Vodacom, South Africa’s biggest mobile network operator in terms of subscribers, expects to spend more than R20 billion in capital expenditure on infrastructure in the new financial year.
So said Shameel Joosub, Vodacom Group CEO, today when the telco published its annual financial results and cash dividend declaration for the year ended 31 March.
Vodacom posted group revenue of R152.2 billion, up 1.1%, despite significant foreign exchange headwinds, says the firm.
Group service revenue declined 0.1% in rands, but increased 11.2% on a normalised basis, above the company’s medium-term target.
Financial services revenue increased 7.6% to R14 billion, contributing 11.6% to group service revenue.
Group earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 1.1% to R55.5 billion, but grew 7.8% on a normalised basis.
Vodacom says it now serves a combined 211.3 million customers and 87.7 million financial services customers, including Safaricom on a 100% basis.
It posted headline earnings per share (HEPS) of 857cps, reflecting strong growth in the second half, and the firm declared a full-year dividend of 620cps, up 5.1%.
According to Joosub, over the past five years, Vodacom continued to invest significantly in infrastructure and expects to spend more than R20 billion in capital expenditure in the new financial year, reinforcing the firm’s commitment to connectivity, digital inclusion and economic empowerment.
Vision 2030 ambitions
Commenting on the results, he says: “As we draw the curtain on our Vision 2025 strategy, I am immensely proud of the progress we have made over the past five years in delivering on our targets. This was achieved despite a challenging macro-economic environment marked by a global health crisis, currency volatility, geopolitical tensions, inflationary pressures and protracted energy disruptions in South Africa.
“Through it all, our purpose – connecting people for a better future – has remained our true north, gathering a momentum of its own across each of the markets where we operate.”
He points out that over the five-year period, Vodacom significantly expanded geographic and product diversification, resulting in the number of customers using its networks increasing from 115.5 million (FY2020) to 211.3 million (FY2025), while financial services customers rose from 53.2 million to 87.7 million, including Safaricom, over the same period.
“That said, we will not be resting on our laurels and now seek to ensure we deliver against our Vision 2030 ambitions, which include growing our customer base to 260 million and financial services customer base to 120 million. While cementing our leadership in all forms of connectivity, we expect our group service revenue contribution from beyond mobile to increase to 30% from 21% today.”
Joosub adds that as part of Vision 2030, the company is upgrading its medium-term targets for group service revenue and EBITDA from high single-digit to double-digit growth.
“Given significant currency volatility, I am particularly impressed with the strong finish the group produced in the last six months, supporting the confidence we communicated in November last year that the organisation is poised for a stronger second half performance.
“Group service revenue grew by a robust 11.2% on a normalised basis, highlighting the resilience of our diversified portfolio and our strong commercial execution. We closed the year with 8.2 million additional customers across our footprint – a 4% increase that underscores our relentless focus on customer-centricity, network reliability and digital inclusion”
According to Joosub, recent currency market stability, particularly in Egypt, bodes well for the group’s performance in the foreseeable future.
“So too does the resilient performance in South Africa and the outstanding, continued growth in Egypt and Tanzania. As one might expect, our businesses in Mozambique and DRC have been impacted by post-election tensions and conflict in eastern DRC, respectively.
“With momentum behind peace efforts in both countries, we are hopeful of improved prospects into FY2026. We remain particularly encouraged by the strong performance in Egypt, which delivered a stellar 45.2% increase in local currency service revenue, buoyed by increased uptake of Vodafone Cash and the growing demand for mobile and fixed connectivity.”
With over 50 million customers and a significant improvement in net promoter scores, he notes, Egypt now accounts for 23% of group service revenue. The return to currency stability is expected to underscore a more positive macro-economic trajectory, he adds.
“Our South African business demonstrated continued resilience, achieving service revenue growth of 2.3%, led by a recovery in the prepaid segment, sustained data traffic growth of over 36.4%, and the increasing contribution of our beyond mobile services.”
These services – encompassing financial and digital services, fixed and IOT – contributed R11.2 billion, or 17.8% of South Africa’s service revenue.
“The successful execution of seasonal campaigns, combined with an industry-leading response to power grid stability, supported an increase in EBITDA of 2.3% in South Africa, while we invested R11.6 billion to further enhance network resilience and spectrum efficiency.
“Consistent with our group-wide focus on sharing, we have approached the Competition Commission in South Africa to advance meaningful sharing opportunities with MTN South Africa, under the provisions of government’s Energy Users Block Exemption regulation.
“Our international business, spanning across DRC, Lesotho, Mozambique and Tanzania, achieved 7.1% normalised service revenue growth. Tanzania was the standout performer, delivering service revenue growth of 20.5% and EBITDA growth of 25.2% in shillings.”
Lesotho and DRC grew service revenue by 10.4% and 8.2%, respectively, in local currency. “While we remain hopeful of a recovery in Mozambique and sustained resolution in DRC, we are actively supporting our people and communities in the affected regions, including through our foundation initiatives. M-Pesa continues to solidify its leadership as Africa’s largest mobile money platform.”
Financial services boom
Across markets, the CEO says M-Pesa processed over $450.8 billion in transaction value over the year, reflecting an 18.3% increase.
Revenue from financial services grew 17.6% on a normalised basis, accounting for 11.6% of group service revenue. Additionally, Safaricom reported R22.6 billion of financial services revenue.
These results underscore the growing demand for payments, savings, lending and merchant solutions across our footprint, Joosub explains.
“In Ethiopia, we recorded a 103.2% increase in our customer base to 8.8 million, driven by growing demand for connectivity and a promising commercial trajectory. Service revenue in local currency increased 238.9%, with strong ARPU [average revenue per user] growth adding to the customer gains.
“As the second most populous country in Africa, Ethiopia remains integral to our long-term growth ambitions, and we are encouraged by the market’s response to our entry and the regulatory strides being made.”
He points out that Safaricom delivered an excellent performance in Kenya, with service revenue up 10.5% in shillings, supported by strong data and M-Pesa growth.
“While a currency devaluation in Ethiopia impacted group earnings in the first half of the financial year, Safaricom delivered a strong recovery in the second half, contributing to group earnings growth for the full year.
“While we were disappointed by the decision by the Competition Tribunal to prohibit our proposed acquisition of a stake in Maziv, we have lodged an appeal with the Competition Appeal Court. Given that fibre is a critical enabler of inclusive economic growth, we remain steadfast in our belief that this transaction holds significant public interest and pro-competitive benefits.”
Share