2010 - vodacom

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untitledGroup Sustainability Report for the year ended 31 March 2010
This is our third sustainability report and covers the financial year from 1 April 2009 to 31 March 2010. References made to
‘this financial year’, refer to the financial year noted above. Likewise, references made to ‘the prior year’ and the ‘last financial
year’ refers to the reporting period 1 April 2008 to 31 March 2009. References to the ‘next financial year’ refer to the reporting
period 1 April 2010 to 31 March 2011. We report annually and this is the first year that we report as a publicly listed company.
Vodacom listed on the JSE on 18 May 2009, binding itself to the JSE Listing Requirements.
Considering South Africa’s dominance within the Group – its operation serves 26.2 million customers out of a total of
39.9 million for the Group – this report largely covers issues relating to this market. Use of the terms ‘Vodacom’, ‘Vodacom
Group’, ‘the Group’, ‘the Company’, ‘we’ or ‘us’ in this report refer to the Vodacom Group, while the use of ‘Vodacom SA’
refers to the South African company, and ‘DRC’, ‘Lesotho’, ‘Mozambique’, and ‘Tanzania’ refer to individual local markets.
Where the term ‘company’ is used in this context, it refers to the local market being discussed.
Other local markets are reported on in more detail than last year, but not as comprehensively as for South Africa. Over time,
reporting will improve as we expand our sustainability programme to our various local markets, and as their operations grow
and mature. No significant sustainability information is recorded for Gateway this year.
The reporting process is based on the Global Reporting Initiative’s G3 Sustainability Reporting Guidelines, and Vodacom
self-declares a Level C GRI rating for this report. No external assurance for this report has been sought. We are consistently
improving our internal reporting structures as the sustainability programme becomes established within the company.
We will be considering assurance in the future.
For more information about sustainability at Vodacom or for queries regarding this report, contact the Group Sustainability
division by email at [email protected] or please call +27 (0)11 653 5000.
About this report
Material Issues 2
Introduction 4 About the Company 5 Foreword from the Chairman 6 CEO’s statement 8 Corporate Governance
Access to communications 12 Socio-economic impact of mobile telecoms 12 Mobile banking for the unbanked 12 Network coverage
13 Competition and cost of communications 14 Affordability and clear pricing 16 Reducing the level of preventable exclusion
Transformation 19 Equity ownership 19 Management control 20 Employment equity (EE) and diversity management 21 Skills development 21 Preferential procurement (local suppliers) 22 Enterprise development 23 Socio-economic development
Our people 24 Representation and engagement 26 Attracting and retaining talent 30 Employee rewards and remuneration 31 Employee wellness 32 Workplace HIV/Aids 33 Health and safety
Impact on environment 34 Climate change/carbon footprint 36 Energy efficiency/alternate energy 37 Resource utilisation 38 E-waste 39 Placement of base stations
Social responsibility 40 Ethical business conduct 41 Anti-CMT compliance programme 42 Regulation of Interception of Communications Act (RICA) 43 Privacy 44 Wireless Application Service Providers (WASPs) 44 Content standards/protecting vulnerable users 46 EMF compliance 48 Contribution to communities (CSI)
GRI Index / Glossary 52 GRI Index 60 Glossary
2 Vodacom Group Sustainability Report 2010
Material issues
Stakeholder Engagement
All stakeholders A strategic workshop was held at Group level to debate the materiality of a variety of societal and environmental concerns. The resulting list of material issues (this table) was approved by the Executive Committee (Exco).
Vodacom SA has partnered with a leading bank to launch the innovative mobile money solution, M-Pesa, to cater for the previously unbanked.
Network coverage Vodacom SA’s 2G and 3G networks now cover 99.7% and 54.0% of the population respectively. We continue with our roll out in rural areas, with 2G covering 81.8% and 3G covering 7.3% by area. Networks in other local markets are also expanding rapidly.
Reducing the level of preventable exclusion
Vodacom SA partnered with Age in Action, launching the ZTE S202 and S302 model mobile phone for older persons. Two new Speaking Phones, and three products for the hearing impaired were also launched.
Competition and the cost of communications
Mobile termination rates (‘MTR’) – or interconnect rates – were reduced by 28.8% this year. In addition, the average effective price per minute dropped by 7.7% in SA during the year.
Affordability and clear pricing Low cost handsets have decreased in price by 30% since 2008. 14
6.25% of the company is BBBEE owned. dti CoGP (Department of Trade and Industry Codes of Good Practice) score: 6.13/20
Management control Black representation increased. dti CoGP score: 6.56/10 19
Employment equity (and diversity management)
A Transformation and Diversity Steering Committee has been established. Retention of black employees, and in particular black female employees, remains a challenge. dti CoGP score: 10.16/15
Skills development 80% of all training this year was invested in the Black Designated Group. dti CoGP score: 12/15
Preferential procurement (local suppliers)
Vodacom SA is working to increase the proportion of registered BBBEE suppliers, and requiring all suppliers to work towards a Level 4 BBBEE status. dti CoGP score: 14.72/20
Material issues Stakeholders Summary of status Page
Our people
Families and dependents
An employee survey was conducted for the first time at Vodacom SA this year, with an 80% participation rate, and action plans are being drawn up to address issues raised
Attracting and retaining talent Vodacom SA invested R71.2 million in training employees (3.1% of payroll). Staff turnover has decreased by almost 3%.
Employee wellness Vodacom SA spent R10.6 million on employee wellness this year, compared with R9.9 million in the prior year (R9 million in 2007/8).
Vodacom is taking part in the Carbon Disclosure Project for the first time, and a climate change policy and strategy is currently being developed.
Energy efficiency/alternate energy
Vodacom saved an estimated total of 23 575 MWh on its SA network during 2009/10. Hybrid and solar power are being rolled out on the non-SA networks. Vodacom SA is now a registered member of the Green Building Council of South Africa (GBCSA).
Resource utilisation Vodacom’s water-saving initiatives are performing well. 37
E-waste 208 tonnes of IT and network equipment, as well as 4.5 tonnes of handsets were recycled this year.
Placement of base stations Vodacom’s safety, health, environment and quality team develop policies relating to the placement of base stations to ensure minimal impact.
Industry bodies
Vodacom launched an Ethics Advice Line, and published a “Guideline for Content in the Workplace” this year.
Compliance with RICA Vodacom SA’s primary target is to make the RICA registration process as simple as possible for both existing and new customers while ensuring that all existing customers are registered by 31 December 2010. Over 13 000 terminals at points of sale have been installed to enable new customers to register and over 113 000 registration agents have been trained.
Privacy of information Vodacom has policies in place to ensure that customer information is not unlawfully disclosed in terms of licence obligations, both internally and via our WASP business partners. The Protection of Personal Information Draft Act (2005), which Vodacom SA made submissions on, was approved in August 2009. All Vodacom SA’s key concerns were addressed.
Protection of vulnerable users Vodacom was instrumental in initiating a double-opt-in rule requiring customers who subscribe to WASP services in South Africa to confirm their requests prior to being billed. This is to be implemented during 2010/11.
EMF compliance Vodacom engages with the Directorate for Radiation Control to keep informed about any developments in local regulation, annually. The industry is currently anticipating a draft South African EMF standard for best practice.
Contribution to communities During the 2009/10 financial year, the Vodacom Foundation in South Africa contributed R68.6 million. A further R11.5 million constitutes CSI activities conducted by other divisions of the company.
About the Company
Products and services We offer a wide range of products and services delivered through
a variety of technological platforms to our corporate and wholesale
customers. While each local market tailors these to suit their
specific needs, the main products and services offered are:
For full details, see our Group website at www.vodacom.com, as
well as our 2010 Annual Report.
Vodacom Group (as at 31 March 2010)
Vodacom Group
7.6 million data users
Vodacom Group Sustainability Report 2010 5
Peter Moyo – Chairman
As one of the foremost corporates in South Africa and indeed on
our continent, we have an obligation to lead by example in saving
the planet’s resources, promoting the best interests of our staff and
customers and facilitating societal progress for the good of all. To
this extent as a company we continue to search for ways we can
use our technology to help address issues such as crime, health
provision, access to communications, education, the eradication
of poverty and the extension of social services.
The global economy is emerging from a prolonged period of
decline which saw the demise of many large corporations and the
loss of hundreds of thousands of jobs. At the same time we
witnessed the failure to implement a new binding agreement at
the global climate change summit in Copenhagen as countries
failed to find common ground on this vital issue.
Our challenge in the face of this is to continue running a successful
business which is not only financially sound but which is also
poised to address the needs of our diverse range of stakeholders
in a socially responsible manner. It is a challenge I am satisfied we
continue to meet.
The past year has seen the company deliver a robust set of
financial results, with a steady growth in customer numbers,
sustained investment in infrastructure and continued market
leadership in most of the countries in which we operate.
However it is the life-changing impact of our products and
services of which we are most proud. In many markets customers
access communications for the first time using our mobile
technology. Our ultra low cost handsets make accessing this
technology more affordable. We are introducing mobile banking
to the previously unbanked and will continue to expand this
offering across the Group. New services in the field of mobile
health are being explored, while the introduction of handsets for
the visually and hearing impaired, as well as for the elderly, has
allowed us to introduce mobile communications to those
previously excluded.
It is precisely these types of products and services which are both
commercially viable and have a high social impact that allows us
to prosper as a company while contributing to positive social
development, in effect tying our success to that of the broader
society in which we operate. Additionally our business success
allows us to contribute to a variety of social causes aimed at
improving the lives of those less fortunate.
Responsible corporate citizenship also obliges us to remain
mindful of the impact we have on the physical environment.
Judicious utilization of limited natural resources is essential as is
the need to limit our waste, particularly e-waste. We have taken
steps in this regard but more needs to be done. We see climate
change presenting both a challenge as well as an opportunity for
us. While we must make our operations more carbon efficient,
and have begun doing so, we are aware that we have the tools
to assist other corporate entities to do the same through services
such as videoconferencing and machine-to-machine transactions.
I believe very strongly in the power of corporations to be a driving
force for positive change and that a truly sustainable company is
one that delivers strong returns to all its stakeholders.
A business can only prosper and be sustainable if the society in which it operates is sustainable, and I believe that Vodacom continues to make a great contribution towards a more sustainable society.
Foreword from the Chairman
Pieter Uys – Chief Executive Officer
Chief Executive Officer’s statement
Shareholders typically expect ongoing dividends from the
company’s profits, as well as growth in the value of the
company. Neither of these is possible in the long-term unless
the company also meets the interests of its other stakeholders.
Customers, employees, suppliers, government regulators and
broader society all have expectations and concerns that require
ongoing response from us if we are to continue to grow our
brand in South Africa and on the African continent. This
thinking is in line with the 2009 King Report on Corporate
Governance for South Africa (King III), which seeks to balance
the wider concerns of society with the interests of business.
This year, we are developing systems to improve our
compliance with the GRI (G3) indicators, which form the basis
of compliance with King III.
We have followed up last year’s stakeholder survey with frank
discourse with a broad range of stakeholders. We also held a
workshop with key staff to examine stakeholder concerns
against the interests of the business, and through this process
have listed and reprioritised the issues we believe are most
important for our ongoing sustainability.
Aside from stakeholder engagement itself, five key issues
emerged, and these form the framework for this report:
1. Access to communications – We recognise the enormous
role that advanced mobile telecommunications can play in
the development of the peoples of Africa. Customers
naturally expect these benefits as affordably as possible,
and they either have concerns with products that are
confusing or they commit to them unknowingly. In
responding to these demands, Vodacom is continuing to
make voice and data more accessible while increasing its
network coverage, especially to rural communities. We are
also working with the Independent Communications
Authority of South Africa and consumer legislation to
ensure our customers continue to receive the best value
from our network. Already, we offer customers the lowest
cost handsets on the market.
2. Transformation – Vodacom is a powerful enabling agent in
our economy for the broad-based empowerment of
historically disadvantaged people. The dti Codes of Good
Practice provide the framework for us to create opportunities
for black employees, suppliers and entrepreneurs, and we
continue to improve our overall score as a Level 4
contributor, whilst acknowledging the challenges we face in
improving the representation of black women in particular.
3. Employees – Considering that our people are most directly
responsible for our sustainability, we are committed to
creating the best working environment for the most highly
skilled and motivated employees in the industry. We are
particularly focused on attracting and retaining talent
through training (skills and leadership), remuneration and
other rewards for good work. To ensure a representative
employee base, the Group has recently initiated a
Transformation and Diversity programme focusing on
developing diversity in race, gender and disability across
the organisation.
and easy access to information, improving planning and
saving on logistics costs), we are nevertheless mindful of
our direct environmental impact through energy and
materials usage, e-waste and the placement of our base
stations. We continue to work on improving the
measurement of these impacts, joining the international
Carbon Disclosure Project, while finding smart solutions to
reduce our demand on scarce resources and fossil fuels.
A year ago, in May 2009, Vodacom listed on the JSE, in the process gaining some 95 000 shareholders eager to share in the company’s success. But how do we define success?
Vodacom Group Sustainability Report 2010 7
Executive summaryCEO statement
demonstrating high ethical standards as a vital measure of
our organisational integrity. To this effect, allegations made
by ex-employees on a range of issues were investigated and
where they pointed to areas of the business that needed to
be strengthened these have been attended to. As we grow
the business it becomes ever more important to embed a
strong ethical culture. We are also constantly on guard
against harm to users of our technology. We anticipate a
national electromagnetic fields standard and best practice
protocol from the Directorate for Radiation Control to guide
best practice. In addition we work with the Wireless
Application Service Providers’ Association (WASPA) on
content standards to protect vulnerable users.
South Africa’s community development strategy was recently
revised and now places a stronger emphasis on ICT-enabled
projects chosen to leverage services such as SMS and USSD to
support initiatives in community health, education and security.
This focus is echoed by all our local markets, who also direct
spend into welfare, community, environment, culture, arts,
sports and technology. During this financial year the Group
spent in the region of R95 million on these initiatives, via our
various in-country foundations as well as from other divisions
within the business.
The way we do business in all our local markets is important to
us. We work with our employees, customers and suppliers to
ensure we respect local cultures, while upholding ethical
standards of business.
8 Vodacom Group Sustainability Report 2010
As an essential part of this commitment, the Board recognises the
need to conduct business in accordance with the principles
promoted in the King III Code of Corporate Practices and
Conduct. These include discipline, independence, responsibility,
fairness, social responsibility, transparency and accountability of
directors to all stakeholders.
A number of these principles are entrenched in the Group’s
internal controls and policy procedures governing corporate
conduct. Our Board is satisfied that every effort is being made to
comply with all material aspects of King III. Where we do not fully
comply, an explanation is indicated below.
Our unitary Board consists of 13 directors. Of these, five, including
the Chairman, are independent non-executive directors while five
are non-executive and three are executive directors. A Board
charter has been adopted where the detailed responsibilities of
the Board include:
approving major capital projects, acquisitions or divestments;
exercising independent objective judgement on the business
affairs of the Group independent from management;
ensuring that policies and procedures are in place in terms of
appropriate governance structures;
ensuring the effectiveness of and reporting of the Group’s
systems of internal controls;
approving the annual budget and operating plan;
approving the annual and interim financial results and
shareholder communications; and
and succession plans.
The Board takes overall responsibility for the success of the
company. Its role is to exercise leadership and sound judgement
in directing Vodacom to achieve sustainable growth and act in
the best interests of the shareholders.
In line with best practice, the roles of Chairman and Chief
Executive are separate. The Board is led by the Chairman while
operational management of the Group is the responsibility of the
Chief Executive.
The directors have a wide range of expertise as well as significant
experience in financial, commercial and mobile telecommunications
activities. In terms of the Group’s articles of association, the
non-executive directors have no fixed term of appointment while
the executive directors are subject to the standard terms and
conditions of employment.
All of the three executive directors have a notice period of six months.
In terms of Vodacom’s articles of association, the directors are subject
to retirement by rotation and re-election by shareholders at least once
every three years. Any director appointed to fill a casual vacancy must
retire at the first annual general meeting following his appointment
and stand for re-election at that annual general meeting.
Independent advice
The Board recognises that there may be occasions where one or
more directors feel it necessary to take independent professional
advice at the company’s expense. There is an agreed procedure
for them to do so.
Board committees
non-executive directors play a pivotal role. All committees
operate under board-approved terms of reference, which may be
updated from time to…