Vodacom’s Zunaid Mahomed, Vodacom Group Digital and Fixed Services Officer on growing a parallel digital business to its telco operations

19 January 2018

Top Story

Africa’s larger mobile operators are beginning to get to grips with running digital services effectively. This week Russell Southwood interviews Zunaid Mahomed, Vodacom’s Group Digital and Fixed Services Officer.

Q: What’s your team responsible for?

A: We are responsible for the digital portfolio for the Vodacom Group, covering South Africa and the rest of the Vodacom territories. The portfolio includes Vodacom-branded and owned services (like Vodacom Soccer and All Out Rugby), strategic, local and global partnerships for digital services( like Facebook, Google, Deezer, Netflix) and enabling third party OTTs (traditionally WASPs) to reach consumers.

Q: What’s your starting point for Vodacom SA as a digital business?

A: We have moved beyond the understanding of the digital business as merelyvalue added services for existing Vodacom telco users. We model ourselves around three fundamental elements:

  1. For the last few years we have embraced a version of our digital service operating model where we are able to provide services; not just to traditional Vodacom telco service customers, but to all customers. Most of our Vodacom-branded digital service portfolio is available to all digital audiences. While the service is telco agnostic, there will be instances where Vodacom SIM users get a better experience. For example, our eSchool service is available to all South Africans, however our Vodacom customers can access our full portfolio of services, including educational videos, which is zero-rated for subscribers.

  2. We are focusing on a portfolio of our own branded services e.g. Vodacom Soccer, All Out Rugby and leveraged partner services e.g. Deezer. This is dependent on where we are able to scale, where partners have a real advantage as well as our ability to link our network, which creates the unique ability to reach new audiences (e.g. our VideoPlay service provides a network award download feature to download videos when there is spare capacity).

  3. Audience engagement is key: we are continually building capability to enable our increasing audiences to be better engaged with the digital world, whether via more open API’s for third party developers or more relevant flexible data usage models.

We have adopted a partner model, meaning that we don’t necessarily want to own content or services, but rather that we are partnering with providers to access our network and services. This strategy has been successful, with us now engaging through multiple digital brands in our portfolio, a growing amount of customers every month with some form of digital services engagement and a richer set of local and global OTT partners deeply integrated into our network.

Q. What lessons have you learned so far?

A: We have learned two major lessons, which are actually fairly simple:

  1. The audience scale and value lies in the depth and breadth of the pyramid, not just high end smartphone users.
  2. With dedicated focus and investment, telco’s have a huge role to play in the next digital wave, especially in emerging markets, both as catalysts but also as meaningful long-term players.

Q. Will you actually invest in services and content?

A: We have an active strategy through our partnership model to invest into the right partnerships to bring the right brands and platforms to our customers. There are limited instances where Vodacom actually owns the content. Every year we continuously scale this and we are seeing the impact in growth and returns.

Q. What's happening with video streaming and download services?

A: Video is one of our biggest bets in the digital space, with users and usage growing significantly on a monthly basis. The specific focus we have on enabling greater live streaming and download features is similarly bearing fruit. Our view remains that this is just the tip of the iceberg, and the coming years will see huge increases in both users and services available and video will make up a big proportion of usage of users

Q. What’s happening with music streaming?

A: We have over half a million music streaming service users in any month on the Vodacom network, and it’s growing steadily. The challenge is getting people to pay for the subscription services, given the current cost. To this end, Vodacom is pushing boundaries with more streaming options, greater marketing support, and flexible time based bundles, with integrated data offers. We remain committed to the traditional digital music market and are still seeing double-digit growth, with music video streaming showing promise.

Q. What have you got going in the games area?

A: We have launched a Vodacom branded dedicated games portal outside of our Vodacom Live Services. We have also run a hugely successful Meg your Day campaign for customers to try online games with free data for a specific day. Games, however, will continue to be driven by our rich set of partners, with Multiplayer gaming and VR being future areas to watch.

Q: When you’re looking at content partners, what sort of use levels and types of content are you looking for?

Our belief is that content and consumer tastes are continually evolving and hence follow a more organic approach to content partners - as we see specific content types and partners gaining traction, we approach them to find ways to support their reach and value creation.

But there are important criteria to watch out for: ethical content and service marketing practices, a commitment to market and innovate to the local market and management with a longer term view of the partnership with us.

Q. What is your advertising business generating and what are you doing about it?

We do not disclose this information, however the business is currently growing high double digit % year on year, off a low base.

Most of our strategy and resultant success has been to move out of our text based model to richer media, audience targeting and providing an Omni-channel portfolio of inventory. One of our key focuses is to ensure that customer trust is maintained with opt-in and carefully managed campaign rules, as well as engaging directly with the brands we work with.

Q. So what things do you find most exciting about the business you’ll be developing in the future?

A: Arguably the single most exciting part of our digital business is that our digital services are actually a parallel business to our telco operations, with their own audiences, partnerships, platforms and brands. This go-to-market mindset allows us to service unique needs - from entertainment to social innovation (like our Mum and baby and eSchool service) and even personal security concerns. Customer behaviour is changing and people are engaging differently for their entertainment and digital needs, beyond what we thought was previously possible. This is an extremely exciting journey for Vodacom. Reaching over 33 million users already across our brands and advertising business, our digital business is poised to decouple itself from just being a value added service to influencing people’s lifestyles and creating new opportunities for developers.

Watch Mohamed Benhamadi on Vodacom's View+, a live streaming service for music and sports events:

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