Vodacom buys into social network
June 27, 2008
By Thabiso Mochiko Johannesburg
Vodacom has bought a 40 percent stake in social media networking company Zoopy.com in a deal that will give the cellular operator a new marketing hub and fresh revenue streams.
Vodacom is positioning itself as a multimedia operator as well as a converged telecommunications provider offering voice and data services.
It already has a radio station for its 24 million customers in South Africa, provides an advertising platform and sells a MultiChoice pay television bouquet. It is investing in internet businesses through a new subsidiary, Vodacom Business.
Zoopy.com was formed last March by Jason Elk and Gerry da Silva. It allows users to upload and share videos, photos, podcasts and blogs.
Zoopy.com has been selected by Nokia as its regional imaging partner for South Africa and west Africa, and Mail & Guardian Online has chosen it as its video delivery partner. The company says it attracts "thousands" of visitors a day.
David Moore, a media analyst at Africa Analysis, said many companies were looking at social networking sites to market their products.
"Unfortunately the only way social networking generates revenue is from advertising, thus the companies looking to enter this market cannot expect a large revenue return from them, merely a semicaptive market to show adverts to."
Tlhabeli Ralebitso, the managing director of Vodacom Ventures, said Zoopy.com had a growing community that would now be able to grow "bigger, better and faster".
Elk said the company was pleased to have found a perfect partner to help it roll out its strategy to its full potential. "With Vodacom at our side, we'll be able to bring many new features and opportunities to both their users and ours."
Even though Zoopy.com is a small company, it is a gateway for Vodacom to enter the multimedia space.
Vodacom's entry into the market follows that of Naspers, which bought 30 percent of instant messaging provider MXit.
Google paid a massive $1.65 billion (R12.7 billion) for YouTube. Not to be left off the social networking bandwagon, Microsoft has bought a minor stake in Facebook.
Corrie Froehlich, an analyst at Frost & Sullivan, said cellular operators had to find ways to provide a "value-added experience" and give their users a platform to create their own content.
Meanwhile, Vodacom said yesterday that it had signed agreements with its new black economic empowerment (BEE) partners, Royal Bafokeng Holdings and Thebe Investment Corporation, which will jointly take 45 percent of the R7.5 billion BEE transaction.
Vodacom, which announced the selection of the two as its preferred strategic partners in April, said the signing of the agreements was a further positive step forward for the deal.
Staff will get 25 percent of the stake and business partners and the public 30 percent.
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