One of South Africa’s leading mobile telecom companies, Vodacom, has spent over R4 billion ($203 million) on backup power solutions such as batteries and generators to keep its network going over the past 3 years in the face of increasing electricity rationing in the country. Vodacom says a further R300 million was spent in the past financial year on additional running costs in the form of diesel, security, and maintenance. This was announced as part of the Vodacom Group Limited’s preliminary results for the year ending 31 March 2023. The Group added that it remains committed to spending 13% to 14.5% of its overall revenue on capital expenditure that ultimately results in an enhanced customer experience through sustained investments in technology and network infrastructure.
Vodacom says a prime example of this promise is the pledge made at the recent South Africa Investment Conference of R60 billion of capital investment over the next five years in South Africa alone, having delivered on a R50 billion pledge made in 2018 over the previous five years. These substantial investments have and will contribute significantly to enhancing network resilience to keep customers connected through the likes of elevated levels of load-shedding, the acceleration of 5G coverage, as well as a rural coverage program to help bridge the digital divide.
Vodacom says it responded to South Africa’s power crisis with increased investment in power resilience, which has ensured network availability and contributed to an accelerated demand for data, up 45.4% in the fourth quarter. The sustained levels of load-shedding have been disastrous for the South African economy and the industry as a collective. The Group is also exploring other solutions, including working with several stakeholders to generate power offsite where space allows under what they are calling “virtual wheeling.”
The Group adds, “We remain confident that the ‘virtual wheeling’ pilot project that we’re pioneering with Eskom, South Africa’s power utility company, will be signed off in the near term and that this will have a significantly positive impact on the country’s power grid and ultimately on the over 20 000 towers across the industry that require reliable power supply to operate optimally.”
This report from Vodacom gives us another insight into just how much South Africa’s electricity crisis is costing businesses. The effects of load-shedding on homes and businesses have been brutal, and the South African Reserve Bank says that during the higher stages of load-shedding, where consumers can experience 12 hours of load-shedding per day, South Africa loses up to R900 million ($46 million) per day.
Businesses with multiple sites have been badly affected. One of the country’s major supermarket chains, the Pick n Pay Group, has over 1,900 locations in South Africa. In a trading update earlier this year, the Group said the generation of emergency localized electricity supply is a severe cost to the Group. The Group spent an additional R346 million ($18 million) year-on-year on diesel to run generators at stores in the first 10 months of the year, with the costs concentrated over the latter months, and is currently on a run rate of approximately R60 million ($3.05 million) per month, depending on the stage of load-shedding experienced. In addition to the above, the Group is experiencing increased generator repairs and maintenance costs and some additional food waste costs. This is due to the fact that diesel generator run times have increased significantly with increasing load-shedding.
The Shoprite Group, which employs over 145 000 people, has over 2,900 stores and a network of distribution centers across Africa. In South Africa, Shoprite says in just 6 months from July to December last year, the Shoprite Group spent an additional R560 million ($28.43 million) on diesel for generators to ensure that its stores could trade without significant interruptions during load-shedding stages.
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