How WhatsApp took R1 billion from Vodacom

2 November 2018

Telecoms

In the land of the SMS, the WhatsApp man is king. Vodacom learnt this lesson when WhatsApp came to South Africa and stopped what could have been an SMS empire.

Fortunately for Vodacom, the number of data users – who use their megabytes on WhatsApp and other apps – has grown nicely and turned into a good revenue stream for the company.

Looking only at SMS volumes and revenue on Vodacom’s network, though, you can see the impact WhatsApp has had – and how it stopped a healthy part of the business growing.

In the glory days of SMS, which were as recent as 2011 and 2012, Vodacom was handling over 6 billion SMS a year. This was despite Mxit and then BlackBerry Messenger being very popular in South Africa between 2005 and 2013. After these two messaging giants fell, however, the titan that is WhatsApp emerged.

The app used your phone number to identify you, worked on many devices, and was cheap – the perfect combination to replace SMS. And that’s exactly what it did. WhatsApp soon grew to replace SMS as the prefered way to text, and South Africa’s biggest network’s results clearly show this.

Up until 2012, SMS volumes and revenue were growing nicely for Vodacom.

It made R3.14 billion from mobile messaging in its 2012 financial year and handled 6.65 billion SMSs. What came in the years to follow was a drop in SMS volumes and the money messaging made, while WhatsApp grew rapidly.

A low point was reached in its 2016 financial year when Vodacom handled 3.76 billion SMSs on its network.

Vodacom’s annual results for the year ended 31 March 2017, however, show that this downward trend was broken. According to the results, 4.33 billion SMSs were sent on the Vodacom network that financial year – but this was attributed to the “Play every day” campaign, a competition with prizes, it started in December 2016. Vodacom also has a large machine-to-machine customer base in South Africa, which can send SMSs.

Vodacom CEO Shameel Joosub stated at the 2018 MyBroadband Conference the the network has has nearly four million SIMs in machines in South Africa. Read the full article on MyBroadband here