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THE ROLE OF BUSINESS IN PROMOTING SOUTH AFRICA’S FOREIGN POLICY

“A VODACOM GROUP (PTY) LTD PERSPECTIVE”

30 OCTOBER 2007

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OUTLINE

Introduction

Vodacom’s current operations on the continent

Key experiences, operational challenges and achievements

Vodacom’s key investment criteria for new investments

The role that governments can play to facilitate and encourage investment

Conclusion

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Introduction

Committed to the continent and actively involved in seeking out new investment opportunities

Our key strategic objectives include:

- democratising communications on the continent

- deploying innovative technologies to deliver communications services to areas deemed ‘impossible’ to service

- establishing sustainable local partnerships based on trust, good faith and professionalism

Our manner of operation on the continent is premised on:

- the values underpinning South Africa’s foreign policy objectives (promotion of an African continent that is prosperous, peaceful and democratic)

- respect and recognition for each countries’ local laws, norms and policies

- continuous reinvestment in the country of operations (partnerships, human resources, infrastructure, CSI etc)

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Vodacom’s current operations on the continent Tanzania

- Vodacom Tanzania licensed in December 1999 and operational from August 2000- 35% owned by local partners (Planetel Communications Ltd 16%, and Caspian

Construction Ltd 19%)

Democratic Republic of Congo

- Vodacom Congo established in December 2001, operational from 1 May 2002- 49% owned by (local) Congolese Wireless Network

Lesotho

- Vodacom Lesotho commenced operations in May 1996- 11,7% owned by (local) Sekhametse Enterprises (Pty) Ltd

Mozambique

- Vodacom Mozambique commenced operations in December 2003- 10% owned by local partners (EMOTEL 5%, and Intelec Holdings Limitada, 5%)

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Vodacom’s key investment criteria

Reasons which influenced Vodacom’s choice of markets include- Shareholder arrangement between Vodafone and Telkom, focus on Southern

Africa- Government invitation, bilateral trade agreements between SA and targeted

countries

Vodacom’s key investment criteria for assessing new opportunities

- Vodacom looks beyond geographic reach and focuses on economic value added for shareholders

- Acceptable country risk profile (includes economics, regulatory, governance and politics)

- Contiguous to existing footprint- Potential to reach a subscriber base of at least 1 million subscribers within a

reasonable timeframe- Positive economic outlook

Other additional factors - bilateral trade agreements between SA and targeted countries- market attractiveness including; bureaucracy, rule of law, compliance to

various SA and international laws (e.g. FICA and anti-corruption laws)- economic growth, level of existing competition in the market and population

sizes

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Key Experiences and Operational Challenges

Regulatory concerns- ad hoc increases in ‘sector’ taxes- undue preference for government owned incumbent

Political instability / security concerns- adverse impact on normal day to day business operations - security of staff, personnel and business property

Bureaucratic and slow government processes and service delivery

- movement of goods and services across borders problematic (i.e. work permits, capacity issues at customs level affecting imports etc.)

- protracted policy reforms and implementation processes

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Achievements and Milestones

Market leader in most of the markets

- Democratising communications by in some instances tripling penetration within first four years of operation

- First to market on innovative products and new technologies

Generally profitable in most of the markets

- Pays dividends to local shareholder partners - Source of social consciousness and national pride through CSI in

health and national education

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Vodacom’s key investment criteria for new markets

Reasons which influenced Vodacom’s choice of markets include- Shareholder arrangement between Vodafone and Telkom, focus on

Southern Africa- Government invitation, bilateral trade agreements between SA and

targeted countries

Vodacom’s key investment criteria for assessing new opportunities

- Vodacom looks beyond geographic reach and focuses on economic value added for shareholders

- Acceptable country risk profile (includes economics, regulatory, governance and politics)

- Contiguous to existing footprint- Potential to reach a subscriber base of at least 1 million subscribers

within a reasonable timeframe- Positive economic outlook

Other additional factors - bilateral trade agreements between SA and targeted countries- market attractiveness including; bureaucracy, rule of law, compliance to

various SA and international laws (e.g. FICA and anti-corruption laws)- economic growth, level of existing competition in the market and

population sizes

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The Government’s Role in Facilitating Investment

South African government can play a role in respect of the following:

- Promoting effective relationship between SA business and the SA embassies in respective countries

- Facilitating, through diplomatic and other channels, security for South African investments in the respective countries

- Encouraging, through Nepad and other relevant channels, the adoption of best regulatory practices across the continent

The governments of the respective countries in which SA businesses operate may

- Set up relevant structures for official and continuous engagements with foreign investors on government policies and objectives impacting investors

- Improve service delivery levels and professionalism to business community (i.e. work permits, customs clearance for imports etc)

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Conclusion

Vodacom was historically restricted to Southern African due to shareholder arrangements

The countries in which Vodacom operates (besides South Africa) are Lesotho, Tanzania, Mozambique and DRC

Though the operations have been largely successful the following ongoing challenges require attention

- Unpredictable and uncertain regulatory environment- Bureaucratic and slow government services delivery to businesses- Uncertain political processes and political / economic insecurities

Vodacom believes the South African government and government in countries of operations can promote a positive investment climate by

- Promoting adoption of best regulatory practices- Setting up structures to facilitate business government interaction on

key government policies- Improving government service delivery in strategic areas to facilitate

smooth government operations

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THANK YOU