Vodacom, South Africa’s largest mobile operator, revealed that its mobile money platforms, including Safaricom, processed a staggering $421.3 billion (R7.4 trillion) in transaction value over the past 12 months. This announcement was made during the company’s interim financial results and dividend declaration for the six months ending 30 September.
Financial Performance and Milestones
As Vodacom celebrates its 30-year anniversary, the company has connected 206 million customers and provided financial services to 83 million customers. Despite facing significant foreign exchange headwinds, Vodacom reported a revenue of R74 billion for the period, marking a 1% increase.
Group service revenue grew by 9.9% on a normalised basis, reaching the higher end of the company’s medium-term target. Financial services revenue saw a 7.8% increase, amounting to R6.7 billion and contributing 11.4% to group service revenue. However, group earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined by 2.7% to R26.6 billion but grew by 8.5% on a normalised basis. Vodacom declared an interim dividend of 285 cents per share (cps), representing an 86% payout ratio.
CEO’s Statement
Shameel Joosub, Vodacom Group CEO, reflected on the company’s journey, stating, “On 1 June 1994, we signed up our very first customer when the first of our networks in South Africa went live. Fast forward to 2024, we now serve 205.6 million customers across a footprint that includes DRC, Egypt, Ethiopia, Kenya, Lesotho, Mozambique, and Tanzania, covering more than half a billion people.”
Joosub emphasized that despite evolving regulatory pressures and customer needs, Vodacom’s purpose has remained unchanged: to ensure everyone is connected. He highlighted the company’s product and geographic diversification, with group service revenue increasing by 9.9% on a normalised basis. On a reported basis, group service revenue declined by 1.2% to R58.6 billion due to currency headwinds.
Investment and Growth
Vodacom remains on track to invest 13% to 14.5% of revenue into capital expenditure, in line with medium-term targets. Beyond mobile services, which include digital and financial services, fixed and IoT contributed 21.1% to group service revenue. This growth was underpinned by mobile financial services such as payments, savings, loans, and merchant offerings.
Our mobile money platforms, including Safaricom, processed $421.3 billion of transaction value over the last 12 months, cementing our leadership as an African fintech company.
Shameel Joosub
In the past five years, Vodacom has invested nearly R80 billion across its markets, with a focus on accelerating rural coverage. Joosub expressed satisfaction with the performance of Vodacom’s Egyptian business, which navigated a significant currency devaluation to produce R13 billion in service revenue, supported by a 44.1% growth in local currency.
Regional Performance
In South Africa, Vodacom now services 49.2 million customers, an increase of 4.2%. Driven primarily by beyond mobile services, the consumer segment, and prepaid mobile data, service revenue in South Africa grew by 1.3% to R31.1 billion, despite pressure in the wholesale segment. Beyond mobile services increased by 8.1%, contributing R5.5 billion, or 17.7%, of service revenue.
By containing costs below inflation and delivering revenue growth, South Africa grew EBITDA by 2.3%, while operating profit increased by 2.4%, aided by a moderated investment in energy resilience due to recent stability in the national electricity grid.
Internationally, Vodacom saw excellent service revenue growth in Tanzania (19.1%) and the DRC (9%). On a normalised basis, international service revenue grew by 6.2%, with the customer base increasing by 4.5% to 56.1 million. However, EBITDA from this portfolio declined by 20%, which Joosub described as disappointing but expected to improve in the second half.
M-Pesa and Safaricom
Safaricom delivered strong results in Kenya, with service revenue growth of 12.9%, supported by the adoption of 4G services and sustained M-Pesa growth. M-Pesa’s revenue grew by 16.6%, driven by business payments. In Ethiopia, Vodacom reached 6.1 million customers, up 47.1%, reflecting strong commercial momentum. Safaricom’s contribution to operating profit was R1.3 billion, impacted by currency reforms in Ethiopia, but the underlying net profit demonstrated strong growth.
Challenges and Future Outlook
Vodacom’s headline earnings per share declined by 19.4% to 353 cps, largely due to currency depreciation in Ethiopia and one-off costs in the international business. The proposed acquisition of a 30% to 40% stake in South African fibre operator Maziv was prohibited by the Competition Tribunal in October 2024. Joosub expressed disappointment, noting that the transaction was designed to help Maziv grow its fibre footprint into lower-income areas and would have been highly beneficial for South Africa. Vodacom is awaiting the Competition Tribunal’s detailed reasons for the prohibition before considering all available options, including an appeal in the Competition Appeal Court.
In summary, Vodacom has demonstrated resilience and strategic growth in its financial and mobile services, despite facing significant challenges in currency fluctuations and regulatory environments. The company continues to invest in expanding its services and infrastructure, maintaining its leadership in the African telecom and fintech sectors.
