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1 THE ROLE OF BUSINESS IN PROMOTING SOUTH AFRICA’S FOREIGN POLICY “A VODACOM GROUP (PTY) LTD PERSPECTIVE” 30 OCTOBER 2007.

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Presentation on theme: "1 THE ROLE OF BUSINESS IN PROMOTING SOUTH AFRICA’S FOREIGN POLICY “A VODACOM GROUP (PTY) LTD PERSPECTIVE” 30 OCTOBER 2007."— Presentation transcript:

1 1 THE ROLE OF BUSINESS IN PROMOTING SOUTH AFRICA’S FOREIGN POLICY “A VODACOM GROUP (PTY) LTD PERSPECTIVE” 30 OCTOBER 2007

2 2 OUTLINE  Introduction  Vodacom’s current operations on the continent  Key experiences, operational challenges and achievements  Vodacom’s key investment criteria for new investments  The role that governments can play to facilitate and encourage investment  Conclusion

3 3 Introduction  Committed to the continent and actively involved in seeking out new investment opportunities  Our key strategic objectives include: -democratising communications on the continent -deploying innovative technologies to deliver communications services to areas deemed ‘impossible’ to service -establishing sustainable local partnerships based on trust, good faith and professionalism  Our manner of operation on the continent is premised on: -the values underpinning South Africa’s foreign policy objectives (promotion of an African continent that is prosperous, peaceful and democratic) -respect and recognition for each countries’ local laws, norms and policies -continuous reinvestment in the country of operations (partnerships, human resources, infrastructure, CSI etc)

4 4 Vodacom’s current operations on the continent  Tanzania -Vodacom Tanzania licensed in December 1999 and operational from August 2000 -35% owned by local partners (Planetel Communications Ltd 16%, and Caspian Construction Ltd 19%)  Democratic Republic of Congo -Vodacom Congo established in December 2001, operational from 1 May 2002 -49% owned by (local) Congolese Wireless Network  Lesotho -Vodacom Lesotho commenced operations in May 1996 -11,7% owned by (local) Sekhametse Enterprises (Pty) Ltd  Mozambique -Vodacom Mozambique commenced operations in December 2003 -10% owned by local partners (EMOTEL 5%, and Intelec Holdings Limitada, 5%)

5 5 Vodacom’s key investment criteria  Reasons which influenced Vodacom’s choice of markets include -Shareholder arrangement between Vodafone and Telkom, focus on Southern Africa -Government invitation, bilateral trade agreements between SA and targeted countries  Vodacom’s key investment criteria for assessing new opportunities -Vodacom looks beyond geographic reach and focuses on economic value added for shareholders -Acceptable country risk profile (includes economics, regulatory, governance and politics) -Contiguous to existing footprint -Potential to reach a subscriber base of at least 1 million subscribers within a reasonable timeframe -Positive economic outlook  Other additional factors -bilateral trade agreements between SA and targeted countries -market attractiveness including; bureaucracy, rule of law, compliance to various SA and international laws (e.g. FICA and anti-corruption laws) -economic growth, level of existing competition in the market and population sizes

6 6 Key Experiences and Operational Challenges  Regulatory concerns -ad hoc increases in ‘sector’ taxes -undue preference for government owned incumbent  Political instability / security concerns -adverse impact on normal day to day business operations -security of staff, personnel and business property  Bureaucratic and slow government processes and service delivery -movement of goods and services across borders problematic (i.e. work permits, capacity issues at customs level affecting imports etc.) -protracted policy reforms and implementation processes

7 7 Achievements and Milestones  Market leader in most of the markets -Democratising communications by in some instances tripling penetration within first four years of operation -First to market on innovative products and new technologies  Generally profitable in most of the markets -Pays dividends to local shareholder partners -Source of social consciousness and national pride through CSI in health and national education

8 8 Vodacom’s key investment criteria for new markets  Reasons which influenced Vodacom’s choice of markets include -Shareholder arrangement between Vodafone and Telkom, focus on Southern Africa -Government invitation, bilateral trade agreements between SA and targeted countries  Vodacom’s key investment criteria for assessing new opportunities -Vodacom looks beyond geographic reach and focuses on economic value added for shareholders -Acceptable country risk profile (includes economics, regulatory, governance and politics) -Contiguous to existing footprint -Potential to reach a subscriber base of at least 1 million subscribers within a reasonable timeframe -Positive economic outlook  Other additional factors -bilateral trade agreements between SA and targeted countries -market attractiveness including; bureaucracy, rule of law, compliance to various SA and international laws (e.g. FICA and anti-corruption laws) -economic growth, level of existing competition in the market and population sizes

9 9 The Government’s Role in Facilitating Investment  South African government can play a role in respect of the following: -Promoting effective relationship between SA business and the SA embassies in respective countries -Facilitating, through diplomatic and other channels, security for South African investments in the respective countries -Encouraging, through Nepad and other relevant channels, the adoption of best regulatory practices across the continent  The governments of the respective countries in which SA businesses operate may -Set up relevant structures for official and continuous engagements with foreign investors on government policies and objectives impacting investors -Improve service delivery levels and professionalism to business community (i.e. work permits, customs clearance for imports etc)

10 10 Conclusion  Vodacom was historically restricted to Southern African due to shareholder arrangements  The countries in which Vodacom operates (besides South Africa) are Lesotho, Tanzania, Mozambique and DRC  Though the operations have been largely successful the following ongoing challenges require attention -Unpredictable and uncertain regulatory environment -Bureaucratic and slow government services delivery to businesses -Uncertain political processes and political / economic insecurities  Vodacom believes the South African government and government in countries of operations can promote a positive investment climate by -Promoting adoption of best regulatory practices -Setting up structures to facilitate business government interaction on key government policies -Improving government service delivery in strategic areas to facilitate smooth government operations

11 11 THANK YOU


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