Vodacom, Telkom push services revamp for growth

Vodacom, Telkom push services revamp for growth

Operators have called on the lowering of red tape to enable a revamp and diversification in services, particularly in fintech – a move highlighted to avoid flattening revenues seen in western service providers.

In a panel discussion at Africa Tech Festival in Cape Town, Vodacom CTO Dejan Kastelic (pictured, far right) pointed out that European operators reported flattening or declining revenues in the past two years. He warned connectivity is becoming a “commodity” if African operators do not learn from their western counterparts to diversify away from “limited connectivity businesses”.

He pointed to Vodacom’s mobile money M-Pesa service which has proven wildly successful for the company, as it currently serves 51 million people across seven countries.

“I have to say here we are quite lucky here in Africa compared to the likes of for example Europe because we have one of the greatest fintech solutions called M-Pesa. That's a part of our value chain outside of the connectivity business and is providing new service or additional services, and we’re actually growing that more than double digits,” said Kastelic.

Around 18% of Vodacom’s revenues stem from “non-core connectivity” services such as M-Pesa, which the group is aiming to increase up to 25% in the next two years.

Telkom group executive of regulatory affairs and government relations Siyabonga Mahlangu (pictured, second from left) urged governments to lift restrictive regulations on operators to enable them to become true technology companies.

He claimed international hyperscalers are able to move more freely with their strategies whereas operators are stuck behind more red tape, an example being having to gain certain licenses for fintech or roaming.

Pointing to the surge in operators working in fintech, Mahlangu said more could be done by operators if given permission.

“What we learnt from fintech or payment systems and so on in that intersection between technology telco and financial services - we see that it's easier for the financial services company to play to in that space than it is for a telco,” said Mahlangu.

“But then what is really holding telco back? We need to then see if there's any need to liberalise some of the banking and financial services regulations to enable telcos to play.”

Examples he stated where telcos can expand their fintech services include providing investment services and accepting deposits. But such services require partnerships with financial institutions which can slow down growth

“I think it's time that we free up telcos to be able to play beyond being a telco. That's where I think in our approach to sharing in our approach to services, we need to start lowering the barrier or at least redefining it,” said Mahlangu.

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