At the announcement of its group interim results recently, Telkom SA Ltd. announced that its mobile subsidiary, Vodacom, has committed, as part of its strategy, to acquire customer bases from certain independent service providers (SPs). It says that, should all conditions be met, Vodacom?s commitments in this regard are estimated at R1.6 billion (US$2.7 million).

Although Vodacom could not reveal the details of its strategy, its chief communications officer, Mthobi Tyamzashe, says Vodacom seeks to have control over its distribution. ?The important thing in telecoms is distribution. If you have good relationships with distributors, you are able to have better control over your business,? he adds.

In June 2000, Vodacom formed the Vodacom Service Provider Consolidation (VSPC) as a result of a merger between Vodac, Teljoy and GSM Direct. The planned further acquisitions are said to be in line with this process.

?The consolidation benefited us, as we achieved consistency in our distribution channels and developed a more focused sales strategy, leading to increases in new connections. We were also able to design efficient business processes, resulting in improved customer satisfaction and better retention of existing customers. All of this has, eventually, contributed to our bottom line growth,? says Tyamzashe.

Presently Vodacom has consolidated RadioSpoor, and is awaiting approval from the Competitions Board before consolidating Tiscali into the VSPC. In both earlier cases, Vodacom acquired the subscribers of the consolidated companies, as well as a controlling interest in Smartphone, the holding company of Smartcall & Smartcom.

Vodacom says it is still in negotiations with many of the SP companies. The consolidation of SPs will mean that the strategy for the roll-out of new distribution channels will be centralized, thus enabling Vodacom to better control the number of stores in each area. ?In this way we will be able to better utilize our existing channels,? he concludes.