Vodacom warns of fast-rising costs

Sitho Mdlalose, MD of Vodacom South Africa has sent a warning that input costs in the telecommunications sector are rising at a faster rate than inflation.

Speaking to TechCentral, Mdlalose said, Vodacom has “absorbed a lot of the costs” by implementing the increasing of inflation, resulting to the cost to serve customers is increasing, with the implication that Vodacom may have no choice but to pass on these higher costs to its consumers.

“The cost of producing 1GB of data has been increasing” due to investments to reduce the impact of load shedding, among other factors, Mdlalose said.

“The sheer cost of operations given this climate will continue to be a pressure point. That won’t go away anytime soon… We have absorbed a lot of the costs and tried to do only inflationary price increases, even though our costs are above that,” he said.

According to Shameel Joosub, the capital investments by the telecoms sector remains “very high”.

With Vodacom investing about R11 billion a year in its network. With energy crisis Vodacom spent R350 million on diesel in its last financial year.

With rand being weaker, is also playing a role in cost increase for operators, according to Joosub. From Technology used in based stations to customers of having mobile connection when hit by load-shedding  it goes beyond personal security. “Knowing that Vodacom is there … makes our customers feel safer.”

In May, trade, industry & competition minister Ebrahim Patel said in a published block exemptions under the competition Act, “These exemptions will enable energy suppliers and energy users to increase supply capacity, reduce the cost of energy or improve the efficiency of energy supply, and secure backup or alternative energy supply to minimise the effects of the current electricity supply constraints,” Patel said.