Writer: Emily Jarvis
Project Manager: Donovan Smith
Since launching in 1996 with just one telecom tower, Vodacom Lesotho has emerged 19 years later as the market leader in mobile communication services, with an 80 percent market share.
As the wider Vodacom Group’s first business venture outside of South Africa, Vodacom Lesotho has spent two decades deeply rooting itself into the country, initially inviting the Government of Lesotho to become a shareholder prior to its privatisation in 1999, followed by a 12 percent local shareholding - which later grew to 20 percent- awarded to Sekha-Metsi Consortium after this date.
Early investment in a solid distribution network has enabled the Company to reach 94 percent of the population, which also helped to drive mobile penetration in Lesotho to more than 84 percent in 2015.
Diversifying its revenue stream to better focus on the customer’s changing needs and embrace the data revolution has resulted in the Company securing an impressive 1.3 million subscribers across a population of more than two million people.
Vodacom Lesotho is majority-owned by Vodacom Group Limited (80 percent), and Sekhametsi consortium owns the remaining 20 percent of the Company.
The need for services beyond voice and SMS on the African continent - and indeed the world - are being dictated by the increased consumption of data services and the additional inclusive applications that internet access brings.
Therefore, in the past two years, Vodacom Lesotho has been investing in ways to differentiate itself in order to diversify its data offering and place customers at the heart of its investments as part of a long-term strategic focus; starting with the relevant investments in the network’s infrastructure backbone.
In 2013, the Company reinvested more than M150 million into its network infrastructure, representing just under half of its operating profit at the time; which was followed by a further M170 million in 2014. “These investments resulted in Lesotho becoming the first in the Vodacom Group to have 3G available at all sites where 2G is available, and the first within the Group to launch LTE services. This huge investment drive formed part of our core strategy and was designed to ensure that we can deliver on the promise we have made to our customers, putting the power of the internet in their hands and making communication services available to them at much lower cost,” says Vodacom Lesotho’s Acting Managing Director, Johnny Dos Santos.
Now equipped with more than 250 2G and 3G-enabled towers – with a growing number of LTE enabled sites in all districts – the Company has invested a total of R1.2 billion into the entire network, including investments in microwave and transmission backhaul, towers and the network, and a world-class Tier 1 data centre which has just received a crucial upgrade. These network upgrades were completed with the assistance of local suppliers where possible, or through Group partner channels in neighbouring South Africa.
“Due to the uptake of data services and our investments in an improved network, Lesotho has seen the price of communication drop by 60 percent in the past two years, extending the reach of mobile telephony services to a wider portion of the population through the creation of even better value,” he details.
Further continuing its improvement of the network and introducing world-class and innovative services to Lesotho, this year, Vodacom is undertaking a key development partnership with the Lesotho Electricity Corporation that will greatly help transmission capacity, helping the organisation to get closer to customers via the deployment of fibre to the business, while also removing other potential challenges or stresses that the predicted increased data usage could put on the network.
As well as investing in a strong infrastructure and value proposition, Vodacom Lesotho also launched the M-Pesa service in 2013, which has seen one of the fastest uptakes of the five African markets where the product has been launched. He explains: “11 percent of our active user base is currently using this service, which is a huge achievement considering that less than half (38 percent) of the adult population has some form of a bank account, compared to some African nations where financial inclusion is much higher.”
In addition to this, Vodacom Lesotho is to explore other converged services opportunities by looking closely at opportunities in the TV, localised online content and streaming services in order to remain relevant to the customer and adapt to market demands. “We are also looking at products and solutions in the insurance and healthcare sectors to further enhance our mobile money offering. We believe that M-Pesa is an extremely powerful and life transforming product, and we are committed to working with our clients and partners to ensure that our technology continues to change people’s lives for the better,” he adds.
Key to building the perfect product portfolio is brand engagement in the relevant market segment, which is something Vodacom Lesotho is passionate about, understanding and catering to customers’ needs.
Dos Santos details: “This year marks the fourth edition of Vodacom Superstars, a musical talent recognition platform that we provide to identify and nurture musical talent in Lesotho; this is just one of the many ways that we engage our customers with the brand, as we continue to deliver to their needs and improve their livelihood at the same time.
“We can then take this brand engagement exercise and build our products and services into this in a way that allows us to monetise an artist’s music through ringback tones, streaming music services and so on. So it is not just recognising and creating a platform for talent, it is giving us a business platform to bring these stars under the Vodacom Lesotho brand to help build their music careers.”
One such partner who works closely with Vodacom Group to drive loyalty management and capitilise on engagement is Business Logic Systems, who provide an automated two-way communication channel to monetise subscriber data through notifications, offers and rewards that benefit and enhance the customer’s experience of the network.
Beyond this, the Company is an official sponsor of Lesotho’s top soccer division, the Vodacom Premier League. Vodacom is very supportive of the individual teams, which have a large following in Lesotho. Directly supporting clubs by providing starter packs, airtime and M-Pesa startup packs, the Company is helping them to monetise their operations and create an alternative revenue stream to support the clubs.
“Our activities ensure that we create an emotional connection with the community and this is just one way in which we have become the leader and go-to partner in youth-focused CSR activities,” he further adds.
Over the past few years, Vodacom has been working on three big projects in a corporate social responsibility (CSR) drive that has proved crucial to addressing the real social issues that Lesotho is facing; all made possible through its standalone organisation, Vodacom Lesotho Foundation.
Dos Santos explains: “Our flagship project in healthcare is designed to address the high prevalence of HIV in Lesotho and the huge strain this is putting on the sector. With the third highest HIV-positive prevalence in the world, we have found that there are preventative programmes in place but the gap lies in, among other things, transportation methods to reach the clinics; and we identified around 20,000 possible children that could not access treatment.”
Together with the Foundation, Vodacom Lesotho has so far raised more than US$12 million to be invested in identifying vulnerable and exposed mothers and children, and utilising technology to provide a transport allowance through the M-Pesa service to access transport to the local treatment centre; implementing a comprehensive text-to-treatment, mobile health management system that will ensure that patients are not only initiated on life-saving treatment, but they also remain enrolled in treatment.
“Given that HIV can now be treated and managed, we are hoping for long-term success stories to give children a real chance in life. We are hoping to ramp up investment in this area as the project gains traction in the coming months,” he emphasises.
Vodacom’s second project in Lesotho is centred around education as a vital area to secure the country’s future economic development. In a partnership with iSchool - an organisation that has been working to digitise education in Zambia - and the Ministry of Education, Vodacom Lesotho has provided an alternative and effective way of educating school children in Lesotho who in a lot of cases do not have access to textbooks or other educational resources.
“At the five schools we are currently trialling this in, two children share a tablet and teachers are able to track their performance. We will soon deliver the service in the local language and roll this out across Lesotho to build the next generation of thinking by leveraging the tech revolution trend,” Dos Santos says.
To continue its employment creation and education focus, Vodacom strives to address the growing gap in the funding and support available for startup businesses in Africa, where the larger financial institutions have not traditionally had the appetite to invest. Vodacom Lesotho Foundation built a first-of-its-kind business acceleration hub in Maseru - The Vodacom Innovation Park - which allows start-ups to utilise the space over a period of 12 weeks, providing the financial support and mentorship needed to get their business off the ground in Lesotho. The application process is rigorous and the programme even more so; with the aim to pick only the very best ideas and entrepreneurs who will change the business landscape of Africa and generate endless job opportunities for other Basotho.
“We want to be seen as an entrepreneurship and innovation hub that looks to incubate business ideas from the local community. Plus, if this is successful in Lesotho, we want to roll this out across our other African operations,” he further adds.
With 2016 marking Vodacom’s 20th year in Lesotho, the operator is keen to build a reputation as a total communication services provider, with a repertoire of converged solutions that leverage the evolution of data and the Internet of Things (IoT) to explore new ways to utilise technology beyond telephony services.
“As data usage continues to increase, other content aggregators and players will enter the market which makes it vital that we diversify our offering into areas such as finance, VOIP and streaming so as to not only relieve the pressure on traditional growth areas of voice and SMS in the long-term, but in becoming a platform that truly enables our customers to connect,” Dos Santos highlights, adding that in the short-term, Vodacom will benefit from bringing in microfinancing and other value-add financial inclusion services to the M-Pesa offering.
“In line with this, we have ambitious targets for M-Pesa to reach 50 percent of our subscribers in the next four years, which would contribute significantly to our business and accelerate the banking and financial inclusion landscape in Lesotho,” he further adds.
Vodacom Lesotho has a strategic advantage over its competitors in that it can achieve the best return on investment possible by aligning with the Group’s experience in other African markets; with M-Pesa representing just one example of this in practice.
Dos Santos concludes: “As we move to becoming a fully-fledged services provider, it is important that our customers know they are at the centre of our future vision. We want to be an admired Company that is not just a network provider of choice, but a local employer of choice and an industry leader.”