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Vodacom clinches R1bn PRASA deal

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Vodacom announces that it has entered into a 15-year strategic telecommunications partnership agreement with the Passenger Rail Agency of South Africa (PRASA), through its subsidiary Intersite Asset Investments (Intersite), with an estimated total value of over R1-billion.
The agreement comprises two major components – the first seeks to further monetise PRASA’s telecommunications assets by leveraging Vodacom Business’ enterprise channel capability. This broadly includes Multiprotocol Label Switching (MPLS); Virtual Private Network (VPN) connectivity; Unified Communications & Collaboration; Metro E Fibre Access; Microwave Access; Dedicated Internet Access; Hosted Exchange; Security Information Event Management and Internet Access.
The second sees Vodacom leasing PRASA’s dark fibre optic cables for the duration of the contract and making these assets commercially available to government and enterprises, including other carriers and mobile network operators through Vodacom’s Wholesale and Carrier division.
The agreement forms part of PRASA’s telecoms assets commercialisation process, which began in 2013, and is designed to support PRASA’s goal to provide quality passenger rail services to commuters.
Commenting on the announcement, Vuyani Jarana, Vodacom Business chief officer, says: “We are humbled by PRASA’s decision to choose us as their strategic partner to help them monetise their existing ICT assets. At Vodacom we have long believed in the strategic role to be played by partnerships and alliances to optimise existing ICT asset utilisation in South Africa.
“The Vodacom – PRASA agreement is one of our most innovative partnership initiatives to date, alongside the IBM CMS Data centre partnership which we announced earlier this year.”
In the past, state enterprises including municipalities invested in optic fibre infrastructure to meet their own consumption needs. To maximise return on investment on these assets, state owned entities must find strategic partners with technical expertise and market reach, which is what PRASA has achieved through its partnership with Vodacom.
Globally, rail agencies invest in strategic telecommunications assets such as optic fibre to manage locomotive traffic: PRASA is no different as it has over 900km of fibre along the railway line and stations.
Through the technology partnership agreement, PRASA (through Intersite) will be able to generate revenue through its fibre assets as well as on-sell Vodacom’s enterprise products and services to the wider enterprise market in South Africa. The revenue streams for PRASA include those realised from the wholesale lease of its fibre assets, channel commissions (when Intersite acquires customers through the agreement) as well as rebates to PRASA where its own ICT services come into play.
Jarana adds: “The South African economy is quickly digitising, the demand for high speed broadband is increasing daily and optic fibre network deployments are crucial in the delivery of high speed broadband services. It therefore makes perfect sense for Vodacom to work with strategic partners like PRASA to weave together existing fibre assets to create wider networks that shorten time to market.”
The PRASA partnership agreement comes after the National Treasury’s confirmation earlier this month that Vodacom has secured government’s mobile communications contract. The strategic sourcing process followed by National Treasury successfully combined innovation with economies of scale, unlocking value for the state and resulting in significant savings for the fiscus.
Intersite CEO Cromet Molepo says: “Our mandate as Intersite is to exploit PRASA’s assets through the use of strategic partnerships to create sustainable value that benefits the people of South Africa.
“This partnership with Vodacom is the first significant milestone in our journey towards effective and sustainable commercialisation of PRASA’s telecommunications assets, with more innovative possibilities down the road. The combination of extensive optic fibre network, GSM-R towers; and data centres, all located in and around major metros in South Africa, positions Intersite well as strategic partner of choice in the ICT industry.”