheme that was concluded in 2008,” says Joosub.

Now, ten years after its implementation, the existing transaction, which comprises of a 6.25% shareholding in Vodacom SA held by YeboYethu, Royal Bafokeng Holdings (RBH) and Thebe Investment Corporation (Thebe), has delivered meaningful value to its participants with 102 000 YeboYethu investors and 8,500 current and past Vodacom SA employees benefitting from the deal.

“The vote by our minority shareholders to support this new transaction to hold direct shareholding in Vodacom Group was a positive development for our company. The value achieved in the old YeboYethu deal has made it one of the best BEE deals in South Africa and we are proud that we could make a meaningful difference in the lives of ordinary South Africans. Importantly, we see the new deal as another opportunity for shareholders to be exposed—not just to our South African operations—but to all the other countries that we are invested in and thus give them greater exposure to the Vodacom Group.”

Looking ahead

Joosub believes there is a lot more growth to achieve for the Vodacom Group across the continent, with only 60 to 65% coverage in certain areas.

“We need to increase this coverage, particularly in those areas where 4G has only just been launched. I also think that with the launch of 5G will come a new set of opportunities across our footprint,” he says.

“Safaricom has also been a big addition for us, and we will continue to look at really promising investments in other countries. Ethiopia and a few other countries are showing some promise. Looking at the market structure, Ethiopia offers the potential to start a new network while the rest involves acquiring existing players. We do tend to take a more conservative approach in this regard.”

For Joosub, the most exciting developments are coming from M-Pesa, the continent’s biggest money sending platform, and he envisions the network operator having 50 million mobile money customers within three to five years.

“At the end of March, we had 32.3 million M-Pesa customers in Kenya—through our stake in Safaricom—Tanzania, Mozambique, Lesotho and the DRC. I think that in addition to taking M-Pesa to new African markets, the growth for this product will be driven largely by convincing more Vodacom and Safaricom customers to take up the service,” he says.

While the introduction of 5G, and what it brings to the playing field, is exciting, Joosub hopes to see Vodacom make a more significant play in the fibre space going forward.

“We need to invest more there, as well as AI, machine learning and big data. This will make us more relevant in terms of our offering and efficiencies. At the same time, we must make sure we use these things as a tool to help us sell the right offering to customers. We will also be spending more on financial services in SA and M-Pesa in other countries,” he says.

Vodacom has also launched platforms where users can watch video, play music, and play games.

“We want to make it more convenient for customers to utilise this service on their phone. I think IoT will also play a big part going forward, connecting things commercially and in our personal lives. These days you can put sensors on almost everything, tracking things from water wastage to aircon usage, and I think that this will become a lot more prevalent.”

Leading the way

“My first mentor was, of course, my mom, and I learned from her that there is no substitute for hard work. Bringing up six kids isn’t easy, so there have been many lessons from her. Looking to Vodacom, Alan Knott-Craig and Leon Crouse played a big hand in my development over the years, as have various people in the company,” he says.

“I believe that good leadership involves selecting the right team, developing a clear plan and making sure that everyone knows what is expected of them. It’s important to pull together in the same direction to achieve the desired result. I also think that leadership is sometimes making big, bold decisions and sometimes, even unpopular decisions. It’s impossible to keep your eye on everything when you’re in this seat, so I make sure I watch my numbers carefully where KPI’s often indicate the first sign of a problem.

“If you don’t do that, you sometimes react too late to a situation, and it can come back and bite you.”

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