Vodacom | A governance champion
Vodacom is facing regulatory pressure in SA to reduce data prices while consumers are migrating to cheaper data bundles in the weak economic environment. The implementation of ICASA's End-User Subscriber Services Charter Regulations contributed to the 5.5% y/y decline in FY '19 ARPU as out-of-bundle rates were cut c.70% in Q4. The negative impact of the rate cut should constrain data revenue growth over the next three quarters. VOD will probably promote data bundle sales and higher data consumption through increased 4G penetration, which enables video and music streaming, to accelerate data revenue growth. The Group needs strong governance to manage the highly competitive environment, lack of spectrum and regulations to deliver returns for shareholders. We believe VOD has solid governance practises in place to protect its market share across its footprint.We rank Vodacom's corporate governance as ‘good' with a score of 3.67 out of 5 (FY '17: 3.65). Sector peer, MTN, scored 3.11. Based on our ESG risk framework, VOD's ESG risk exposure is “moderateâ€, with a residual risk rating of 3 out of 5 (MTN: 3.3).
Vodacom is an investment holding company. Through its subsidiaries, Co. is engaged in the provision of a range of communications products and services including but not limited to voice, messaging, converged services, broadband and data connectivity. Co.'s segments comprised of: Corporate, which include the holding companies of Co. which do not relate to specific operating segment; South Africa, which include information relating to the South African-based cellular network, service provider and other business segments; and International, which include information relating to the non-South African-based cellular networks in Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.
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