Vodacom wins government deal worth up to R5bn
bdlive.co.za - Sep 15th 2016, 08:37
VODACOM, Africa’s largest cellphone company by market value, has won an estimated R5bn government contract as Treasury seeks to cut costs, according to three people familiar with the matter.
The tender is to supply as many as 1.3-million government employees for four years, starting on September 15, said the people, who asked not to be identified as details of the deal had not yet been made public.
If 400,000 government employees take up the service, the contract will be worth up to R5bn over the duration of the deal, one of the people said.
"Vodacom is honoured by the National Treasury’s decision to appoint us as a partner to government to deliver on the all-important task of enabling government to connect and communicate efficiently," CEO Shameel Joosub said in e-mailed comments on Wednesday, without providing detail of the contract.
"Our substantial investment in infrastructure and innovative capability will now be at the disposal of the state."
The decision is intended to save Treasury money and have a reliable telecommunications supplier, according to one of the people.
Finance Minister Pravin Gordhan said in his budget speech in February that the reduction of government costs was a priority. The state could save R25bn a year through "belt tightening", he said, including R500m from changing cellphone policies.
For Vodacom, the deal will help increase its number of customers who pay for voice and data on a monthly basis, rather than pay-as-you go deals.
The Johannesburg-based company had 35.1-million SA subscribers at the end of June, of which 30.1-million were lower-spending, prepaying customers.
Vodacom is 65% owned by UK group Vodafone plc.
Its shares gained 1.2% by the close in Johannesburg on Wednesday, valuing it at R232bn.From DFM Publishers (Pty) Ltd
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