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Vodacom touts super app to connect next 100m Africans

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 16 May 2022
Vodacom Group CEO Shameel Joosub.
Vodacom Group CEO Shameel Joosub.

As Vodacom wades deeper into financial services, the telco today reported its VodaPay super app has attracted 2.2 million downloads and 1.6 million registered users in the eight months since its launch.

Vodacom today reported the group’s financial performance for the year ended March, saying the super app, which provides services ranging from loans and savings, to person-to-person payments, has become indispensable for its fintech ambitions.

Vodacom CEO Shameel Joosub says he is satisfied with the success of VodaPay so far and the telco will scale its super app, as it seeks deeper penetration of financial services.

“Through our sustained investments in financial, digital and lifestyle services, we remain focused on providing opportunities to enhance our relationship with the 129.6 million customers we serve across our footprint.

“I am particularly excited about VodaPay’s high adoption rate since its launch in South Africa in October last year.”

According to Joosub, VodaPay will be instrumental in Vodacom’s quest to connect the next 100 million African customers.

Vodacom has set its sights on becoming Africa’s top fintech operator, saying financial services are vital to its business model.

In the past few months, the telco has been aggressively pushing its fintech drive. Last week, Vodacom added VodaLend Compare, a marketplace for unsecured personal loans, on its super app.

The platform already offers loans to small, medium and micro enterprises, and carries VodaTrade, which assists small businesses to transact securely.

Financial services have now become a key sector for telcos, as they seek to diversify revenue streams away from the traditional voice and data.

MTN has also been making strong inroads in the space and has set the second quarter of the 2022 financial year as the deadline to spin off its fintech business.

Joosub outlines Vodacom’s fintech agenda: “Alongside M-Pesa, which is expected to further establish itself as Africa’s largest fintech provider through the implementation of an enhanced product roadmap, VodaPay will be instrumental in our quest in connecting the next 100 million African customers so that no one is left behind.

“M-Pesa across our markets has grown to serve more than 47.1 million customers and 550 000 merchants through 510 000 agents in the DRC, Kenya, Lesotho, Mozambique and Tanzania. M-Pesa processes over 52 million transactions.”

Buoyant performance

Vodacom today reported a strong performance for the year. The group recorded revenue of R102.7 billion, which was up 4.5%, with normalised group service revenue and group operating profit growth of 4.6% and 5.4%, respectively.

In the year, Vodacom added 5.9 million customers, to serve a combined 129.6 million clients across the group, including Safaricom, on a 100% basis.

It says financial services customers, including Safaricom on a 100% basis, went up 5%, or 2.9 million, to 60.6 million.

“Group service revenue grew 4.6% on a normalised basis, supported by a resilient performance in South Africa. Group service revenue growth was underpinned by new services, which include digital and financial, fixed and IOT,” says Joosub.

“Financial services delivered 14.4% growth on a normalised basis, as we continue to scale user adoption, new products and services. IOT was up 32.1%, supported by our class-leading products in agriculture and smart infrastructure.

“In aggregate, these new services amounted to R14.3 billion and contributed 17.9% of group service revenue from 17.2% in the prior year. We target a new service contribution to group service revenue of 25%-30% over the medium-term.”

Home field advantage

For the year, in its home market – South Africa − Vodacom service revenue grew 3.8% to R58.5 billion, which Joosub says, was supported by continued demand for connectivity, incremental wholesale revenue and growth in new services.

Financial and digital services, fixed and IOT were up 8.5% and contributed R8.4 billion, or 14.4%, of SA’s service revenue.

Vodacom Business revenue reached R80.8 billion in the financial year, up 5.3%, and was driven by strong equipment sales.

Mobile contract customer revenue increased by 5.5% to R22 billion, with both Vodacom Business and consumer contracts contributing to this growth.

“We added 271 000 contract customers in the financial year, mainly within Vodacom Business, and increased ARPU [average revenue per user] by 1.7%. Consumer contract posted 1.5% customer revenue growth in the quarter, supported by attractive packages offering customers larger data allocations to facilitate increased usage,” says Joosub.

“Prepaid mobile customer revenue declined 0.7% to R25.2 billion. Adjusting for a loyalty programme provision release of R142 million in the prior year, prepaid mobile customer revenue was flat. We are pleased with the result given the strong prior year comparative, which was associated with more stringent lockdowns.

“We added 1.1 million prepaid customers in the year and focused our efforts on keeping customers engaged and active on the network for additional days. Higher customer engagement supported prepaid ARPU of R56, which was above the pre-COVID-19 level of R54.”

Vodacom recorded an increase of 19.2% in data traffic in the year, accelerated to 24.3% in the fourth quarter.

“We added 1.8 million data customers, reaching 23.5 million customers, up 8.2%. Smart devices were up by 13.1% to 26.2 million, while 4G and 5G devices increased by 23.9% to 18.5 million.

"The average usage per smart device increased by 14% to 2.4GB per month. Prepaid data revenue increased by 3.1% to R10 billion, as strong usage growth was offset by price transformation, including our zero-rated ConnectU platform, discounted offers for poor communities, and further cuts to headline monthly data bundles implemented on 1 April 2021.”

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