Vodacom Strategy

"As South Africa was steadily and bravely charting it course towards the democracy that would be born in 1994, another series of events was taking place. In February (of 1993), an event called Telkom93 proved to be the turning point for Telecommunications in South Africa" (Vodacom, 2007).

At Telkom93, the then Minister of Transport and of Post and Telecommunications, Dr Piet Welgemoed, announced that the cabinet of the Republic of South Africa had approved the appointment of a regulator for the telecommunications industry. It was also announced that South Africa was considering the implementation of "a more efficient cellular telephone system, based on the global system for mobile telecommunications..." (Telkom93, 1993). On 15 February 1993, Dr Welgemoed announced that two licenses would be issued for participants in the cellular industry (Sergeant, 1993).

"The license conditions, finalized in consultation with a diverse range of political and business stakeholders, were both visionary and revolutionary... providing a cost-effective telephone service to affluent cell phone users as well as a subsidized service to previously disadvantaged communities in poorly serviced areas. In a provisional scenario, it was estimated that a staggering 70% of South Africans across all income groups would be able to access cell phone services" (Vodacom, 2007).

Executives at Telkom were angered by the announcement, primarily because their monopoly over the telecommunications industry in South Africa was coming to an end. In addition, Telkom management was also frustrated by the government's announcement that their participation in the cellular industry would be limited to only 50% of one of the cellular licenses. With Telkom participation in the industry guaranteed, the first license was issued to a consortium consisting of Telkom, Vodafone, the Rembrandt group, and a percentage of the shareholding was allocated to black shareholders, known as Vodacom (Bidoli, 1993).

This assignment aims to provide a strategic analysis and competitive interpretation of the South African telecommunications industry with a specific focus on Vodacom.