Vodacom’s latest results revealed that the biggest contributor to its increase in expenses is its roaming agreement with Rain.
Vodacom’s interim results for the six months ended 30 September 2020 showed that its expenses in South Africa increased by 6.9% – from R20.036 billion to R21.427 billion year-on-year.
The increase of R1.391 billion, Vodacom said, was mainly a result of higher costs related to its roaming agreement with Rain.
Excluding the Rain impact, total expenses grew by 3.0%, benefitting from the decline in publicity costs of 29.9%.
This information gives a peek, albeit a limited one, at how much Vodacom pays to roam on Rain’s network.
According to Vodacom, 3.9% of the 6.9% increase in expenses, which amounted to R1.391 billion, can be attributed to Rain.
This equates to Vodacom paying Rain R786 million more for roaming on its network over the last six months.
This increase in roaming fees was expected. African Rainbow Capital (ARC) co-CEO Johan van Zyl said in September its roaming agreement with Vodacom has seen good growth.
Van Zyl said data traffic on Vodacom’s network increased by around 30% during the lockdown.
He said Rain provides a “big chunk” of this data through roaming, which means it roaming revenue increased significantly.
How much Rain really makes from Vodacom
While Vodacom is paying Rain a large amount to roam on its network, these roaming fees are partly offset by Rain paying Vodacom to use its infrastructure.
Vodacom is helping Rain to roll out its LTE network by providing it with space at its sites and access to some of its infrastructure.
Vodacom CEO Shameel Joosub told MyBroadband their agreement with Rain means there is both expense and revenue.
“We pay for roaming rates, but we also get fees for them using our sites and some of our infrastructure,” he said.
Joosub said the net impact on Vodacom’s income statement is not huge compared to last year.
He would not give exact figures on the net expense of the Rain agreement, but did say it is “a few hundred million”.
Rain CEO Willem Roos would also not provide details about the money they make from roaming, saying as a private company they do not disclose financial figures.
Despite the lack of financial information, it is clear that Rain is a net beneficiary of the arrangement with Vodacom.
Rain is funding its rapid LTE network deployment through its partnership with Vodacom – a great way to monetize its spectrum assets.
In the end, Rain will have a fully funded mobile network without the large debt burden which typically accompanies launching a new mobile network.
