Vodacom Group’s interim results show that the company delivered one of its strongest interim performances on record after gaining control of Safaricom, but the South African telecoms giant now faces a high-stakes legal battle in Kenya that could determine the future of its East African expansion strategy.
The group reported revenue of R102.5 billion for the six months ended September 30, up 25.6%, while EBITDA rose 40% to R42.7 billion. Headline earnings per share increased 25.7% to 587 cents, and the board declared an interim dividend of 355 cents a share.
However, the results were dominated by developments surrounding Safaricom, the Kenyan telecommunications giant behind M-Pesa, after Vodacom increased its effective shareholding from about 35% to 55% on June 30 2026. The acquisition transformed Safaricom from an associate into a subsidiary, allowing Vodacom to consolidate its earnings for the first time.
That transaction, though, is under threat after Kenya’s High Court ruled in September that the acquisition of the government’s 15% stake in Safaricom was unlawful and declared the deal null and void.
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Vodacom and the Kenyan government have appealed the ruling, and the Court of Appeal has ordered that the status quo be maintained pending the outcome of the expedited appeal. The company remains the registered holder of the disputed shares for now.
Vodacom Group chief executive Shameel Joosub said the strategic rationale behind the acquisition remained intact despite the court challenge, adding that the deal enhances Vodacom’s exposure to high-growth markets and significantly expands its financial services footprint.
Safaricom becomes the growth engine
The Safaricom acquisition emerged as the biggest contributor to group growth during the reporting period. Vodacom said Safaricom delivered 13.1% service revenue growth, 27.5% EBITDA growth and 35.9% growth in net profit attributable to equity holders in Kenyan shillings.
Safaricom’s inclusion also dramatically increased the significance of financial services within the enlarged group. Vodacom’s financial services revenue nearly doubled to R15.9 billion, while the combined Vodacom-Safaricom platform now serves 108 million financial services customers and processes more than US$575 billion R9.4-trillion) in annual transaction value.
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The acquisition is central to Vodacom’s Vision 2030 strategy of becoming a broader pan-African technology and fintech company rather than a traditional mobile operator. The company said its customer base reached 250 million, up 11.8%, with Safaricom giving it greater exposure to Kenya and Ethiopia, two of Africa’s fastest-growing telecommunications markets.
Price tag and growing debt
The strategic gain came with a substantial balance-sheet cost.
Vodacom disclosed that the Safaricom transaction involved total invested capital of about R153.4 billion, including R25.8 billion paid for the Kenyan government’s stake, the revaluation of existing interests and the assumption of debt.
As a result, net debt surged by R78.8 billion year-on-year to R135.6 billion, pushing the group’s leverage ratio from 0.9 times to 1.6 times EBITDA. The company said the acquisition was funded partly through R35 billion in debt and included the consolidation of Safaricom’s debt obligations.
Vodacom also acquired rights to a portion of future Safaricom dividend payments from the Kenyan government for an upfront consideration of R5.1 billion, a structure that remains subject to the ongoing appeal process.
Investors watching Kenyan appeal closely
While Safaricom boosted reported earnings, investors are likely to focus on the uncertainty surrounding the Kenyan litigation.
Vodacom said it continues to consolidate Safaricom because the shares remain registered in its name and the Court of Appeal has preserved the status quo pending the hearing. Nevertheless, the company acknowledged that if the appeal fails, the accounting treatment and broader implications of the acquisition would need to be reassessed.
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The group expects an appeal date to be set before the end of December 2026. Appeals have been filed by the government of Kenya, Vodafone Group and Vodafone Kenya.
- Vodacom Group’s interim results show that the company delivered one of its strongest interim performances on record after gaining control of Safaricom, but the South African telecoms giant now faces a high-stakes legal battle in Kenya that could determine the future of its East African expansion strategy.
- The group reported revenue of R102.5 billion for the six months ended September 30, up 25.6%, while EBITDA rose 40% to R42.7 billion.
- Headline earnings per share increased 25.7% to 587 cents, and the board declared an interim dividend of 355 cents a share.
- However, the results were dominated by developments surrounding Safaricom, the Kenyan telecommunications giant behind M-Pesa, after Vodacom increased its effective shareholding from about 35% to 55% on June 30 2026.
- The acquisition transformed Safaricom from an associate into a subsidiary, allowing Vodacom to consolidate its earnings for the first time.
