The Kenyan operator continued to appear an arm’s length and avowedly individual business within Vodafone, using its Annual General Meeting to assert independence on key decisions and ensure freedom to expand M-PESA according to its own strategy.

  • Hands-off‘ message sent to Vodafone and Vodacom directors.

Safaricom looks to have exploited an opportunity to re-assert control over the strategic direction of flagship m-money service M-PESA, following the transfer of in-Group oversight of the Kenyan operator from Vodafone to Vodacom Group (Vodafonewatch, #154, #156, and #158).

The provider’s Annual General Meeting (AGM), held during mid-September 2017, saw the approval of a new Article of Association blocking Vodacom appointees to its Board of Directors from influencing certain important, M-PESA-linked decisions.

Directors assigned to Safaricom by Vodafone Kenya (VKL), the vehicle through which both Vodafone and Vodacom now hold shares in the operator, will be “excluded from voting on agreements directly related to M-PESA and the mobile money platform, to which a Vodafone group member and the company [Safaricom] are parties”, read one of the AGM’s resolutions. They will also be compelled to “vote in the best interest” of Safaricom when considering “expansion and investment decisions… whose effect is to put the company directly or indirectly in competition with [the] VKL director’s interest”.

Safaricom and Vodacom not yet BFFs

While the operator did not provide any background to its thinking on the resolution, its timing – only a few weeks after approval of the VKL transfer’s completion – indicates Safaricom’s management was able to extract concessions affording it greater independence on strategy during negotiations over the switch.

At the least, the new Article is a sign of Safaricom’s desire to head off any disagreement with Vodacom’s leadership on M-PESA strategy and budget. It will no doubt be conscious of it and Vodacom’s differing approaches in m-money and m-commerce over the past years, and that the South African group has failed to replicate Safaricom’s level of success elsewhere in its footprint (especially South Africa, where M-PESA saw numerous false starts).

This, in turn, is a sign that the “cohesion” Vodafone has said it is seeking to bring to its African operations, via the Safaricom-Vodacom combination, is by no means a fait accompli – and it is unlikely to ever achieve true ‘standardisation‘, even if Vodacom finds a route to expand its 35% stake in the Kenyan player into a majority.

M-PESA unshackled: A less-Vodafone-based future emerges, and this may not be a bad thing

The move could also be read as an opportunistic bid for greater freedom from Vodafone itself. The reference to “agreements directly related to M-PESA and the mobile money platform” is a clear nod to Safaricom’s desire for greater independence when overseeing and driving M-PESA‘s technical development, having long bemoaned frailties in the service’s original, Germany-based IT infrastructure.

Although it shifted to a new, locally-based, “G2”- branded platform in 2015 (Vodafonewatch, #148), it remains subject to payment of licensing fees (thought to be 5% of M-PESA revenue) to Vodafone headquarters, which developed the Vodafone Money Transfer system underpinning M-PESA.

A particular source of concern for the Kenyan operator, here, could be former Safaricom Chief Executive Michael Joseph’s recent exit from his position as Group M-Money Director at Vodafone, where he would have been a strong advocate of Safaricom interests in London (Vodafonewatch, #154).

There have been no signals that Safaricom is now looking to dramatically overhaul its M-PESA enablers, and looking to team with other suppliers beyond Vodafone – but it seems reasonable to think it is keen for greater power to address any internal technical barriers against progression of the offering, including via new functionality or add-on services.

Safaricom could also be seeking greater control on partnerships, and even M&A. M-PESA has previously been mooted for a spin-out or sale, with Facebook named among potential buyers (Vodafonewatch, #148), and Safaricom’s leadership would want a direct say in where any M-PESA transaction would lead, especially if Vodacom also has input.

Power play as M-PESA goes OTT

New external tie-ups will particularly come into play when Safaricom enacts plans to expand M-PESA into markets beyond Kenya – a strategy it indicates it now has freedom to pursue following the VKL transaction. To enter new territory, Safaricom could conceivably form operator tie-ups that clash with Vodafone and Vodacom’s other African interests.

Although the (enticing) thought of a direct move by Safaricom against the m-money services of Vodacom’s own OpCos is probably stretching it, it will be interesting to see how the dynamics between Safaricom and Vodacom (OpCos and Group) play out if the Kenyan operator builds M-PESA into a regional powerhouse.

Bob Collymore, Chief Executive of Safaricom, has repeatedly mooted international plans for M-PESA following the VKL transfer, and was reported to have told the AGM that “these changes have freed Safaricom to take the over-the-top [OTT] services into other markets”. He had earlier told the Financial Times that “in two to three years’ time we will be in four to five African countries. I don’t think we will step out of Africa because that’s too far and you have lots of other challenges”.

The geo-political angle

Kenya’s government – which retains 35% of Safaricom shares – will have been another player behind the scenes, and will have had its own political motivations for partitioning certain decisions and powers from Vodacom, including the future direction of a service that brings significant kudos and economic benefit to the country.

Notably, the AGM saw further Articles introduced that seek to ensure continued strong Kenyan representation in Safaricom’s leadership. These extend to both the Board (via retention of at least two Kenyan non-executive directors, and a local chairman – both of which are currently fulfilled) and top management (encouragement of a “predominantly Kenyan character in the senior management and Executive Committee”).

Image: © Safaricom.

Table of Contents

EXECUTIVE BRIEF

GROUP

Deals

Zambia appears on Group radar again [p6]

  • Ambitions must tiptoe around an emboldened Vodacom
  • Partner Markets’ Cameroon affiliate goes offline
  • Table: People movement highlights

IT

Vodafone Turkey reaches line on major BSS overhaul [p12]

  • A happier ending than other convergence-led IT refits
  • Back from the brink
  • Table: Vodafone Turkey long-term trends overview, FY09-17
  • Fighting fit
  • Breaking trail
  • Spotting the curveballs
  • Table: Vodafone Turkey BSS transformation project overview
  • The personal touch

Group Commercial

Red Edge expanding behind scenes, targets APAC [p18]

  • A first step outside Europe

Legal and regulatory

Colao’s “itchy feelings” about Brussels prove prescient [p19]

  • EU-surped
  • You don’t like consolidation, do you Brussels?
  • Suggested code revisions not all bad for Vodafone?

Supply chain

Vodafone ties with American quartet on AI [p22]

  • Care and networks provide the focus for AI
  • Vodafone’s new business model – network reduction
  • Group still looking in-house for data dollars

VMware lifts lid on Group NFV win… [p24]

  • Table: Partner/supplier people movement highlights
  • … and ties with IBM to give Cloud & Hosting Services a leg up

Profile

Allot [p26]

  • Breaking out of the capex vault
  • Biography: Erez Antebi
  • Customer focus
  • Virtual reality
  • New IoT and video use-cases
  • Operators remain central
  • Vodafone Secure Net: next steps
  • Table: Vodafone Secure Net availability, October 2017

EUROPE REGION

Ireland

SIRO pulls out of National Broadband Plan tender [p33]Netherlands

 Ericsson extends Dutch networks tie-up [p34]

  • Accompanying kit deal includes LTE for Machines
  • A challenge-filled deal backdrop

Portugal

Vodafone boosts broadband cred with NOS tie-up [p36]

  • Partial win
  • Table: Portugal converged operator user comparison, 30 June 2017
  • We’re close, but not that close
  • Mix and match
  • Table: Vodafone European wireline rollout and regulatory agenda
  • Raised hackles over Altice media-expansion plan

Spain

VfS brings DOCSIS 3.1 upgrade live [p41]

  • Other markets in pipeline
  • Table: Gigabit Vodafone checklist

AFRICA, MIDDLE EAST, AND ASIA-PACIFIC REGION

Australia — Vodafone Hutchison Australia

VHA preps Vodafone TV release [p44]

  • Table: Vodafone TV customer base comparison by market (‘000)
  • New Zealand also a Vodafone TV target
  • NBN plus
  • Hutch reaffirms Total Comms ambition
  • Table: Selected Vodafone OpCo “4.5G” tests and rollouts (500Mbps and above)

VHA jumps on Massive MIMO bandwagon [p47

  • VHA knows the recipe but can it afford the ingredients?

Egypt

VfEg ties with Openwave on video management [p50]New Zealand

VfNZ takes 400Gbps metro route with Ciena [p51]

  • Ciena feet under Group table

Vodacom Group

Safaricom pushes back against Vodacom control [p52]

  • Safaricom and Vodacom not yet BFFs
  • Table: Prospective Safaricom ownership, post-2017 Vodacom transaction
  • M-PESA unshackled: A less-Vodafone-based future emerges, and this may not be a bad thing
  • Power play as M-PESA goes OTT
  • The geo-political angle

VdSA moves focus to LAA amid 4G spectrum squeeze [p55]

  • Lukewarm on LAA
  • On the spectrum back-foot

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 51

A

Aditya Birla Group
Idea Cellular 8
Africa 6, 7, 9, 10, 40, 48, 49, 50
Congo 7, 49
– Egypt 46
– Ghana 7, 42
National Communications Authority 42
Kenya 7, 9, 44, 48, 49, 50
– Lesotho 7, 49
– Mozambique 7, 49
– Nigeria 7, 49
– South Africa 7, 9, 10, 24, 44, 46, 48, 49, 51
– Sub-Sahara 7
– Tanzania 7, 49
– Uganda 6
– Zambia 6, 7, 8, 49
Afrimax Group 6, 7, 8
Alcatel-Lucent 10
Alfa Group
Altimo (Alfa Telecom International Mobile)
Turkcell (see Curkurova/TeliaSonera/separate) 13
Allot Communications 25, 26
Altice Group 34, 38
Amazon.com Inc. 21
Amdocs 11, 14, 20
American Tower Corp. 8
Americas
Canada 8, 47
– Latin America 29
– USA 18, 21, 26, 28, 47
Apple 24
Asia-Pacific 10, 17
Australia 17, 24, 41, 43, 44, 45
Australian Communications & Media Authority (ACMA) 45
– – National Broadband Network (NBN) 43
China 17, 20, 21
– Fiji
Commerce Commission 46
India 8, 17, 22, 43, 45
Licence Circles
Haryana 45
Telecom Regulatory Authority of India (TRAI) 43
Japan 17, 48, 51
– Malaysia 49
– New Zealand 17, 42, 46, 47
Commerce Commission (New Zealand) 46
Singapore 8, 17, 49
AT&T 20, 47
Axiata Group Bhd (TM International)
India (Idea Cellular, see also Aditya Birla) 8
– Singapore (Mobile One, see separate) 33

B

Betfair Group plc (The Sporting Exchange) 9
Bharti Group 8, 43
Airtel 6, 8, 42, 43
Africa
Ghana 42
Bharti Infratel 8
Indus Towers 8, 22
Bosch Group, The 34
Bridge Mobile Pte. Ltd. 10
BT Group
Openreach 37

C

China Mobile 20
China Telecom 20
Ciena Corp. 47
Cisco Systems 20, 22, 35
Cukurova Holding
Turkcell (see Altimo/TeliaSonera/separate) 13

D

Dell 23
Deutsche Telekom
Europe
Netherlands 35
– – UK (EE) 24
Germany 24, 37
– USA 10
Drillisch AG 20
du (Emirates Integrated Telecommunications) 15

E

EE (see DT, FT) 24
Electricity Supply Board (Ireland) 32, 37
Emblaze Group
European Telecom 20
EMC 23
VMware 20, 23, 24
Enel SpA 37
Ericsson 20, 33, 44
Europe 17, 18, 21, 23, 24, 29, 31, 36, 37, 39, 44, 51
Albania 29
– Czech Republic 18, 37, 44
– France 34, 49
– Germany 18, 20, 22, 24, 29, 32, 34, 37, 42, 44, 50
Länder
Bavaria (Munich) 34
– – – North Rhine-Westphalia (Düsseldorf) 34, 44
Greece 29, 37, 42
– Hungary 17, 18, 37
– Ireland 17, 18, 22, 24, 29, 32, 37, 44
Commission for Communications Regulation (ComReg) 37
Italy 17, 20, 21, 29, 37, 44
– Luxembourg 17, 21
– Malta 44
– Netherlands 7, 17, 20, 33, 35, 37, 44
– Portugal 15, 18, 29, 34, 35, 36, 37, 38, 41, 42, 44
ANACOM 35, 38
Romania 29, 37, 44
Autoritatea Naţională pentru Administrare şi Reglementare în Comunicaţii (Ancom/ANC/ANRCTI/ANRC) 37
Russia 17
– Spain 17, 29, 33, 37, 39, 42, 44
– Sweden 33
– Turkey 11, 12, 13, 14, 15, 29, 44, 45, 51
– United Kingdom (UK) 9, 10, 12, 15, 17, 24, 29, 37, 44, 49
Office of Communications (Ofcom) 37
European Union 9, 17, 18, 20, 32
European Commission 18, 20, 38
– European Parliament 18, 20

F

Facebook 21, 50
Forthnet 37

G

GigaSpaces Technology 20
Gilat Satellite Networks Ltd 26
Goldman Sachs 18, 21, 43
Google 21, 46
Gmail 46
– Google Mail (Gmail) 46
– YouTube 28

H

Huawei Technologies 14, 20, 22, 39, 44, 49, 51
Hutchison Whampoa 24, 43, 45
Hutchison 3G Australia Pty Ltd 43, 45
– Hutchison Telecommunications Hong Kong Ltd (Hutchinson Telecom/HTHKH/3 Hong Kong) 43, 45
– Vodafone Hutchison Australia Pty Ltd (VHA, (see Vodafone) 24, 41, 42, 43, 44, 45

I

IBM 20, 21, 23, 24
Iliad 20
Indus Towers 8, 22
Infrastructure Development Finance Corp. (IDFC, India) 8
Intel 20
McAfee 29
IOL 38

J

Juniper Networks 23

K

Kohlberg Kravis Roberts 8
Deutsche Glasfaser 37
KPN 37

L

Liberty Global 32, 33
UPC Germany GmbH
Unitymedia GmbH 32, 37
Virgin Media 37
– Ziggo 33, 35, 37, 42

M

Mahindra Group
Tech Mahindra 20
Market segments
Fixed broadband 34
– Mobile broadband 41, 51
– Mobile data 44, 46
– Network-sharing 34, 37
– Outsourcing 22
– Over-the-top (OTT) 43, 50
– Value-added services (VAS) 26, 35
– Voice 6, 21, 35, 39, 43
McKinsey & Co 9
Metroweb S.p.A. 37
Microsoft 46
Middle East
Egypt 46
– Israel 25, 26
Millicom International Cellular
Tigo Ghana 42
Mirambo Ltd 47
Mobile One (Singapore) 33
Motorola Mobility Holdings Inc. 51
MTN 6, 42, 51
Ghana (Scancom) 42
– South Africa 51

N

Naspers Limited (MIH Group) 48
Netcracker Technology 10
Netflix Inc. 28, 43
Nokia 20, 24, 45
Novabase SGPS SA 12
NTT 48
Dimension Data 48
Internet Solutions 48

O

Oger Telecom
Cell C 10
Open Network Automation Platform 20
Openwave Systems 46
Oracle 11, 14
Siebel Systems 14
Orange
Orange 20, 37
– Spain 37
– UK (see EE) 24

P

Promotora de Informaciones, S.A. (Grupo PRISA)
Media Capital 38
Televisão Independente (TVI) 38
Proximus Group
Belgacom Mobile NV/SA (Proximus) 35

Q

Qualcomm 44, 51

R

RCS & RDS SA 37
Red Hat 24

S

Safaricom 7, 9, 15, 44, 48, 49, 50
Ex-executives
Joseph, Michael 9, 50
M-PESA 48, 49, 50
SEACOM 9, 10
Singapore Telecom
Optus (Australia) 45
Sky Network Television 42
Sonaecom
Optimus 36, 37
Sprint Nextel 10
Supreme Court 37, 43
Swisscom
Fastweb 37

T

TalkTalk Telecom Group plc 37
TDC 10
Technology
2.5G 7, 45
– 2G 7, 45
GPRS 45
3G 18, 39
Evolved HSPA (HSPA+/I-HSPA)
MIMO 44, 45, 51
4G 8, 39, 42, 45, 51
Long Term Evolution (LTE) 8, 33, 37, 42, 51
LTE TDD 6
WiMAX 7
5G 18, 33, 39, 41, 44, 45
– BSS 11, 12, 13, 14, 15
– Cloud computing 17, 20, 23, 24, 39
– CRM 10, 39
– Data centre 47
– DSL 37
– Ethernet 47
– Fibre 9, 13, 20, 32, 34, 36, 37, 39, 41, 47
FTTC 37
– – FTTP 34, 36, 37
FMC 11
– FTTH 37, 39
– GPRS 45
– IP 41, 47
– IPTV 41, 42
– Linux 20
– M2M 43
– Narrow Band Internet of Things (NB-IoT) 33, 34, 39
– NGN 34, 36
– PC 28
– R&D 26
– SIM 24
– Smartphone 24, 25, 34
– Spectrum 7, 18, 20, 41, 42, 44, 45, 51
700 MHz 41, 45, 51
– – 800 MHz 42, 51
– – 850 MHz 45
– – 900 MHz 7, 45, 51
– – 1800 MHz 44, 45, 51
– – 2100 MHz 44, 45
– – 2500 MHz 7, 45
– – 2600 MHz 44, 51
– – 3500 MHz 18
Tablet 28, 34
– Telematics 17
– VDSL 37
– W-LAN 29, 35, 48
Tele2 20
Telecom Italia 37
Telefónica Group 9, 29, 37
Europe
España 37
– – UK 9
Telekom Networks Malawi Ltd (TNM) 10
TeliaSonera
Turkcell (see Alfa/Curkurova/separate) 13
Telstra 43, 45
Texas Pacific Group (TPG) 41
TIBCO Software Inc. 14
Turkcell (see Alfa/Curkurova/TeliaSonera) 13
TVI 38

U

UPC 37

V

Vocus Communications 43
Vodacom Group 6, 7, 9, 10, 12, 22, 24, 44, 46, 47, 48, 49, 50, 51
Congo 7, 49
– Ex-executives
Santos, Jose dos 10
Gateway Communications 7, 49
– Group 6, 7, 9, 12, 22, 47, 48, 49, 51
– Lesotho 7, 49
– Mozambique 7, 49
– South Africa 7, 9, 10, 24, 44, 46, 48, 49, 51
– Tanzania 7, 47, 49
– Vodacom Business 7, 10, 49
AfriConnect Zambia Ltd 7, 49
Vodafone
Africa, Middle East, and Asia Pacific Region (AMAP) 39, 40
Africa 7, 9, 10, 40, 49, 50
– – Asia 10, 17
– – Australia 17, 24, 41, 43, 44, 45
VHA Pty. Ltd (see Hutchison Whampoa) 41, 42, 43, 44, 45
Egypt 9, 22, 46
– – Ghana 7, 42
– – India 8, 17, 22, 43, 45
Indus Towers 8, 22
Kenya (see Safaricom) 7, 9, 15, 44, 48, 49, 50
– – Mozambique 49
– – New Zealand 9, 10, 17, 39, 42, 46, 47
TelstraClear 42
Pacific 10, 17, 41
– – South Africa (see Vodacom) 6, 7, 9, 10, 12, 22, 24, 44, 46, 47, 48, 49, 50, 51
– – Turkey 11, 12, 13, 14, 15, 29, 44, 45, 51
Koç.net 13
Corporate
Vodafone International Holdings BV 49
Europe Region 31
Albania 29
– – Cable & Wireless Worldwide 37
– – Czech Republic 18, 37, 44
– – Germany 18, 20, 22, 23, 24, 29, 32, 34, 37, 39, 42, 44, 50
KDG Holding GmbH (Kabel Deutschland) 37, 39, 42
Greece 29, 37, 42
Hellas On Line (HOL) 37, 42
Hungary 9, 17, 18, 37
– – Ireland 9, 15, 17, 18, 22, 24, 29, 32, 37, 42, 44
Complete Telecom 37
– – – SIRO 32, 37
Italy 9, 17, 20, 21, 22, 29, 37, 41, 42, 44
– – Malta 44
– – Netherlands 17, 20, 33, 35, 37, 42, 44
VodafoneZiggo 33, 35, 39, 42, 44
– – – Wiericke 37
Portugal 11, 12, 14, 15, 18, 29, 34, 35, 36, 37, 38, 41, 42, 44
CelFocus (see Novabase) 11, 12, 13, 14, 15
Romania 29, 37, 44
– – Spain 17, 29, 33, 37, 39, 42, 44, 45, 46, 51
Grupo Corporativo Ono (ONO) 37, 39, 42
UK 9, 10, 12, 15, 17, 21, 22, 24, 29, 37, 44, 45, 49
Executives
Baird, Tony 47
– – Berry, Brad 9
– – Colao, Vittorio 12, 18, 20, 21, 22, 23, 43
– – Cramer, Warrick 21
– – Cuba, Yolanda 42
– – Deegan, Colman 12
– – Gastaut, Stefano 9
– – Hassim, Fatima 9
– – Heeran, Fran 10, 23
– – Joosub, Shameel 51
– – Joseph, Michael 9, 50
– – Mottram, Phil 9
– – O’Leary, Anne 32
– – Read, Nick 17
– – Resmini, Enrico 9
– – Sheehan, Anne 9
– – Timuray, Serpil 12
– – Wibergh, Johan 39
Ex-executives
Amzallag, David 10
– – Clarke, Richard 9
– – Geldmacher, Jan 10
– – Herbison, Craig 10
– – Knook, Pieter 10
– – Panos, Arthur 10
– – Rook, Ivo 10
– – Smith, Andrew 9
– – Tennyson, Richard 10
Group 10, 18, 24, 25, 36
Americas (see Verizon Wireless) 10
– – Marketing
Internet Services 10
– – – ZYB (Imity) 9
Partner Markets 6, 7, 8, 9, 10, 14
Africa (Afrimax) 6, 7, 8
– – – Belgium (Proximus) 35
– – – Hong Kong (Hutchison Telecom) 43, 45
– – – Kenya (Safaricom) 7, 9, 15, 44, 48, 49, 50
– – – Scandinavia (TDC) 10
– – – United Arab Emirates (du) 15
Vodafone Automotive (formerly Cobra Automotive Technologies) 9, 17
Autoconnex 17
Vodafone Global Enterprise (VGE) 10
– – Vodafone Procurement Company (VPC) 21
Tomorrow Street 21
Vodafone Ventures 21
Products
360 10
– – Europe 37
– – International (UK) 49
– – Liberty (Malta) 32, 33, 37
– – Money Transfer 50
– – Red 14, 17, 24, 46
– – Small Business (UK) 9
– – Vodafone TV 41, 42
– – ZYB 9

W

WPP 10
G2 Worldwide 49, 50

X

Xero 9

Y

YouGov plc 8

Z

ZTE Corp. 20

About

About Vodafonewatch

Report: #159
Published: October 2017
Next report: November 2017
For more information visit: Vodafonewatch