Vodacom sees 40% jump in data usage as people stay at home

16 April 2020 - 14:09 By Reuters
Vodacom said that while it expects a short-term increase in demand for its services, "medium-term economic downturn is not good for any business."
Vodacom said that while it expects a short-term increase in demand for its services, "medium-term economic downturn is not good for any business."
Image: REUTERS/SIPHIWE SIBEKO

Mobile phone network operator Vodacom said on Thursday that data traffic on its network has jumped 40% since a nationwide lockdown began as people work from home to curb the spread of the coronavirus.

The telecoms sector has experienced a spike in network data traffic in recent weeks after the South African government imposed a five-week lockdown to the end of April.

Vodacom said that if necessary it would offload more capacity to the Rain network in terms of its existing 4G roaming agreement with the private mobile data-only network provider.

On Tuesday Vodacom said it will spend more than R500 million ($27 million) over two months to increase network capacity and is waiting for its application for temporary additional spectrum to be approved by the telecoms regulator.

"We are expecting this trend to continue in the short to medium term as more customers work from home and people using technology to remain connected, educated and entertained," the company said in a statement.

Rival MTN Group, the largest telecoms operator by subscribers, has seen a 30% increase in data traffic and is reprioritising its 28.5 billion rand capital expenditure towards adding network capacity and has approved $250 million towards building network equipments across the group.

Vodacom said that while it expects a short-term increase in demand for its services, "medium-term economic downturn is not good for any business."

South Africa's central bank sees the economy contracting 6.1% in 2020 as non-essential businesses remain shut for longer and financially constrained households spend less.

Vodacom, majority-owned by Britain's Vodafone said its balance sheet remains "well managed" with no significant debt repayments due in the next 12 months.

Short-term debt was refinanced during the financial year ended March 2020 and repayment periods were extended.

"The company continues to monitor its debt exposure between fixed and variable rates, to ensure a balanced portfolio in an uncertain and volatile environment," it said.

"In order to ensure that short-term liquidity can be met and volatility absorbed, existing committed facilities with banks have been doubled by converting shadow facilities to committed facilities resulting in a total of 8 billion rand committed facilities."

The telecoms operator, which partly owns Kenya's top mobile network operator Safaricom, said to date it had not experienced significant device and hardware supply disruptions but where possible it had stockpiled some critical network and device "elements". 

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